New IBM SaaS/Notes Effort a Signpost on the Road to Outsourcing

Dennis Byron

As of 9:00 a.m. October 6, 2008, is running a story about a new IBM concept called "Blue House." can't find anything about the subject on, so I assume IBM will release information later. But the Forbes description of what IBM says ties into my recent blog post on how various large IT providers differ in terms of the value proposition they offer.

Despite the fact that Cisco, EMC, Google, HP, Intel, IBM, Microsoft, Oracle, SAP and so forth all get lumped together in the trade press (and investment analyses), most of these companies self-sort themselves into separate buckets (see illustration):

  • Technology providers
  • IT product/service (including SaaS) providers
  • IT-based business/consumer services providers



Very simplistically, technology providers offer low-cost IT commodities on which you should expect little service. IT product/service providers are increasingly delivering everything they do online, including software-as-a-service (SaaS). And an IT-enabled business service provider is investment-analyst speak for outsourcing.


So, you ask, if IBM is an "IT-enabled business service provider," how come it is thinking about offering a SaaS version of Lotus Notes? The answer is that using SaaS is an effective marketing tactic on the road to outsourcing. I expect many such cross-group moves (tech provider to IT product/service provider to IT business service provider and back), especially from companies such as IBM and HP, which have the ability to deliver in all three categories. Another option I suggested in the recent post was something like IBM coming "back down" into the product/service provider space by acquiring a Lawson or similar company. If an IBM or other company in the business-service provider camp makes such a move, it would be more than likely done to support its "business service provider" strategy rather than to re-enter the product/service provider category.


Just to be clear, I am not pro or con outsourcing. Your C-level management cannot ignore it as a business strategy. Your response as an IT group member or manager should be to think of your department as a separate company and make the argument to C-level management-- where applicable -- that doing some things in-house actually provides the enterprise better return on investment and lower total cost of ownership than going outside.


And you have another option: Go to work for an outsourcer. You won't have to move to India.

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