Infrastructure, Software And Services – The Lines Are Blurring

CSC celebrates its 50th anniversary at Innoventure Europe 2009

 

At Innoventure Europe 2009 on June 22 & 23 in Paris CSC outlined their new strategic concept – increased industry focus and innovation.

After 2 years of transformation CSC has finally settled on their new vertical organization and strategy around the 6 industry clusters Public Sector, Financial Services, Manufacturing / Aerospace & Defense, Technology / Consumer, Health Services and Chemical, Energy & Natural Resources. With solid figures for FY09 including a net income of $1,115 million and strong sector growth in e.g. Healthcare (+30%) and Public (+4%) based on the new vertical strategy, CSC seems to be well positioned to navigate the stormy waters of the current economic crises. However, with the new vertical company orientation CSC will face some new fundamental challenges and questions that need to be addressed.

 

·        Technology Agnostic or Pre-packaged?

Service companies typically base a lot of their value and creditability for clients on their technology agnostic approach. The independence from any product vendor enables them to position a pure best-of-breed approach and easily adapt to existing client preferences. However, as a service company goes vertical and starts to offer industry tailored solutions concrete technology decisions need to be made.

In a true vertical strategy clients expect vendors to understand their business and pain points and to offer pre-packed solutions that address their specific needs. Suddenly service companies are in the same shoes as end-users. They can hardly afford to build pre-packed solutions on any possible technology option and have to settle on one or few alternatives. CSC started to offer a range of vertical assets including e.g. an Electronic Health Information Exchange and a Picture Archiving and Communications System (PACS) for the Health Service Sector, proven solutions that can be installed quickly at the client site. This is very different from a pure best-of-breed approach since with industry tailored solutions the service company relieves the customer from some significant investments but has traded this for some technology decisions upfront.

 

·        Product or Service?

In order to offer tailored solutions to the market service providers continue to build more and more assets – some based on lean configuration, others however including heavy code. As clients are implementing these solutions only few are willing to take ownership of ‘alien code’ and more and more are expecting the service vendor to maintain the solution over its whole product-lifetime. Similar to the previous point, service companies are suddenly in the same shoes as product vendors. Specifically for ‘heavy weight’ assets service companies need to find the right sales and support model. Should the asset be bundled and sold as part of a service package or should it be offered in a separate product business model? Some service companies, pushed by their clients in their effort to reduce custom code, are looking for partnerships with traditional product vendors to solve the challenge. However, considering the risk on intellectual property and the opportunity of net new business, service companies will need to find their own model to take full advantage of their investments. 

CSC’s new Dynamic Desktop solution is a good example of a productized offering by a service company. It is a virtual desktop infrastructure including hardware, software and services to offer users the experience of a flexible PC desktop via a centrally managed virtual desktop machine in the data center. CSC has chosen a subscription model and offers the solution based on an annual user price and a service trail over 3 months.

 

·        Maybe The Answer Is In The Cloud!

The trend to cloud computing might relieve us all from the above questions. By the time when Infrastructure, Platform, Software and Business Processes are all delivered and consumed as services, when products become service, customers won’t care any more about a technology agnostic approach of their vendors. CSC has started its venture into cloud computing. At Innoventure in Paris the company outlined the new 'cloud strategy' and the Dynamic Desktop solution is an example of a first step of the company into PaaS (Platform-as-a-Service) and into the Cloud.

 

Fifty years strong and the way ahead full of opportunities – happy birthday CSC!

 

What do you think how cloud computing will influence the balance between service and product companies in the future? Please leave a comment or contact me directly.

 

Kind regards,

Holger