The Case for Virtual Business Processes
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If IT is doing its job, its primary focus should be on automating business
process solutions. IT should constantly be looking at business processes to find
ways to improve, streamline, and virtualize the workflow. As soon as these
opportunities have been identified, the next step is to build, stabilize, and
document the new automation so that it can be turned over to an outsourcer for
ongoing maintenance. If the IT department is doing this, it is clear that cutting-
edge solutions should be developed, maintained, and supported in-house, and
routine ones should be outsourced. Although ratios might vary slightly, we believe
that this is a situation in which the 80/20 rule should apply. The internal IT
group should support roughly 20 percent of the networked infrastructure, and
approximately 80 percent should be outsourced. The internal IT department
should direct the management of 100 percent of the infrastructure.
If this is done, an interesting thing occurs: Rather than being thought of as a
cost of doing business, IT becomes a strategic asset. Its focus changes from an
operational one (support) to a strategic one (development). Not coincidentally,
IT’s cost dynamics change as well. Because outsourcing provides the day-to-day
support for most networked automation, the consumers of such a service can be
billed directly. This, once and for all, gets IT out of the business of budget
enforcement. Currently, most IT shops are servicing an unlimited demand with a
limited budget—hardly a prescription for success.
It goes without saying that such a dynamic must be carefully managed.
Because a virtual business is only as successful as its networked infrastructure
allows it to be, the network must be safeguarded and secured.
Ways to Safeguard Your Business
Infrastructure
IT must direct the management of 100 percent of the infrastructure regardless
of who is actually supporting it. This is the principle safeguard for the business
when using outsourcing. IT’s role must evolve from operations to management.
Expertise must be held in the virtualized business in the area of technology
application. How is this done in practice?
Chapter 6: Capitalizing on Outsourcing
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A business, whether virtualized or not, must control its means of production.
In the case of factories, this means managing the production line to produce the
goods that are the company’s output. In a virtualized work environment, the same
notion holds true; however, in this case, someone else is actually running many of
the virtualized production facilities.
Of course, the challenge in selecting an outsourcer is to discover what it is
good at doing and to have it do only that. Many outsourcers might try to sell the
notion that they can manage every aspect of the outsourced process. A few
outsourcers, such as IBM Global Services, Electronic Data Systems (EDS), and
Computer Sciences Corporation (CSC), can do this. A large percentage of managed
service providers, though, are unable to provide a holistic end-to-end solution. The
demise of Marc Andreessen’s Loudcloud, and its ultimate absorption by EDS,
should be viewed as the poster child of what was fundamentally wrong with the
initial foray into managed services. The concept of “all things to all companies”
rarely flies.
Service providers that are stable, even during times of economic turmoil, have
optimized their expertise within a particular vertical market or technology. It is
through this extreme specialization that they can add significant value to their
customers’ outsourced processes. For example, a specialized outsourcer can
anticipate its customers’ needs or process change requirements before the
customer is aware of the requirement, because the outsourcer has deeper and
wider visibility into the overall market segment. What is needed is an outsourcer
that is tightly coupled to IT management.
In such a situation, IT provides the day-to-day oversight of the outsourcer to
ascertain that the outsourcer is doing its job. This includes being able to look over
the outsourcer’s shoulder using automated management technology. This does not
mean that IT must build a parallel operational oversight capability. It just means
that IT should have real-time access to the appropriate information and should
have someone whose job it is to monitor the quality of the outsourcer’s support
services.
IT should be in the thinking and development role. This means that as new
automation is developed and deployed, there needs to be a close coupling with
outsourcers. Just as strategic initiatives need to be informed by operational
realities, IT needs the operational perspective of the outsourcer. All deployment

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