Software as a Service and IT Consulting Firms

IT Consulting firms in the history of their existence have shown their value to the Enterprise in several ways. In the early days their value was two folds -

1) A Solution to the IT staffing needs of an Enterprise to handle Peaks and valleys in their staffing requirements based on the projects. (companies like EDS excelled at this and were really the delivery arms for the CIO's)

2) A Consulting based approach that added value to the client organzations by helping them making informed strategic decisions (Capgemini , Accenture (NASDAQ: ACN) are good examples of companies that did great here)

Over the last decade with the advent of offshore Consulting firms , The labor arbitrage angle was the big focus area and getting the distributed development model working was the big value add of these firms. The growth of companies like Wipro and Infosys are excellent examples here.

At this point of time all the above are a given for an major IT Consulting firm , but the next phase in the evolution of IT Consulting faces a threat that challanges the very existence of IT Consuting firms in their current forms.

I am talking about -- Software as a Service firms (eg: Salesforce.com)

The Bread and butter for IT Consulting has been implementing complex software withing the Enterprise Context. With the advent of Saas firms , the need for an IT Consulting Firm is eliminated . The value of SaaS to an enterprise is cutting on the complexity of maintaining inhouse software and it is in direct conflict with the Business model for a consulting firm. Yes , their is some need for IT Consulting but it is very minimal.

So , what will happen to the IT Consulting firms ---> In my best guess they will evolve into ITBPO firms . (BPO + ITO). ITBPO firms takes the outsourcing concept to the next level. ITBPO takes the Software aspect out of the relationship and focusses on the business function.
There will be convergence in the business model for traditional outsourcing firms like ADP and Traditional IT Consulting firms like Wipro , CGEY , etc. A Similar convergence is happening in the media industry with players like Viacom , News Corp trying to be tech savvy and players like yahoo , google and MSFT trying to be media savvy.

Why is SOA more important in the Insurance space

I was at the ACORD LOMA 2007 conference and there were a lot of sessions on SOA explaining all the great things we know about SOA.

A point that I felt got missed in the conference was that "SOA is even more important in the Insurance World today as say compared to other verticals"

One of the biggest challanges facing Carriers today is "Legacy Modernization". Carriers want to achieve Straight through processing but it is probably a 100Million investment and atleast a 2-3 year plan to do that.

In the mean time you also have pressures from the market to get your website going (enable realtime functions like InsuranceID Card printing , Update Garaging Address , Add Vehicle , Add Driver etc). The question most carriers face is that - Will the investments I make for my website upgrade go waste as there is a seperate initiative for upgrading my Policy Admin system going ?

--- > Enter SOA
The Hub and Spoke Arcitecture of SOA promises to decouple your front office applications from back office systems. This becomes a very strategic advantage for present day carriers as most of them have a roadmap of upgrading there backoffice systems and also have market pressures to get new front office applications and with SOA the two initiatives do not need to be tightly coupled.

I also hear a lot about "How do I get the business to sponcer an SOA program". So here is one more reason (added to the list here) .

SOA will enable business to get what they want earlier. IF they want an upgraded website and also Straight through processing , the only way to get that is using SOA