I was reading this article, http://www.informationweek.com/showArticle.jhtml;jsessionid=B35NVR10CV1JYQSNDLRCKH0CJUNN2JVN?articleID=192300430&queryText=iss+ibm and was struck by one of the comments made about how positive and what a good thing the purchase is for the customer now that IBM can offer a more rounded service.
If you haven’t heard, IBM bought ISS. The big news however is that they aren’t putting ISSs intellectual capital (i.e. the people that write the software) into the software division. Nope. IBM is going to put the company into the IBM Global Services division. The thought seems to be that if they do that, then they can offer a more rounded, and therefore more appealing set of services to their customers.
According to the spin, by making this sacrifice, IBM puts itself into position to help, you Mr. Customer.
Ok, if you sell software, you have to spin your products in a positive light. I’ll allow that. But what gets me is that you pretend to be able to offer high-end resources at reduced costs utilizing “economies of scale” economics. That’s where I take issue.
Think about it. If you’re an outsourced services sales person, your job is to convince Mr. Customer that you can do the job (whatever the job is) better and for less money than he’d otherwise spend. IT is all about intellectual capital (otherwise, it’s just one’s and zeroes, right?) To do that, you’ll give him better job resources than he can otherwise bring to bear thereby alleviating him of his burden of managing high-end technical people and of paying those salaries and increasing the drainage of his bottom line to those blood-sucking IT peop… well, you get the idea
If you’re IBM, you’re telling your customers that with the acquisition of ISS you now possess the magical mix of technology and personnel to offer a security scanning and patching service to go with your hosting services that you were lacking before. And, if you buy today…Wait, I get ahead of myself.
But the issue comes up later, after you’ve let your “high-priced” people go. You find out that IBM has taken that highly talented resource you’ve gotten used to seeing and re-focused her on another client’s issues. “But, we’ll take care of you and we’ll fulfill our agreement – to the letter.”
IBM’s pressure in this relationship is to lower costs to make the outsourcing more equitable for them. They are in business to make money after all. The manifestation of that is that for the first 6 months, you’ll see the highly technical people diligently working on your issues and bending over backwards to make you happy. Then, those people will be moved to other projects or will otherwise move on to “be focus on their family life.”
Where does that leave you, Mr. Customer? You’re in a cycle where you now depend on your outsourcer. And now that you’ve gotten rid of that high-priced IT shop and replaced them with a few mid-level managers, you have some people that can manage your issues and give your business competitive advantage right? Hmm…. Really? Might want to think about that.
Don’t get me wrong. It might make sense to use such a tactic for your business. But at least you can go into knowing the pressures that each side has and not fooling yourself into thinking that you’ll have the high-end technical resources for less than you’d otherwise spend. And you only wanted your business to be successful at the lowest possible price! They want to sell you a service that pays a recurring annuity and they want to lower their costs year over year.
Is ISS a good purchase for IBM? I don’t think so. IBM couldn’t make it work before when they had their own in-house scanners and pricing models. I doubt they’ll be able to make ISS work in the Big Blue machinery. Of course, they didn’t ask me how to build their credibility now did they?