Just two years ago,
Internet outsourcing – having providers handle some or all of a company’s
technology infrastructure, applications, and business services over the
Internet – was booming. As the latest
wave of the dot-com era, Internet outsourcing launched one of the biggest
“alphabet soups” of acronyms ever seen – MSP, ASP, FSP, CSP, VSP, and BSP, to
name a few. Spending and revenue
projections were equally large. One
example: Estimates just for spending on
application outsourcing over the Internet by year-end 2003 ran as high as $22.7
billion.
Along with so many of the
dot-coms themselves, these kinds of estimates are a thing of the past, and
Internet outsourcing has come back to earth along with the stock market. But, does that mean that Internet outsourcing
will be gone someday as well? It’s not
likely.
Today, almost every large
company is using the Internet to conduct business and many are using it to
source at least some of their technology and business needs. Added to that is the fact that the
outsourcing service providers themselves are using the Internet in some way to
help deliver services to their customers. So, Internet outsourcing isn’t going away. But it is growing up and beginning to take on the maturity needed to become a viable business tool.
Attendees at The 2002
Outsourcing World Summit agreed with that. When asked if their company was outsourcing software and business
services over the Net, almost two-thirds said either that they were doing it today
or were considering it. Amazingly, only
12 percent said that their company had considered and rejected the idea.
As with all outsourcing,
the real issue – it turns out – is finding the right supplier. Mary Cecelia Lacity, associate professor of
MIS at the University of Missouri - St. Louis and coauthor of Netsourcing: Renting Business Applications and Services
Over a Network (Prentice Hall, 2002), says, “The primary worries that
customers have are about the suppliers – their longevity and existence and
their service and business stability.”
Lacity’s research finds that successful Internet outsourcing requires
three things: selection of the right
activities to outsource, identification of the right supplier to provide the
services, and the right governance approach for the relationship.
The bottom line, focus on
doing it right, especially teaming with the right provider. But, says Lacity, “the value of Netsourcing
to the customer is too compelling not to be adopted.”
Reference: Copyright © 2002 Time Inc. All rights reserved.
Published: August
30, 2002