On-Demand Service Providers

Michael Cot points to a free IDC report: ” Disruption from Below: The Emergence of mazon, eBay, Google, and Yahoo! as On-Demand Service Providers.”

Am excerpt from the report:

Our view [is] that there lies the potential for some current and future unknown players to either displace or beat to the punch the traditional set of IT services companies currently pursuing a model of delivery referred to as utility computing (which appears likely to become the underpinning of the future means of provisioning IT services). The combination of these newer entrants and the disruptive nature of utility computing could radically alter the landscape of players traditionally branded as “the” IT services companies.

“The combination of newer players and the disruptive nature of utility computing could radically alter not only the landscape of current players known for provisioning IT and even communications services, but also the ecosystem of players and the fundamental process of provisioning such services,” said David Tapper, IDC research director, IT Outsourcing, Utility, and Offshore Services. “Success will depend on how well players transform their businesses in such areas as accessing new sets of customers likely to buy these services, ensuring that ecosystem partnerships support ‘cannibalization’ of older services (and technologies), and aligning brands with the appropriate value chain position.”

As the IT industry comes to grips with the notion that its capacity (processing power, storage, software, network bandwidth) may increasingly be delivered in the form of on-demand, outsourced utility services, the questions grow about which players are positioned to become the leading suppliers in this transformed landscape. Several large traditional outsourcing firms, including IBM Global Services, EDS, and CSC, have made major investments in building integrated platforms from which to deliver utilized IT. While these firms would appear to be well positioned to become the dominant figures in an on-demand world, however, IDC notes that other players namely online firms such as Amazon, eBay, Google, and Yahoo! are already delivering on-demand services on a global scale and have the potential to disrupt the traditional power players in the IT technology and services markets. These online firms are often lumped together with the dot-com failures of the past and viewed as interesting, if insignificant “Internet retailers.” In reality, they have built their own platforms with which they can leverage the scalability and direct sales aspects of the Web, and they are not waiting for permission to move up into becoming business process outsourcers, in many respects. These firms’ growing success at delivering on-demand services speaks to the opportunity for other types of companies business process outsourcing (BPO) firms like ADP; telcos like AT&T; large, consumer-driven, yet industry-savvy conglomerates like GE; and IT sales and marketing champions like Dell and Microsoft to become significant players in the forthcoming on-demand universe.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.