Sunday, February 08, 2009
Enterprise Architecture: What does the Wall Street Meltdown have to do with Indian Outsourcing
In an economic downturn, IT's value to the business can only improve, NOT...
In a market where demand outstrips supply and there are no cost penalties when buying inefficient products, even the most incompetent of management teams could tread water and take in the money. But the moment there are real cost penalties, consumers react by seeking more efficient products. When applying this analogy to IT, the business will either skip Indian outsourcing or create a shadow IT organization that is more efficient.
Regardless of whether we talk about business or IT, this is the free market in operation. It also has the effect of revealing which management teams are asleep and which have some resilience to respond to the economic conditions. Everyone is to blame.
Whether you are a bank, an auto manufacturer or just attempting to deliver IT to the business, executives will accelerate giving the gullible more of what they seem to want and there is no management will to challenge the market's perception. Indeed, to do the right thing such as unwinding credit overload, improving fleet fuel consumption for autos or simply not allowing Indian outsourcing firms to use process as a substitue for competence will require incurring more costs in the short term. This would reduce the dividends to shareholders during the development phase. This would displease everyone. Products would retail at higher prices to recover development costs, profits would stall and the amount of tax payable to the state would drop as the companies write off their development costs. At a time when the government was cutting taxes, this loss of revenue would have been sorely missed. It was, if you care to think of it in this way, a conspiracy of ineptitude and mediocrity in every and all senses of both words...
| | View blog reactionsIn a market where demand outstrips supply and there are no cost penalties when buying inefficient products, even the most incompetent of management teams could tread water and take in the money. But the moment there are real cost penalties, consumers react by seeking more efficient products. When applying this analogy to IT, the business will either skip Indian outsourcing or create a shadow IT organization that is more efficient.
Regardless of whether we talk about business or IT, this is the free market in operation. It also has the effect of revealing which management teams are asleep and which have some resilience to respond to the economic conditions. Everyone is to blame.
Whether you are a bank, an auto manufacturer or just attempting to deliver IT to the business, executives will accelerate giving the gullible more of what they seem to want and there is no management will to challenge the market's perception. Indeed, to do the right thing such as unwinding credit overload, improving fleet fuel consumption for autos or simply not allowing Indian outsourcing firms to use process as a substitue for competence will require incurring more costs in the short term. This would reduce the dividends to shareholders during the development phase. This would displease everyone. Products would retail at higher prices to recover development costs, profits would stall and the amount of tax payable to the state would drop as the companies write off their development costs. At a time when the government was cutting taxes, this loss of revenue would have been sorely missed. It was, if you care to think of it in this way, a conspiracy of ineptitude and mediocrity in every and all senses of both words...
