a) When will offerings like amazon’s new Compute Cloud be viable for corporate versus free- agent developer usage?
b) So SaaS pricing includes hosting, bug fixes, tuning, upgrades – and the application licensing? Can we terminate our current  infrastructure and application maintenance outsourcing and move to a SaaS vendor?
c) Can you find us an alternative vendor which does away with time zone, travel and communication issues with our current one?

Against this background, I see Brian Sommer recommend the article How to be an Outsourcing Virtuoso by 2 Booz Allen consultants.

It is well written, but I cannot help but think it presents such a placid, even dated, view of the outsourcing market.

Just under the surface there are so many other evolutions going on:

Cannibalized application hosting and maintenance a la SaaS vendors
Hardware as a service by vendors like Sun and amazon
Beyond single country delivery to multi-country – truly "Global" delivery models
Emergence of near shore and rural delivery centers as alternatives to long distance delivery from India, China, Philippines.
Understanding of how to leverage developer "communities" – amazon, SAP’s SDN
The short putt from SaaS to BPO
Re-engineering of the outsourcing supply chain

The "best practices" the Booz Allen article describes are a helpful catalog.  But the outsourcing "virtuosos" I know are looking way beyond them.

Some of the factions I have seen just in the last week:

a) I defend the CIO here and here but question incumbent vendor models. The new world of Enterprise 2.0 cannot just be a Web 2.0 layer on top
of Enterprise 1.0, but needs to fix a number of things wrong with incumbent vendor models.

b) A camp questioning the entire current IT establishment (CIO AND incumbent, status quo vendors) – some of the reader comments on this blog

"There’s a growing camp of believers in the Enterprise 2.0 story that
personally don’t care what the CIO is interested in because the CIO is
not their target. It’s an LOB sell with a liberating story for
user/knowledge workers."

"The view that CIOs are docile sheep getting squeezed by the megavendors
is simply disingenuous. It takes two to tango. Talk is cheap, many CIOs
will continue the current state of few vendors and megabudgets (putting
in complicated systems from megavendors) and push systems to users
because it suits them."

"
1. Is the CIO in a position to take on the mantle you suggest?
2. What about the incumbents rotting from within with their outdated
data centric, inflexible models in a world where flexibility and
agility are the order of the day?"

c) The Office 2.0 view of the future "Imagine a computer that never crashes, or gets infected by a virus.
Imagine a computer onto which you never have to install any
application. Imagine a computer
that follows you wherever you go, be it at school, at work, abroad, or
back home. This
computer does not exist today, but it will in the future, and this
future might be much closer than you think."

d) Defenders of the status quo vendors question "weak"  emerging alternatives or say there really is  not much new. Thomas Otter calls out  emerging HR/job board functionality. Rod Boothby calls web alternatives to MS Office a "niche" even as he signs up to present at the Office 2.0 conference. Nick Fera - "Business users have been doing this very thing over and over again for
many years (thus the "20.0").  Look at e-mail, chat solutions, IM.  All
of these were available publicly and used long before corporate IT ever
deployed a single line of code for any one of these solutions.  There’s
nothing new about the process of Enterpise-readying new software
applications, just the name.  The key is what’s necessary to make them
suitable for businesses."

e) Status quo vendors even question their current patrons, the CIOs. Charles Zedlewski of SAP in a comment on his blog "I also don’t care if CIO’s see art or passion in a great software
product. That doesn’t affirm or negate its greatness. If they refuse to
pay money for it, well that’s a different story."

Exciting, scary, treacherous times ahead.

Actually I think it is sublime that Wikipedia has an entry defining a high five.

Brother Niel, gimme some skin!

I would have yawned if Google would have called to brief me. The big thing I would have pushed them for is to disclose details about their non-ad driven pricing model for the enterprise.

Then we can see if they are truly different – “not evil” as they like to say – or
just a slightly different recipe of the MISO – Microsoft, IBM, SAP,
Oracle – soup.

Most of their close to 30 acquisitions since 2001 were around infrastructure software and had revenues of under $ 500 m a year – so bite sized and relatively low risk. It can usually lower SG&A across its global sales network and breath new life in to aging products.

IBM calls most of these acquisitions "capability" extensions (see slide 7 of this presentation) – avoids the Larry term "consolidation" and the negative CA or Infor acquisition image.

And it is starting to market many of these products under the SOA banner. Allows it to say SOA is growing rapidly and start a self-fulfilling momentum.

It shows up in Open Source world with selected products like Linux and GlueCode which help commoditize certain competitors – and gets kudos for being "socially responsible".

Sells lots of systems integration, application maintenance, BPO and hardware and systems management around third party application software like SAP and Oracle, and gets kudos for being a "neutral", Switzerland like player.

And laughs all the way to the bank. Software is likely to be 25% of revenues this year, but 45% of pre-tax income. No talk of open source or neutrality around its core software products.

You have to admire their deftness.

"An infrastructure vendor – likely Dell or Sun (as it tries to redefine itself)
- will introduce infrastructure outsourcing at aggressive, "utility"
price points to cover a wide range of network, database, desktop and other
services."

I had not counted on amazon to offer compute and storage "in the cloud" – but it is delightful none the less.

• Pay only for what you use.
• $0.10 per instance-hour consumed (or part of an hour consumed).
• $0.20 per GB of data transferred outside of Amazon (i.e., Internet traffic).
• $0.15 per GB-Month of Amazon S3 storage used for your images (charged by Amazon S3).

Not sure I should have been surprised. As I wrote in The Incumbents Dilemma

".. the challengers are not the 6th or 8th market share player in the category but often brand new players out from left field."

While amazon is aiming at more of the free agent developer market (along with its Mechanical Turk for outsourcing tasks), it sets a benchmark for emerging utility computing vendors to aim for.

eBay with Skype in communications, SaaS vendors cannibalizing application hosting and maintenance, Google in everything…left field, indeed.

Much as Europe changes, thankfully old landmarks do not disappear.

As we plan next summer’s trip, I recalled my two years in Europe were greatly enriched by a book of walks in major European cities. Written by George Oakes, a NY Times travel writer,  in 1965 it described every little square, fountain, church. It has since been updated periodically by Alexandra Chapman.

Saint George, as my wife calls him (she is not as big a walking fan as I am), made me explore European gems like the canals of Bruges and the aqueduct of Segovia – and discover little secrets in Paris and Rome the tour bus guides do not even know about. I finally gave up my dog eared copy a few years ago and got a new one.

Get your self a copy – or if you want walks for a selected city, my daughter will be happy to make you a copy. For a small fee – in euros, please for her fund when she Eurails the continent in 4 years. By then she probably be able to avail of a GPS enabled Segway – and Saint George’s classic in e-book format on her iPod with dog ears painted on….

SaaS vendors are learning what offshore vendors learned a few years and what EDS and IBM learned a long time ago. Hurricanes, earthquakes, wars – CIOs are paid to worry about stuff like this. And expect their vendors to worry just as much.