Exploding the Enterprise

August 6, 2004

Soundbites from a marvellous panel session at the Supernova conference in Santa Clara last month. Moderator: Phil Windley. Participants: John Hagel III, Halsey Minor, Gordon Eubanks, Darren Lee.

    Impenetrable walls ringed medieval cities to keep invaders out. Once a week, the gates swung open for market day. Want to buy a chicken? Better do it on market day, for Seven-Elevens had not been invented. Stores didn’t appear until catapults breeched city walls.

    Corporations similarly built walls around themselves for protection. Now the walls are tumbling down. It’s more efficient to outsource non-core activities, for example having someone do your payroll or manage your pension fund from outside the old walls. This “deperimiterization” also facilitates trade, coordination, and partnering with other organizations.

    Bringing down the walls will totally change our definition of the enterprise. Instead of protecting commerce, since transaction costs will be dropping through the floor, the job of the enterprise will be to accelerate learning and deepen practices. IT support will be a combination of SOA, grid computing, and social network analysis.

    The net is becoming the IT infrastructure. (Salesforce.com went public the day before.) Outsourcing IT is a tremendous cost saver. Imagine the “global elimination of duplicative effort.” You know the efficiency of keeping a single copy of a document on the web current as opposed to the old way of making and distributing copies? Imagine that applied to business processes. This is the only way to go, for BPM does not scale across enterprises; it would require loose coupling for that.

    The progression of IT from mainframes to minicomputers to PCs to client/server all start on the inside of the organization and only secondarily reach outside. The future will focus on connections rather than nodes, and this means IT will focus on what’s incoming instead of what’s outgoing.

    By the way, outsourcing IT is only the tip of the iceberg. We’re going to see more and more outsourcing that includes talent and equipment, too. Offshoring is not just wage arbitrage; it’s skills arbitrage. You will be able to outsource your entire manufacturing operation to China, for example.

I’ll blog more of the Supernova presentations as I listen to them.

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