Services 2.0 - A New World for Systems Integrators
Here's why this "2.0" will forever change the software services ecosystem as it delivers Web 2.0 and SaaS 2.0 solutions to the enterprise.
By Chris Barbin, Appirio
Apr. 05, 2007
Just when you thought it was safe to open your browser, another "2.0" trend hits the software industry. But before you click away, be aware that this "2.0" may be one that will impact your business in a direct and significant way.
I'm talking about "Services 2.0" and it is dramatically altering the system integrator (SI) landscape. This new breed of specialized firms fully embrace SaaS with complementary business and technology consulting, productized intellectual property, and support services via flexible social networks will be disruptive to traditional Global Systems Integrators (GSI)- such as Accenture, IBM, Cap Gemini, and Infosys - who are just as addicted as the ISVs themselves to revenue streams based on the on-premise install base.
This is not buzzword marketing. Software vendors must recognize that the advent of Services 2.0 is changing the entire value chain of their solutions.
By aligning with Services 2.0 companies to further disrupt the GSI model and redraw the lines of the software services ecosystem, software vendors will be able to improve the value, timeliness and cost-effectiveness of their customer solutions.
The Evolution from Services 1.0 to Services 2.0
Large-scale technology services firms - "Services 1.0" - grew to dominate enterprise IT in the late 1980s. Big enterprise resource planning (ERP) project implementation fees fueled the growth of firms like Andersen Consulting, KPMG, Price Waterhouse, Coopers & Lybrand, IBM and Deloitte. These firms enjoyed huge growth and profits throughout the 1990s as on-premise solutions from independent software vendors (ISVs) such as SAP, Oracle, Baan, J. D. Edwards, Siebel and Peoplesoft grew ever more complex.
GSIs created large data centers and server farms, and deployed small armies of consultants to customize, integrate, implement, and maintain the hardware and software. Over time, these efforts yielded diminishing returns for customers and little differentiation from competitors.
Services 1.0 received a reprieve from customer frustration with large cumbersome engagements when the benefits of outsourcing became clear in the early 2000s. As the world flattened, enterprises realized labor cost savings up to 50 percent, by sending significant IT services offshore, fueling the growth of India-based global players like TCS, Infosys, Wipro and Satyam.
In order for these firms to grow and compete with existing GSIs, they extended their portfolios to capitalize on the $200 billion market for project development, application support, and education services. The traditional GSIs countered by accelerating their outsourcing divisions.
By 2006, the offerings of traditional GSIs and India-based GSIs were essentially similar - based on large revenue streams from long term engagements involving outsourced IT services and project development work for on-premise enterprise software and its associated hardware.
I'm talking about "Services 2.0" and it is dramatically altering the system integrator (SI) landscape. This new breed of specialized firms fully embrace SaaS with complementary business and technology consulting, productized intellectual property, and support services via flexible social networks will be disruptive to traditional Global Systems Integrators (GSI)- such as Accenture, IBM, Cap Gemini, and Infosys - who are just as addicted as the ISVs themselves to revenue streams based on the on-premise install base.
This is not buzzword marketing. Software vendors must recognize that the advent of Services 2.0 is changing the entire value chain of their solutions.
By aligning with Services 2.0 companies to further disrupt the GSI model and redraw the lines of the software services ecosystem, software vendors will be able to improve the value, timeliness and cost-effectiveness of their customer solutions.
The Evolution from Services 1.0 to Services 2.0
Large-scale technology services firms - "Services 1.0" - grew to dominate enterprise IT in the late 1980s. Big enterprise resource planning (ERP) project implementation fees fueled the growth of firms like Andersen Consulting, KPMG, Price Waterhouse, Coopers & Lybrand, IBM and Deloitte. These firms enjoyed huge growth and profits throughout the 1990s as on-premise solutions from independent software vendors (ISVs) such as SAP, Oracle, Baan, J. D. Edwards, Siebel and Peoplesoft grew ever more complex.
GSIs created large data centers and server farms, and deployed small armies of consultants to customize, integrate, implement, and maintain the hardware and software. Over time, these efforts yielded diminishing returns for customers and little differentiation from competitors.
Services 1.0 received a reprieve from customer frustration with large cumbersome engagements when the benefits of outsourcing became clear in the early 2000s. As the world flattened, enterprises realized labor cost savings up to 50 percent, by sending significant IT services offshore, fueling the growth of India-based global players like TCS, Infosys, Wipro and Satyam.
In order for these firms to grow and compete with existing GSIs, they extended their portfolios to capitalize on the $200 billion market for project development, application support, and education services. The traditional GSIs countered by accelerating their outsourcing divisions.
By 2006, the offerings of traditional GSIs and India-based GSIs were essentially similar - based on large revenue streams from long term engagements involving outsourced IT services and project development work for on-premise enterprise software and its associated hardware.
