When we look at the offering of IT Services today, we see a divers landscape with many options. Still we can say something about the added value of these services based on experience of some years ago. In the '90's en '00's the options of choice were a lot less and companies were primarily occupied with outsourcing the internal IT department. On the strategic impact of outsourcing I already mentioned a number of things in my articles on strategy. I will adress decision making on outsourcing in a separate article.
In general the offerings of IT Service Providers is still to be subdivided int 3 big realms based on the IT Value Chain:
In reality there are numerous variations and combinations available. Most frequently used offerings in the early days were:
The major difference in the added value of these services is in the required competencies and the management attention needed. We can draw a parallel wiht the 'Dynamic Stability' strategy (see articles on strategy). For IT Services we can also distinguish between 'products with a fixed bill of material (BOM) structure' and 'customer offerings based on configurations of products'. This leads to the 'hourglass model' for IT Services:
The 'Infrastructure services' are in the bottom 2 layers of the hourglass model. The added value of these services strongly depends on the assets used and the competencies available to use these assets efficiently. The primary management objective is in efficiency and cost optimization.
The 'Application services' are in the waist of the hourglass model. The added value strongly depends on 'functional fit': does the software provide what is required?. Standard applications are in the 'supported product' and tailor made applications need more Business specific knowledge. The primary management objective is in both cost opimization and effectiveness.
The 'Value added services' are in the top layer of the hourglass model. The added value is in the Business / Industry specific competencies. The primary management objective is in the effectiveness of these services to the Business / Organization.
The difference in managing the IT Portfolio for these three groupings of services is in the Management Objectives and the required KPI's (Key Performance Indicators). It is obvious that I am talking about the IT Magement Objectives here. So this is the 'IT Supply view' on the IT Portfolio.
It makes no difference whether IT Supply (the IT Service Provider) is inside or outside the organization.
In the next article I will adress the Managment attention on the added value of IT from the Business perspective. This is the IT Demand view on the IT Portfolio.