An IT Industry Transformed

Michael Vizard

With Dell's move to acquire Perot System for $3.9 billion, the IT industry as a whole has arrived at a seminal moment.

What's been slowly happening over the past several years is that the companies that make IT equipment have been pushing into the business process consulting space. The most obvious example has been IBM, which not only bought the IT consulting arm of Accenture, but has been aggressively convincing customers to outsource entire business processes, including the people that run them, to IBM.

None of this was entirely lost on Hewlett-Packard, which first belatedly jumped into the business process outsourcing space and then moved to shore up its entire services capability by acquiring Electronic Data Systems (EDS).

Now comes product manufacturing specialist Dell with an acquisition of Perot, which is recent years has developed business process expertise in the healthcare and government sectors. Nor do you have to look too far before you find very active business consulting units with Cisco, Oracle or any of the other large IT companies.

What's really happening here is that technology vendors have collectively become tired of waiting for customers to figure out how to become more efficient using IT. Instead, they are investing massive amounts of money in services organizations whose primary mission is to drive IT-enabled change that in turn will drive more product sales.

Of course, these services firms promise not to just be shills for the products of their parent companies. But all things being equal between any given set of products, there are tons of incentives in place for the consulting unit to make sure they push the parent company's products.

In many ways, this all amounts to a very expensive way to bridge the divide between IT and the business. All too often, the internal IT department does not command enough respect of the business leaders it serves. So its recommendations tend to fall on deaf ears. But if those same recommendations come from a consultant that can boast of a low golf handicap while wearing a very expensive suit, then they must be the greatest business ideas of all time.

This is not to say that internal IT departments don't need a little help when talking to the business. But relying on business consultants might be just the single most expensive way of accomplishing that.

The good news overall, however, is that as cloud computing evolves and IT services become more automated, the cost of delivering these services should drop. And given Dell's historic reputation when it comes to pricing, chances are good that Dell is going to try to continue to lead the way forward when it comes to the "commodization" of both technical and business consulting services.

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Add Comment      Leave a comment on this blog post
Sep 24, 2009 9:29 AM outsourcing services outsourcing services  says:

Nice article! I think Dell now wants to plunge in software business sector to give competition to many software firms and I think it will do it.


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