Thursday 24th Aug 2017 - Logistics & Supply Chain

Outsourcing your problems

In 1993 the internet was still a novelty, used by a few million people. There were earnest debates about whether selling should be allowed at all on he web – it had been developed by unworldly scientists  to enable them to exchange information.

Today, the majority of commercial computer communications take place using standards and technology designed for the web.

In the intervening period we have seen the rapid rise and equally sudden deflation of the dotcom bubble. Many of the products of that feverish period such as exchanges and logistics operations dedicated to the web failed to live up to the claims of their proponents. Undaunted, IT companies are now casting around for the next big thing.

So, will a new internet-style advance emerge in the next ten years? Unlikely – but it won’t be for want of trying. One of the hottest technologies of the moment, and one that is already having a big impact in the supply chain, is wireless technology.

Handheld devices linked by local wireless networks, radio frequency identity tags and advanced mobile phones are already enabling businesses to e much more precise in the way that they track  and trace goods in transit achieving greater speed, flexibility and transparency. Falling prices, improved technology and the prospect of third generation networks will make wireless technology even more effective in the supply chain.

Greater agility
This greater agility will also be accompanied by more effective ways of dealing with the web pages, documents, files images, emails and so on that now represent the intellectual capital of any business. Content management, as the process of organising business information is now called, is going to make it easier to transfer content from one system to another and thus easier to share knowledge.

In the process the silos of automation created by dedicated IT systems should be broken down and reassembled in patterns that suit business imperatives rather than the dictates of technologists.

However, an even more fundamental change than these technology shifts is on the horizon – the move towards buying IT as a service rather like plumbing or electricity instead of owning hardware and programs, and employing staff to maintain and develop them.

It’s not a new idea – ever since the first computer payroll was farmed out in the sixties, firms having been putting their IT washing out for laundering. What will change is the extent to which business embraces the service concept.

There are signs that companies are more ready than ever before to outsource their IT, a process that still remains sensitive. When news leaked out that GlaxoSmithKline was talking to IT services companies about taking over some 66,000 desktop systems and hundreds of IT staff, the company did not exactly welcome the publicity.

There has always been a debate between those who say IT can deliver a competitive edge only if an organisation owns and runs its own systems and those who argue that IT is an overhead that distracts businesses from their real purpose. In practice most IT set-ups have accommodated both ways of thinking: putting out their bog-standard IT to third parties and retaining the really cutting-edge stuff themselves.

Now the pendulum is swinging much more in favour of the service view. There are several reasons for this. Firstly, IT and its uses are so much better understood within business that managers have less qualms about putting their IT out to a third party. Secondly, there just aren’t the big shifts in technology that mean it is important to keep as close to IT as before.

But as significant as both these trends is the fact that technology itself is moving to deliver information processing as a series of services that can be assembled into new services like building blocks. Microsoft’s web services concept called .NET is being enthusiastically promoted by most of the industry. This service view of technology should make it much easier to develop new systems whether or not they are run in-house or by a service company.

By the time Logistics Europe’s twentieth anniversary comes round readers will no longer be picking up their phones to curse their IT department, they’ll be cursing their third party supplier instead.

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