The “As-a-Service” Disruption to the IT Industry

It’s been quite a long time since there’s been such a tectonic shift in service models and commercial forms within the IT Services industry. In my opinion, the last time we saw a “stand up and take note” change in how IT was delivered to enterprises occurred during the era of the dot-com exuberance. Coincidentally, that was immediately after the prior global recession, just about 10 years ago.

The shifting footing that is occurring today is being driven by the rapidly accelerating “As-a-Service” marketplace and its associated economic impact.

The greatest difference between the two eye-opening periods of innovation, however, rests with the underlying economics. The dot-com rush was almost entirely prospective, betting on economic models for value creation that were speculative at best. Yet, it changed the way IT was acquired, assembled, and delivered to the enterprise. Speed became more important, and the distributed nature of work and systems became commonplace.

The “As-a-Service” emphasis builds off that legacy, but it is less about the creation of “exchanges” among trading partners and more about modernizing the inefficient and resource-intensive business processes that epitomize common systems architectures and business functions.

The delivery models for IT and IT-enabled business functions are being transformed in radical ways. The “old world” approaches of complex development, integration and provisioning that were intensive in terms of capital (human and financial), and lacking efficiency in leverage, are being sacrificed at the altar of mobility, big data, ubiquitous networking, cybersecurity, and virtualization.

The IT industry – in terms of product and services providers – is being reformed in real-time. Those players that are betrothed to legacy business models, such as staff augmentation, commodity-oriented computing capacity, or consulting-heavy systems deployment, are facing headwinds unlike anything seen before. Their offerings aren’t nearly as relevant in the “As-a-Service” economy.

The reasons are rather straightforward. If you’re in the business of “how” rather than “what,” then your value is marginal and replaceable. “As-a-Service” is all about “what” the services and business functions entail.

Progressive CIOs are leaping for joy at the opportunity to reassert their relevance at the table of business strategy. “As-a-Service” requires that the IT leadership play a much more prominent role than ever before, but also a role that demands new skills and disciplines. And the industry partners on which those CIOs call for services will need to pass new tests of legitimacy and leadership.

The “As-a-Service” economy will shift spend profiles, technology stacks, and business relationships in ways that are not yet evident. All we know for sure is that yesterday’s approaches to acquiring, deploying and operating IT are fading fast.

Peter Allen is president of Global Sales and Marketing for CSC and is a 30-year IT services industry veteran. He believes that the As-a-Service model is the next major shift in the evolution of information technology.