The first IT outsourcing models-single-sourced, vertical deals-promised to bring to bear industry expertise in service delivery and processes. But these all-inclusive relationships often ended up stifling competition, limiting flexibility and even increasing costs.
As the corporate IT environment grew more complex, IT leaders sought help from multiple vendors to meet their needs for technical skills, geographical coverage, and competitive rates. But this "maze of outside vendors" has proven difficult to manage, says Arjun Sethi, vice president and partner in charge of A.T. Kearney's strategic IT practice. CIOs in multi-sourced IT organizations continue to struggle; there's no single view of processes, no automated exchange of information between vendors, no consistent SLA management-all of which lead to escalating management costs.
But that's all about to change, according to Sethi, who says the tipping point will be the adoption of independent cloud-based IT service management tools. These systems will not only streamline vendor relationships and service management, he says, but also enable CIOs to reassert control over IT by taking the process piece back in-house.
CIO.com talked to Sethi about his predictions for the future or corporate IT power and the IT outsourcing model he envisions for the future.
CIO.com: IT outsourcing has always been fraught with management challenges for corporate IT. What are the biggest changes you've observed in this area in recent years?
Arjun Sethi: We have observed several key changes in the last five years that have fundamentally changed the structure of the IT outsourcing market: