Utility Computing Will Create Significant Job Loss, Says Gartner
Egham, UK 13 December 2004 — Following ongoing debate around the threat to IT jobs from offshore outsourcing, Gartner Inc. today warned that this is only one factor that will impact the security of jobs in IT departments in Western Europe and the United States. Analysts predict that the automation of IT infrastructure services and business processes, through concepts such as IT as a utility and on-demand computing, will put even more pressure on traditional IT jobs during the next two to ten years. The impact will be felt predominantly by internal IT organisations, but external service providers (ESPs) will also see a drop in headcount as automation begins to replace customisation.
"The trend towards offshore services has monopolised attention in terms of job losses," said Gianluca Tramacere, analyst in the IT Services and Sourcing group at Gartner. "There is less awareness that increasing reliance on highly automated infrastructures will significantly reduce the need for manual procedures and direct involvement of the workforce. IT automation can mean greater flexibility and cost efficiency for businesses. However, it makes it harder for IT personnel to defend their jobs as this evolution, accelerated by the global economy and the competitive marketplace, is seen as an inevitable consequence of IT progress." Mr Tramacere stressed this will require IT staff, both in-house and those employed by ESPs, to move their skills further up the value chain.
Automation in the Delivery of IT Infrastructure Services
Enterprises are warming to the idea of accessing technology infrastructure rather than owning it. Management will be prepared to give up a large proportion of highly customised, internal IT infrastructures to achieve greater flexibility in accessing IT functionality.
"ESPs, including IBM and HP, are investing heavily in new technologies that will allow the automated delivery of IT services," said Mr Tramacere. "Examples of technologies that are emerging include 'self-healing' hardware, rapid development tools and software components, and tools that automatically manage systems and services."
"In the future, strengthened by the economies of scale, technical enhancements and adaptable pricing, organisations will be able to access IT utility infrastructure services more competitively with a reduced reliance on internal resources," continued Mr Tramacere. "Ultimately, organisations will be driven to access utility infrastructure services more frequently and to reduce the size of their internal IT operations."
Automation in the Execution of Business Processes
Over the next five to ten years, leading-edge business processes will also become far more IT intensive and rely less on people and paper. While automating existing processes will be key, using IT to transform the processes of a business to speed up decision-making, respond faster to change and make more effective use of their assets, will be even more important. Findings from Gartner's annual worldwide survey of CIOs early this year showed that 43 percent believed the biggest change in the role of their IT department would be to enable better business processes.
"Once fully available, real-time infrastructure — IT infrastructure as a utility — has the potential to become the underpinning layer of business process automation," explained Claudio Da Rold, VP and distinguished analyst at Gartner. "The final aim for highly specialist service providers will be to provide greater business flexibility by developing and offering applications and business processes on a large scale as a one to many model."
Gartner predicts that through 2015, the United States will be better positioned to use business change as a strategic weapon as compared to Western Europe because it has more fluid labour laws and culture. "Organisations based in countries with complex labour laws and strong union representation, such as France, Germany and Italy will have to work hard to maintain a competitive edge as they strive to make the transition to the new models," said Mr Da Rold.
Gartner acknowledged that the impact will be felt acutely by individuals and IT organisations alike and counselled both parties to prepare well in advance.
Individual Skills Development
Individuals should strengthen their business and IT skills and any specialised knowledge of their organisation's business models and processes. The right focus will be on IT enablement of new business processes, as driven by the competitive business strategy. Specific new areas of IT skills are needed around data, IT architectures, business process management and modelling, information flows and relationship management.
Advise to CIOs and Business Unit Executives
Gartner advised CIOs and business unit executives to develop a clear vision for evolving IT and business processes and a long-term course of action for evolving IT roles. Most CIOs typically work to a one or two-year plan, but the critical nature of a five-year sourcing strategy will become increasingly apparent as automation assumes a greater role. "The whole IT landscape will become increasingly complex as the inclusion of new delivery models impact internal skill requirements," said Mr Tramacere. "As such, CIOs must also formulate plans to deal with affected employees in the early stages of the planning process and work closely with Human Resources (HR) executives to retain critical employees and manage the HR transition policies to mitigate breakdowns in culture and morale.
Mr Tramacere concluded, "IT change is accelerating and CIOs need to be prepared to manage constant change. Employing a methodology to review past experiences and best practices, and build a strategy to manage future change, is now an essential pre-determinant of success".
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
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visit www.gartner.com.
