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Defining the Next Paradigm of IT Outsourcing

All crises begin with the blurring of a paradigm and the consequent loosening of the rules for normal research... a crisis may end with the emergence of a new candidate for paradigm and with the ensuing battle over its acceptance. -T.S. Kuhn, 1962

In his classic book The Structure of Scientific Revolutions, Thomas Kuhn explained that a paradigm is a worldview that is vulnerable to being displaced when new ideas render it obsolete. When a sufficient number of "anomalies" have appeared and bedeviled the present paradigm, then it is thrown into a state of crisis. During this period of turmoil, new approaches come to the fore and are implemented. As a new paradigm emerges, the promoters of this new worldview find themselves locked in a pitched battle with defenders of the old worldview.

This is the state of affairs that enterprises, the field of IT, and vendor and solution providers are now confronting. It's increasingly clear that conventional approaches to IT infrastructure management are not aligned with the expectations and demands of our fast-paced, networked global economy. However, the new paradigm has not yet been thoroughly articulated or embraced. Indeed, there is plenty of evidence of resistance from the IT and vendor camps.

And yet, the outlines of this new paradigm are now in sight. Companies that embrace this new worldview will increasingly concentrate their internal resources on IT that delivers a competitive advantage and will outsource and add specialized partners to manage the rest. In addition, they will distinguish new opportunities for infrastructure management and outsourcing from the alternatives. Solutions will be solidly based on predictability, scalability and process-driven systems, not personal expertise or globally arbitraged labor.

Times of great change require bold, yet thoughtful leaders. To make this transition successfully, IT executives will need to develop specific plans that enable them to move dedicated resources from foundational IT to strategic IT in a timely manner. They will also need to concentrate on getting quick wins through the outsourcing of discrete, well-defined activities that represent manageable risk and measurable rewards.

Today's IT infrastructure world is in a state of turmoil. The costs of maintaining the existing infrastructure continue to come at the expense of innovation and strategic value. The only question now is whether companies will embrace the new paradigm or remain committed to supporting, maintaining and defending the old one.

Once again, outsourcing partners cannot deliver true operational excellence if their business models are based merely on skilled labor. They must have world-class processes, methodologies and systems in place if they are to scale in a cost-effective way to meet the growing infrastructure demands of business.

Moving forward, what should companies look for in an infrastructure outsourcer? There are several key capabilities to expect and seek. Among them:

Proactive methodologies and capabilities. Rather than waking up a service technician or a database administrator in the middle of the night to deal with a problem, outsourced support for the infrastructure should be around-the-clock. Central to the future success of outsourcers in network management, help desk, database administration and other areas is their ability to actively address concerns and problems on a 24x7 basis. Monitoring technologies should give them clear visibility into the operational issues associated with their area of specialization. They'll need to rely on systems, methodologies and critical success factors to ensure they deliver on their service level agreements with clients. It is often impossible to provide these levels of service if the activities are managed entirely in-house or completely overseas, which are models that cannot offer 24x7 monitoring and problem resolution.

Predictive assessment and action. While in-house and outsourced resources can solve problems reactively, they generally don't have the process-driven systems necessary to predict and analyze key patterns - and take action using that knowledge. One of the key benefits of systematic, automated solutions is the clear visibility they provide into technical problems and the ability to analyze the likely frequency of them occurring. Outsourcers should constantly assess and analyze infrastructure performance to ensure that it is meeting established service levels. They should provide access to trending data and actively predict, for instance, when a company may run out of data storage capacity with respect to current business initiatives. Drawing on insights and best practices from an array of clients, outsourcing should provide predictive guidance to clients that helps them better invest in IT infrastructure for maximum effectiveness.

Dynamic, scalable business models. Whereas business models based on labor can scale up arithmetically, business models based on systems can scale exponentially. While process-driven outsourcers actively use the skills and expertise of their people as leverage, labor-driven outsourcers add more people to meet greater demands. Over time, these two models lead to a significant divergence in terms of value, quality and capability. Low-labor cost models offer apparent advantages in the short-term, but they may be unable to scale cost-effectively to meet the growing needs of their clients as time passes. Nor can their systems capture the knowledge and insights drawn from past experience. When talent is hired away, they take their client knowledge and experience with them. By contrast, infrastructure outsourcers should actively learn from experience and continuously improve. Knowledge is captured and embedded in the system, not merely in the minds of consultants.

At present, demands are exploding for infrastructure in the forms of network support, computing capacity, data storage, database administration, help-desk assistance, security and other areas. Companies that hope to keep up with these trends and meet the enormous infrastructure demands associated with strategic IT must have service providers who can scale to meet their needs.

Finally, it's important to recognize that companies can realize quick wins with respect to outsourcing in this new paradigm. Vendors should be able to handle discrete, technical tasks associated with specific aspects of the underlying IT infrastructure. While some outsourcers handle a wide array of outsourcing roles and manage all sorts of IT assets, third-wave outsourcers tend to specialize.

While it's likely that all outsourcers will move toward the process-driven model over time, it seems that many of the most disappointing outsourcing relationships today are still riding the labor-driven relationships of the past. Fortunately, there are opportunities for companies to begin embracing outsourcing now in a way that represents limited risk and rapid returns. That is clearly one path to operational excellence as the challenges of infrastructure management become increasingly clear.


John Bostick is president and chief executive officer of dbaDIRECT, which provides data infrastructure management services to Fortune 1000 and Private 500 firms including ABN-Amro, Warner Brothers, Brookstone and AlbertoCulver. He has more than 25 years of industry experience. Contact him at john.bostick@dbadirect.com. 

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