IBM Leverages Experience To 'Simplify' Outsourcing

Building on 25-plus years of experience working with more than 1,000 clients, IBM is officially unveiling a "pre-engineered technology services model" that it says can cut deployment time by more than 60 percent and slash costs by up to 50 percent. Big Blue's new services capabilities are based on a set of server, storage, networking and help desk services "assets" that integrate process, software, industry expertise and IBM research to create reusable building blocks. The company says that by baking its expertise, software capabilities, experience and best practices into its services offerings in a standardized, systematic way, it can speed up the time it takes to build the basics.

IBM says that most IT organizations have been dealing with massive growth and less-than-ideal results during the last few years. The challenge was to come up with how to dramatically increase its outsourcing business in a way that would enable future growth for their clients--sort of a gift that keeps on giving.

IBM says it tends to involve 80 percent standard solutions and 20 percent customization. The company started putting the concept together about two years ago, and a year later used itself as a test bed, deploying its entire storage infrastructure using the standardized asset-based approach, which is expected to lower its storage costs by nearly 50 percent.

According to the InformationWeek Analytics 2010 Business of Outsourcing Survey, nearly six of 10 IT shops outsource some critical function--management, engineering or development. Almost one-fourth keep executive and management functions in-house but look to outsource everything else. However, 29 percent of the 530 business technology professionals surveyed have fired a vendor within the last 12 months.

Last year HP launched its Cloud Start service, which includes everything for a cloud deployment, such as application and virtual machine sizing tools, deployment scripts, processes and workflows to new, on-board applications and training for HP's Cloud Service Automation software. The offering was based on taking a standardized approach to the company's consulting and build-out services, and offering a quicker turnaround.Bill Martorelli, principal analyst, sourcing and vendor management, Forrester Research, thinks that IBM's new offering, as well as cloud service initiatives like HP's, are in line with the trends he's following in the outsourcing market: "I think it is broadly consistent with the trend in this market that is focusing on services that are more packaged, more bound up as building blocks as opposed to custom one-offs." This market has tended to be characterized by a lot of customization, he says, and this is an attempt to bring in more standardized, pre-engineered solutions.

There is growing commoditization in the outsourcing market, as well as an increase in the number of companies competing with IBM, says Martorelli. It's been a very competitive market that finally looks like it's growing again. He expects that the move to cloud services will become more prevalent and that IBM's latest announcement is a step in that direction.

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