Former ICI IT boss Richard Sykes sees cloud computing creating a ‘Services 2.0’ culture

In some ways, Sykes’s ICI helped create a template for today’s shared-risk/shared-reward arrangements.

“What we always wanted was an outcome-based relationship where you worked as a combination with the same ideas. We always wanted to move away from ‘classic’ outsourcing deals.”
In recent times, of course, outsourcing has changed hugely, thanks to globalisation and the India effect. Is Sykes a fan of offshoring? The answer is mixed.

“The IT outsourcing movement grew up from companies with a very strong technology offer, that slowly learned how to be facilities management operators. What the Indians have done is to come in and leverage world-class talent at a cost base much lower than Europe or the US. They have taken the old model but what they haven’t done is innovate on that model. Some people have taken outsourcing into front-line call-centre work, egged on by the lower cost structure, and have not understood the importance of the culture.”
Despite having left ICI in 1999, Sykes has stayed very much involved in technology and business, having been chairman of outsourcing firm Morgan Chambers between 1999 and 2004, taking up several non-executive positions and business consultation roles, and advising on how technology can best be tapped to address social issues.

Vendor consultant
His latest incarnation sees Sykes moving over to advise vendors, prompted by what he sees as a seismic change in computing architectures. While notions of cloud computing still divide many industry watchers, Sykes believes that remote, hosted, web-based services have the ability to change the basis of how IT is run and how services are delivered.

“You’ve got one fundamental thing that’s happening at the moment,” he argues. “Over the last 10 years, a bunch of companies like Google have been teaching themselves how to commoditise online services. But in the process they’ve taught themselves how to do the complex, underlying stuff. They have the physical assets [in the form of datacentres and networks], proven reliability and robustness, and people don’t realise how good it is.”

Sykes believes that the opportunity for the likes of Google and Amazon.com is to take that infrastructure and use it to serve applications, or provide a platform for others to hawk their applications and services.

“If you look at what most CIOs are doing, most are either running operations in their own datacentres or they have outsourced them but have them managed by an EDS or a CSC. They are still ‘boundaried’. Their critical mass might be quite large but it’s nothing like a Google datacentre. So their cost of utilisation and robustness is nowhere near as good as a Google, a Betfair, or an Amazon. I can see the beginnings of a services offering from all this, in which, if you’re willing to escape the confines of having your own datacentre, you can go out into the cloud and access your data processing and storage.”

But doesn’t commoditisation mean that firms lose competitive differentiation? Sykes won’t have any of it.

“There’s this image of commoditisation that it’s bad but if you’re a brilliant retailer you ain’t going to create competitive differentiation with a different infrastructure.

“There’s a very sloppy piece of language in IT called ‘technology drivers’ but technology is the enabler and the driving comes from human involvement. If you’ve got another year of learning ahead of your rival you’ll always be ahead of them.”

OK, so the $64,000 question for CIOs is this: what becomes of the CIO and IT department in a world where offshoring is mature, where remote, hosted, web-based applications are widely available, and where even changes to great big pieces of business logic can be achieved without significant manual intervention?

Sykes’ answer is typically robust. CIOs might become more like COOs or might get another title and the UK might have to accept that pure IT skills need to be sourced from abroad, or that they belong to service providers.

“Younger people in the UK increasingly are not going into universities to do IT [and many regard this as an important problem]. My counter argument is that you need people who are going to be all-rounders. I have a relative who is studying aeronautical engineering at Imperial College, London.

“Do you know where they go when they graduate? The City! They’ve studied how to build aeroplanes but they’re highly numerate, business-literate and instinctively IT-literate. If you do a law degree you don’t get turned out into the world to be a lawyer. You’re a broad player with broad business skills. In the UK, I’m less concerned that we’re not producing pure IT professionals. I’m concerned about making more blended individuals.”