Technology Change

The technology environment has undergone a complete change in the past few years. Instead of a fairly stable, benign mainframe environment, IT now has to deal with a user-centered workstation environment supported primarily by server-based storage and processing. New development methodologies, integrated package suites, and exploding technologies create a situation in which IT units must interface with as many as 50 to 100 suppliers (not the previous 5 to 10 major ones) to meet their needs. And the IT industry is complex, uncertain, and ever changing. The key technological issues are:

• Distributed Computing Environment. Current users are well trained and more demanding as they install PCs and portables throughout the organization, often with nonstandard software. Power users abound and frequently are more knowledgeable about PCs than core IT personnel are. They are frequently the application innovators in an organization but often fail to understand what is necessary to provide secure, industrial-strength systems, so the IS staff must reverse-engineer applications they have developed. Unfortunately, even in 1996, client/server environments remain difficult to implement and support. Inadequate software, multiple suppliers, and new languages make the transition from thirty years of mainframe-based COBOL a challenge, and the "legacy systems" still have to be maintained.

• New Development Methods. Software development is moving slowly from COBOL on mainframes to object languages on server platforms. Meanwhile, management's dissatisfaction with previously costly and slow development, coupled with a sense that basic transaction processing has little competitive advantage, has led to the increased use of integrated packages like SAP. In most companies, IT is not prepared for this revolution. Many COBOL programmers and mainframe operators have difficulty making the transition to more complicated, uncertain technologies. Some CIOs describe new development methods and technologies as "black holes". Those firms that invest in training IT staff in new tools find that training costs are high and the payback sometimes slow. In addition, there are growing personnel losses as other firms look for people trained in the new development approaches.

• Exploding Technology. While IT staff people are already struggling to implement existing technologies, more technology changes loom. Object orientation, image processing, wireless communication, pen and voice processing, and multimedia are all becoming more useful. Most important are the emerging information highway capabilities, evidenced by the Internet, the World Wide Web, the emerging Microsoft Network, and services like CompuServe and America Online. They are changing the way that business is done and demand new skills and capabilities from the IT organization.

• A New Industry. Less than a decade ago, a few companies, led by IBM, dominated the computer industry and could supply most of the required technologies and services. Today, the many-layered industry includes hundreds of players.^[6] Not only are there hardware, software, and communications suppliers, but systems integrators, facilities managers, information brokers, and so on. Almost daily, there are new entrants, new alliances, and new product announcements. The old certainties, along with many once successful products and vendors, are gone.

• Availability of Outside Suppliers. The outsourcing industry, once confined to a few firms such as EDS and a number of contract systems developers, has burgeoned. Outsourcing is on the mind of every senior executive who wants to cut costs or shrink (or reduce the perceived or real trouble connected with) the IT organization. While only a few firms, such as British Petroleum, ITT, and Kodak, have outsourced major portions of the IT function, most IT units have identified specific tasks that could be better served by companies specializing in IT services. Learning how to identify tasks that are candidates for outsourcing, negotiating an appropriate outsourcing contract, and managing the outsourcing agreement effectively are major new challenges IT executives face.

^[6]The Computer Industry 1993.