CIOs Should Keep Automation, ‘Hoteling’ on Radar

The time of year has come when the experts and pundits start telling us what to expect in 2013. Despite sound advice from many wise people that trying to predict the future is a hopeless endeavor, some prognosticators actually do a pretty good job looking down the IT road. Caesars-palace
One such expert, or group of experts, is sourcing advisory firm ISG, which recently released its prediction for the sourcing and operational agendas of America's CIOs and their business enterprises in 2013. Two of the agenda items which should be of particular interest to CIOs getting ready for the New Year are automation transforming the economics of outsourcing and “hoteling” of global networks becoming more prevalent. It is worth delving a little deeper into each trend to see just what may lie ahead for CIOs looking to perform leading-edge ITO.


Automation Transforms Outsourcing Economics
As pointed out by ISG, “Outsourcing has historically achieved cost efficiencies principally by moving jobs to low-cost labor centers.” However, ISG analysis indicates that today (and next year), a new outsourcing model is emerging that “deploys tools, platforms and software that automate tasks and functions previously performed by humans.” And these functions are becoming higher-level and more complex as artificial intelligence continues to evolve and become more of a mainstream business application.

As a result, ISG predicts that the availability of skilled offshore resources (or even domestic resources in a lower-cost area) at reduced wage rates will become less of a competitive advantage for outsourcing providers. ITO buyers and providers will start creating new business models, both deliberately and organically, to integrate and manage new automated capabilities. And especially with virtualization and cloud computing continuing to emerge as everyday business tools, the location of automated services will generally be of minimal importance.

‘Hoteling’ of Global Networks Becomes More Prevalent
The increasing mobilization of the enterprise, driven by both the “BYOD” (bring your own device) trend and a general shift of computing onto mobile platforms, will drive large organizations to adopt new approaches to manage their global data and telecom networks. Employees who are used to constant network access in their personal lives are increasingly expecting the same convenience in their professional lives, and businesses are looking for new, more affordable ways to purchase the necessary bandwidth.

ISG predicts an emerging “hotel” interconnect model that allows an enterprise to tap into a large hosting facility and then provide regional interconnects for best-in-class pricing will end the days of engaging a single global services provider. Rather than relying on one provider to deliver global services, the hotel model requires enterprises to assume greater ownership of assembling and managing the network, which will increase the importance of effective multi-vendor management practices and governance processes.

Few predictions of the future are ever 100% accurate, and next December we will likely look at this analysis and point out spots where it was incorrect. But ISG provides what appears to be a good general roadmap to how leading edge CIOs will approach outsourcing in 2013. Do you want to be on the leading edge or standing back admiring the view?