by Richard Sykes The marketplace for IT services has changed in ways that are only beginning to be recognized by both the buyers and the suppliers of those services. In the past, this market has grown under the outsourcing model. From IT outsourcing to business process outsourcing, clients and vendors alike have taken a facilities management approach in which the technical professionalism of vendors was sold as “part of the deal”: assets and people were transferred to be managed by the supplier, who delivered back the services required.

Today, those services are only a small part of a wider market for what may usefully be labeled as technology-enabled business services (TEBS). This wider market draws upon a broader range of skills and competencies to offer specialized services that range well outside the capabilities of the traditional IT industry.

This new market is more about sourcing than outsourcing. Instead of transferring jobs and machines to vendors, companies will look for service integrators who have a deep understanding of their business and can work with them to sharpen and maintain their competitive edge through carefully focused sourcing of services.

A wider marketplace of technology-enabled services

In the last 20 years, there has been a steady evolution of the IT industry from a purveyor of kit and software to a purveyor of (technology-enabled) services. Two decades back, the spread of skills and experience required by the IT revolution — such as the ability to run and maintain the data center, and to create, systems integrate, and maintain code — was relatively tightly bounded within the developing IT profession itself.

Two decades on, the demands for greater specialization within the boundaries of the technical profession itself have massively increased. The worlds of the IT professional and the telecom engineer have converged into the far more complex universe of the information and communications technology (ICT) profession. Today, applied ICT has penetrated deeply into many of the other professions that deliver the dynamics of the modern economy — from accountancy to architecture, from engineering to education, from logistics to law — creating demand for application professionalism.

As shown in Figure 1, there is now a very wide spectrum of skills and experience to consider, a spectrum that ranges from technical professionalism at one end to application professionalism at the other. The technical professionalism relevant to the operation of high-performance servers sits at one end of the spectrum; the application professionalism relevant to architecting the interior of the latest fashion retail store sits at the other end.

The bottom left quadrant of Figure 1 will be populated by businesses whose core competitive differentiators are in the delivery of commodity technology services: broadband telecoms, commoditized Web services, and indeed the Web, the Internet itself. In contrast, the upper right quadrant will be populated by specialist businesses whose core competitive differentiators lie in their professional expertise outside of ICT, in legal patenting and research services, for example.

A maturing ICT industry in a horizontally layered market

This increasingly wide spectrum of skills is the result of increasing competition. Competition in maturing industries eventually forces companies to focus more clearly on their core competencies and their genuine competitive differentiators. Such maturing in older technological industries (such as the auto industry) led to a horizontal layering as specialization allowed the focus necessary to reward investment in competitive markets.

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