Ditching your in-house IT

One of Gartner's top predictions for 2010 was that 20 per cent of companies would have no IT assets by 2012. With that time now fast approaching, is it really possible for companies to ditch their in-house IT?

(Empty office building image by Tomi Knuutila, CC BY 2.0)

Stephen Hains, director, global technology services at IBM, believes it is quite possible that 80 per cent or more of Australian businesses will have no internal IT within a fairly short period.

His reasoning is that there are around 820,000 companies in Australia with employees, and 89 per cent of those have fewer than 20 staff. Using existing cloud services for productivity applications, customer-relationship management (CRM), enterprise-resource planning (ERP), etc, would already enable a six- to 10-person company to go all cloud.

For the top end of the market — the 1200 companies with more than 500 employees — Hains says IBM's research shows that only 17 per cent intend to keep all of their IT in-house, and 65 per cent say they will "partner excessively".

Getting rid of internal IT completely "is absolutely doable today", according to Brad Freeman, VP global business solutions at CSC, at least as far as generic functions, such as email and collaboration, are concerned. If it isn't already possible in every case for financials and HR software, it soon will be.

Freeman is more sceptical on mission-critical applications; if an organisation gains a competitive advantage from a particular aspect of IT, then it should be kept in house. If it really is a commodity service, it should be outsourced, he believes.

However, that line is not always clear. Steve Tull, general manager, marketing and effectiveness at ASG, suggests that business intelligence is one example of a function that can be put in the hands of an outsourcer, and still deliver a competitive advantage.

Another test is how long the organisation can cope with an outage of a particular service. In many cases, it's no big deal if email is down for a day, but if the CRM system isn't available, business may grind to a halt. And if extremely high availability is required (eg, core-banking systems), Freeman says they need to be run in house, with the necessary facilities and processes to get them working very quickly if there is an outage.

Tull says his clients tend to perform some functions internally, and hand others over to an external provider, but notes that it can lead to integration problems, and it can be difficult to manage end-to-end service levels.

All told, the in-house/external decision "tends to be a bit of a yo-yo", and it isn't yet clear where the equilibrium point will be, Freeman says.

Things that tip this equilibrium point towards assets being held externally include not only outsourcing, but also bring-your-own-device (BYO) models, alongside other trends.