IT capabilities used to be a strategic differentiator. It provided companies with new and unique ways to process business transactions and information. These unique capabilities provided organizations with a competitive advantage that allowed them to leapfrog their peers.

So far the only way to gain the benefits from IT was to 'build' these capabilities in-house from scratch. To take full advantage of IT capabilities, organizations had to master the art of developing, operating, and maintaining information systems. Since each organization is different, unique solutions were built to meet those special needs. This, in turn, led to dedicated teams of specialists who developed and operated dedicated complex information systems.

As technology progressed, it became possible for organizations of all sizes to possess these same capabilities. Commercial, off the shelf solutions have become more powerful and available. Organizations were now able to buy solutions instead of building them. It was no longer necessary to hire specialists to build applications.

Necessity for doing business

Today, IT is more like a utility that is no longer a strategic differentiator. The advent of powerful flexible yet affordable systems has made it possible for even the smallest organization to acquire the same capabilities that only large companies possessed only a few years ago. IT has moved from being a differentiator to being a necessary part of doing business.

Managing change

The commoditization of IT has transformed the issues facing organizations. Instead of the challenge of acquiring new capabilities, organizations are now faced with the need to manage complex systems and keep up with change. Technology has introduced an era of 'hyper change': a time of rapid and increasing rate of change. Companies need to have the ability to change their infrastructure and resources rapidly in order to keep up with the changing business environment. In addition, the reliance on complex systems to run the business has created the need to ensure that IT systems and applications are available at all times.

IT Outsourcing Addresses the Challenge

If done properly, IT outsourcing can address both the above challenges. By choosing the right outsourcing partner, and negotiating the appropriate terms, an organization can get access to a flexible infrastructure and resources, and at the same time receive consistent and high levels of service.