Events, dear boy

Chris Yapp picks through Carillion’s ashes and finds lessons for everyone as he asks what 2018 will hold for the IT industry.

It is almost certain that Harold Macmillan never uttered the words above about a journalist question on what might drive a government off course. Fake news in the 1950s!  However, it’s stuck.

Around two years ago I was with a group of ex-colleagues and we were talking over emerging trends we were experiencing - in both the public and private sector. In 2016, it was the first time in 20 or more years that we were talking to more organisations who wanted to bring functions back in house rather than further outsource more.

Complaining about suppliers or customers is as old as business itself: ‘This would be a great business to be in if it wasn’t for our customers’.

It’s fair to say that there was some scepticism. The background seemed to be that many organisations signed up to contracts after the financial crash that were coming to an end in 2018/19.

The collapse of Carillion has made outsourcing politically divisive territory. I agree strongly with Brian Glick’s assessment, that there is no lesson for government IT outsourcing from Carillion that we don’t already know. The fact that we don’t ever seem to learn is, of course, a separate issue. However, the organisations that my ex-colleagues and I were mulling over were in both the public and private sectors.

The complexity of some supply chains looks ripe for simplifying - more so with the pressures of Brexit looming. One organisation I know, with five major outsourcing contracts in different functions, last year discovered that three of it’s suppliers used the same subcontractor. In effect, it gave more business to one of it’s subcontractors than the smallest prime but had little or no direct contact.

So, the question I want to pose for 2018 is: Are we are about to see a rethink on the IT supply chain? I can remember the late 1980s as IT outsourcing started to take off.

I remember two pieces of market research coming across my desk. One suggested that IT outsourcing would grow two to five per cent per annum and the other suggested 20-25% per annum. Where did the difference lie?

In fact, the lower number came from research among the heads of IT and the larger from finance directors. Guess who got it right?

At the same time, the IT supply side is arguing that ‘digital transformation’ is core to surviving and thriving while also arguing for commodifying IT in the cloud. So which argument will win?

The collapse of many minicomputer companies at the end of the 1980s and the arrival of new entrants such as EDS and CSC changed the landscape of the industry for a generation.

Could it happen again?  Whether it is fair or not, I suspect that, with Carillion, and possibly other failures in the near future, that outsourcers will need to up their game.

Taking away one letter makes Carillion, a set of bells. Ignoring weak signals can lead to the fall of mighty organisations. My advice for 2018: ‘Do not send to ask for whom the bell tolls’.

Have a great 2018.

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About the author
Chris is a technology and policy futurologist. Chris has been in the IT industry since 1980. His roles have spanned Honeywell, ICL, HP, Microsoft and Capgemini. He is a Fellow of the BCS and a Fellow of the RSA.

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