At Forrester Research's executive strategy briefing Tuesday, Virginia Rometty, senior vice president of IGS' Enterprise Services Division, said that as core service capabilities move offshore, IT service firms must transform their business models to offer higher value-add services that are common and consistent globally.
At the conference, top executives from GM, Procter & Gamble, Sprint Nextel and Safeway discussed the critical role of IT services in the globalization of businesses.
"Services industries are the ones that have to change the most," said Rometty. "It isn't just about advice and assistance, but about assets and helping people run [business] processes and drawing on these capabilities globally. It's about doing things in common, it's not about centralization."
She said it’s a mistake to think about globalization in terms of "bodies cheaper by the hour," and that changing business processes will require all customers--and their IT services partner--to make changes to the corporate internal workings and by building business networks through partnerships.
Service firms will offer business process innovations using Web services and open standards but also by playing a more active role replicating, implementing and managing those new business processes.
Top technology executives from GM, Procter & Gamble and Safeway agreed that services is the future of IT.
Following her presentation, Rometty told CRN that smaller services firms can participate in the globalization trend but emphasized they must be highly specialized--not diversified--in a particular business process in order to consistently deliver a common set of quality services.
To pave the way for enabling this global services model, IBM is in discussions with several academic institutions about establishing a new "services science" curriculum that integrates multiple disciplines including IT and business.
The services science, Rometty said, will focus on how to define business problems as well as methodologies for executing new processes, she said. Northwestern University, Evanston, Ill., is establishing a services science curriculum, she told CRN.
During his presentation, the CIO of General Motors agreed with Rometty that "intelligent caretaking" and the stagnancy of IT spending will end and that services more than technology itself will drive much of the business transformation.
"There is no boundary to any country, or region, anymore. You have to do all functions and have processes in place, but there are a lot of issues around reuse [of technology for business processes]" said Ralph Szygenda, group vice president and CIO of General Motors. "We went through intelligent caretaker and now we're going to the business information technology [IT] broker."
Companies will continue to outsource basic IT functions, but next-generation IT services firms will be key to "cannibalizing " existing business processes and building global supply chains, he added.
There will be opportunities for all service firms and innovative software startups in the transformation, he said.
"We rely on the virtual model of IT companies, and we have had a significant outsourcing model for years with EDS and in other areas and we buy more from outside resources than any other corporation. Now it is the technology broker who needs to transform business, " he added. "It's easy to do big outsourced projects with EDS, IGS or CapGemini, but it doesn't necessarily bring you the innovation you need."
Stephen David, retired CIO of Procter & Gamble, said the line between research and development and IT across all industries has blurred and IT services will be paramount to achieving globalization goals.
"IT is an enabler of business processes, especially horizontally," said David. "It is one of the few organizations that sees all the business processes, touches all pieces, and understands how companies work. IT has a global view of the company and adds speed and improving activity, systems and competitiveness."
Pete Bigley, vice president of Enterprise Architecture at Safeway, said all users of technology will have to become highly skilled in services--or turn to partners for help. " IT needs to become a services business," Bigley said. "You must become a great systems integrator."
But the biggest obstacle is taking risks, said GM's Szygenda.
"If you are a CIO, you've got to take risks if you really want to transform business. Building technology is fun but if it doesn't change the business, it doesn't matter," he said."But if you want to be a transformation agent, you have to take risks. Don't talk about it. There's a lot of talking about it or analyzing it. Nobody cares."