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Smaller is better. thats the lesson we should draw from the EDS-Navy outsourcing contract, which EDS chief executive Michael Jordan last month freely admitted had gone bad. As eWEEK has chronicled since its inception, the monster EDS-Navy deal has been plagued by trouble. Now the Securities and Exchange Commission is looking into the $6.7 billion deal in an effort to understand EDS accounting practices.
Why would it be a surprise that an agreement of that size would not live up to expectations? When General Motors acquired EDS two decades ago, the idea was to gain efficiency by working more intimately with a single large outsourcing provider that handled a vast array of IT needs. It didnt work. What GM got instead was a deadly diet of unwieldiness and exclusivity.
Having disgorged itself of EDS in 1996, the automotive giant has been heading in the exact opposite direction. As reported in eWEEK last year, GM corporate CIO Ralph Szygenda now seeks to break up outsourcing contracts in as many pieces as possible to create a competitive market among outsourcing providers.
Now comes further corroboration for this approach. In her report “Predictions for Outsourcing in 2004,” Gartner analyst Linda Cohen said the trend for outsourcing deals is toward smaller agreements with specific business objectives: “Providers have to move to a more focused set of delivery capabilities in a more focused set of industries.”
For IT executives, it means dealing with a number of specialized providers. “Its the multisourced environment,” Cohen said. “The key is in how you manage it. The reality is that were not going back to internally supplying IT functions.”
Although the outsourcing trend may seem to mean less work for IT execs, the opposite is true. Working with multiple providers requires a deep knowledge of your companys business mission, as well as negotiation and management skills in dealing with outsourcers. “Outsourcing is hard work,” Cohen said.
Out and About
Out and About
Ever think of what business without e-mail would look like? CC West, a printing company in Austin, Texas, that serves Dell, Motorola and AMD, doesnt want to think about what might happen because most of its business is done through e-mail. So the printer inked a deal for e-mail business continuity service from MessageOne (whose founder and chairman is Adam Dell, brother of Michael).
“We had one e-mail outage less than a year ago in a big rainstorm,” said James Diorio, vice president of operations at CC West. “A local switch went underwater. The [MessageOne] backup kicked in for over 24 hours.”
SunGard Availability Services is now teaming with MessageOne to make the e-mail backup service available to its customers nationwide. The basic service will be free for SunGard customers. Since many e-mail users use Microsoft Exchange and Outlook or IBM Lotus Notes, MessageOne thought it wise to avoid the pitfalls of monoculture by building its backup system on the Horde e-mail server and the PostgreSQL database on Linux.
Offshore applications outsourcer Sierra Atlantic is touting its Nshore methodology, which a spokesman described as a set of best practices, tools and processes that are geared to find the right blend of onshore, near-shore and offshore software services for enterprise life-cycle management. The $25 million Fremont, Calif., company specializes in Oracle, PeopleSoft, SAP and Siebel applications for manufacturing companies. Sierra Atlantic has 550 employees, 450 of whom are in Hyderabad, India.
Reality Check
Reality Check
In covering for eWEEK.com a recent New York luncheon sponsored by IBM, I quoted Cathy Pelaez, chief operating officer of Liberty Travel, as saying, “In the last 18 to 24 months, it has been much harder to find talent. … Technology skills are hard to find in the U.S. and are very expensive.” As you might expect, I received a spate of e-mail from skilled professionals who cant find work.
Then a missive landed in my in-box from IEEE-USA, noting that the unemployment rate for U.S. electrical engineers and computer scientists reached an all-time high last year, at 6.2 percent.
Stan Gibsons e-mail address is stan_gibson@ziffdavis.com.
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