If IT is not adding strategic value, Commoditize IT – II

at a more tactical level, I tend to agree that if not all, but certainly some of the components that make up IT landscape of an enterprise can be categorized as a commodity. i also think that this catagorization may be dynamic. i.e a resource that is strategic today may end up being a commodity tomorrow.

a few years ago, network connectivity made collaboration with business partners possible, it was a strategic IT component that very few companies had or exploited to gain advantage over their business partners. for some, the cost of provisioning the connectivity was prohibitive enough to prevent them from leveraging for business enhancement. therefore for some companies, network connectivity was a strategic resource at that point in time.

over a period of years, the cost of connecting to business partners has come down drastically and today, cost is hardly a barrier to an enterprise. hence network connectivity and partner collaboration is no longer a strategic resource. it can now be treated as a commodity.

similarly is the case with erp. at one point, enterprise developed elaborate business processes and used IT to enable them. hence for the companies that successfuly implemented erp, it proved to be a strategic differentiator. however with SAP and other vendors quickly moving into this space and now offering “erp in a box” type of solutions, it is hardly a strategic resource that can significantly impact the business bottomline.

 once a resource becomes commodity, an enterprise can look towards moving quickly to ensure the total cost of owership for an enterprise is as low as possible within the acceptable risk and associated parameters.

for an example take a case of an enterprise for which email was a source of strategic or tactical differentiator a few years ago. but over a period of time, email may no longer be a source of differentiator or strategic value to the enterprise. hence the enterprise, instead of owning the hardware, software and operational cost can look towards hosted email providers / “in the cloud” email solution from google etc.

 similarly the logic can be extended for an enterprise end user computing services etc. if an enterprise does not see a strategic value in these resources (say desktops, Operating Systems, office productivity software etc) it can adopt the following as part of its enterprise desktop computing strategy:-

  • be a laggard when it comes to adoption of new version of operating systems and office productivity solutions for the desktops
  • insulate the enterprise from technology risk by being two to three versions below than the latest ones
  • save hardware costs associated with upgrading the existing desktops to rollout newer versions
  • save on pilots and associated deployment effort for new versions.

over a period of time, the associated hardware costs will be low, technology risks known and learning from experience of other customers made available and hence adoption to newer versions would be cheaper, easier and less riskier.

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