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An IT outsourcing storm is brewing. Are you ready?

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Bernard Golden CEO, Navica

Enterprise IT organizations are well aware that they're being challenged by their business counterparts to build new digital offerings, deliver and update them more quickly, and, generally speaking, reform their reputation as the “department of no.” But even as IT professionals vigorously debate the best technical and organizational tactics to reach those goals, many seem blissfully unaware of the fact that they may have already lost the battle.

The confidence that senior business executives once had in IT has faded, and many are ready to turn toward outsourcing in a big way. The current, steady stream of outsourcing contracts is about to become a wave, and IT organizations—and the individuals within them—are going to need to adapt to this disruption. 

Inside the walls of IT, opinions about how to accomplish this change vary. Some advocate an enterprise DevOps approach, asserting that IT should streamline its internal processes to achieve sufficient speed and agility on its own. Others aren't so sure about the prospects for IT self-improvement. Gartner, for example, has called for the creation of a bimodal IT, a bifurcated organizational arrangement made up of two types of groups. Type 1 is the existing IT organization, left undisturbed and directed toward maintaining legacy systems and processes. Type 2 is a separate organization focused on building agile systems while leveraging DevOps processes and new application architectures.

Both approaches have adherents and detractors, and both promise benefits. But both assume too much willingness on the part of the business to financially support legacy IT groups during this transition. Senior business executives are looking to cut existing IT costs as a way to fund innovation. They have concluded that the promised payoff will take too long to materialize, and they're hoping that external parties can help the business accelerate the long-awaited IT transformation.

IT executives need to realize that there's a lot more outsourcing on the horizon than they have expected up until now. Major job disruptions are on the way. So what can you, as an IT professional or manager, do about it? Here are three recommendations.

1. Shift away from legacy application spending

Both budget and jobs will be moving to external parties. Either the applications as they stand will be outsourced to other, less expensive parties, or SaaS applications will replace internal systems. 

But even though a third party will be running the application, someone within your IT organization will still need to define the requirements, evaluate and negotiate with potential suppliers, monitor service delivery, and negotiate contract changes. Technical capability is a critical element in each of those tasks, so these are areas where you need to expand your skills and knowledge. This is an obvious opportunity to perform an architect or project management role.

Also, the move to the digital enterprise requires that new applications communicate with existing ones and that means knowing how to wrap legacy applications with a service layer and an API. IT organizations will need people who can work in a service architecture and enablement role. This kind of service exposure functionality will be a high-growth area over the next few years.

2. Build skills relevant for the digital enterprise

Do these new roles seem insufficiently challenging technically? Do you want to stay hands-on? As companies thirst to become digital enterprises, they’ll focus on building next-generation applications. That will require next-generation skills, providing opportunities for IT teams.

You need to identify the technologies that will be important for your company’s new systems going forward and develop skills in those areas. Hot areas include machine learning, mobile applications, microservices, and NoSQL databases. IT professionals should choose an area where new applications will be required that interests them, learn about it, and then lobby to join the group building those applications.

This kind of self-development would have been incredibly difficult five or ten years ago. Trying to get approval for a training course not directly germane to current job duties was nearly impossible, even without the frequent training-freeze dictates due to IT budget cutbacks.

Fortunately, you'll find a plethora of free, high-quality training resources online. Udacity has even created a new Nanodegree in emerging technologies that employers have agreed can serve as proof of skills sufficient for employment. In summary, there are plenty of resources IT teams can use to build skills relevant for the digital enterprise.

3. Build relationships with the new power brokers

Unfortunately, many companies assume that their IT organizations are not up to the task of helping them become digital enterprises. They’ll decide to engage with external organizations such as digital consultancies, mobile shops, and new-wave system integrators to build those Type 2 applications Gartner describes.

What should you do, then, with your newly buffed-up digital skills? You need to help the power brokers in your company who made the outsourcing decisions. While they may have the clout to direct application development to an external party, they don’t have the technical knowledge to know how to manage it.

The emerging approach to creating digital offerings is to pair a business person, such as a product manager, with a technical architect to ensure that the resulting product will meet market requirements. This is an opportunity for IT to serve in an important role—one where you're part of a business team that carries a revenue target, rather than as part of the IT organization cost center. If you can fulfill a role that helps your organization achieve its revenues goals, you'll always have a job.

Another opportunity lies in the way the company will support an outsourced digital application once it’s delivered. Most external agencies don't provide operational support or long-term application maintenance because their business model focuses on time-bounded project work.

Businesses usually underestimate the support requirements for an application—especially digital ones. The fact that these revenue-generating applications are typically external-facing means performance and availability are critical. Developing a plan to address support and maintenance is a way to create your own job.

The time to adapt is now

Too many IT organizations as a whole, and the IT professionals within them, assume that their future will be one of gradual, incremental change. But this flies in the face of the accelerating shift toward the digital enterprise. Heightened customer expectations mean that no company can move slowly on the digital journey. 

Your organization is likely to migrate old and new applications to external parties in an effort to reduce legacy spend and accelerate digital initiatives. Your opportunity lies in seeing that shift and enabling it. So don't wait until the wave overtakes your organization. Start preparing now.

 Are you seeing a move to IT outsourcing in your own organization? If so, how are you adapting? 

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