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Article by Mohan Babu

Back to basics - The new IT mantra

Moving up the value chain is no longer just a mantra but a reality, and only those who can provide total services to their international clients will survive, writes Mohan Babu

2002 is already here. After weathering the big storm of 2001 most of us are looking at the year ahead with a sense of déjà vu. Most professionals are looking at the (stock) markets to give an indication that the worst is behind us. One or two quarters of fairly OK results and managers will heave a sigh of relief. In my previous article, I attempted to hazard a guess on the direction of IT. One thing is certain, shorn of the hype this is going to be a year of B2B-Back to basics.

The hype that IT systems and people, along with new technologies can provide a magical cure to business ailments is dead. By the same token, the hope that IT systems will help businesses return back to normal is still alive. There is little doubt that there is a pent-up demand for IT systems and services from businesses in a reactionary mode. This is especially true of businesses in the US that are generally proactive when it comes to cutting costs.

I would be preaching to the converted if I were to tell IT professionals that the “golden age” of IT when the mere mention of Java, C++ or DB2 on one’s resume could get one hired. It should be apparent to most professionals that IT houses are looking for core knowledge and assistance with total solutions than merely for skill-sets. The IT companies in turn are reacting to a changing marketplace where they are expected to provide a solution to business problems, not merely cater to the demand for their professional services.

Case in point: Take Compuware, a large S&P 500 software company with over $2 billion in revenues that I work with. Until recently, the company was an amalgamation of two businesses—software services and software products. The services side of business employed thousands of consultants with varied skill-sets, hired in the open market to be placed as “consultants” at client IT shops hungry for talent. The product side of business focused on selling core software products ranging from popular mainframe, mid-range and business software for development, testing, web-enablement, performance tuning, etc. During the boom years of the nineties, products and services were practically selling themselves. The slowdown has hit most companies hard and even Compuware has not been immune to the vagaries of the economy. However, this company’s reaction to the slowdown has been interesting. Unlike its corporate compatriots, the company has dug in instead of laying off people like most other American companies, Compuware is focusing on an innovative strategy of merging its service and products, offering a unified suite to its customers. The premise behind this approach is simple: IT users want solutions for their business problems, and do not care about just the fizz factor.

Many big Indian IT giants are following this approach too — bundling (the few) products they have with the services. However Indian companies either fall short when it comes to moving up the value chain or while providing a “total solution.” The big picture, i.e. the business problem they are trying to solve in terms of providing IT solutions to companies whose core competence is not IT, eludes most of the software houses. At the end of the day, IT systems are just tools-of-enablement to be used by the ‘users’ of businesses to further their core goal viz. making money and generating revenue.

A down economy in the US, could lead to some interesting options to Indian software giants looking to expand their products and services offerings. Cash rich Indian giants that are listed in NASDAQ could leverage their finances to acquire a few niche market products and services companies in the US that are undervalued and are looking to bail-out. What they (Indian companies) would be buying is not just a product, but a market and brand along with the product. This will help immensely when the market starts looking up and companies in the US open up the pent-up requirements for IT products and services.

The decade ahead is not going to be like the decade past. Companies around the world are going to question the use of IT and use only systems that are proven to add real value. The global playing field for IT services and systems is undergoing a sea change. Mid-tier Indian companies, which were content to skim profits by “people placement” or selling “cheap offshore development”, are going to find the market really competitive. Cost is not the only concern for IT users, value-addition is equally important. Moving up the value-chain will no longer be just a mantra but a reality, and only those who can provide total, tangible services to their international customers will survive. As I said earlier, back to basics.





About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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