“All things by immortal power,
Near and Far, Hiddenly
To each other linked are,
That thou canst not stir a flower
Without troubling of a star.”

Francis Thompson, 1913

 

The IT supply chain does not span as far as the distance between a flower and a star.  It does, however, reach from design facilities located around the world, to factories located primarily in Asia, through warehouses located in the US and Canada, connecting to solution providers of various types before landing as IT-enabled solutions in the computer facilities and on the desktops of Canadian government and business professionals.

 

In Canada alone, this interconnected web of businesses and capabilities connects hundreds of thousands of “buy side” and “sell side” IT professionals – and millions more outside of our borders. For the most part, the end-users who rely on technology to perform business functions aren’t concerned with how this puzzle fits together. However, there are fundamental changes occurring within the IT supply chain, and these changes have an impact on how Canadian private and public-sector organizations will buy and deploy technology.

 

To explore these changes and their impact on Canadian IT firms, Canadian Government Executive partnered with CRN Canada, Information Week Canada, and the IT industry experts at IT in Canada to launch the “Tides of Change” research project. By combining input from Canadian Government Executive and Information Week Canada readers with data and insights from three different points within the IT supply community, we are able to offer our readers insight into how their supply options are evolving – how to take advantage of new capabilities, and how to avoid “falling into the cracks” created by change in the IT industry’s composition.

 

Brief history of the IT supply chain

To really understand the nature of the recent supply chain changes, we need to take a brief look at how we arrived at the current point. Twenty-five years ago, most buyers purchased IT solutions from a single supplier. This value added re-seller (VAR) would combine hardware and other components from multiple sources, add their own software and services, and create a “turnkey” solution for a customer.

 

In the 1990s, this craft-built approach to solution software was eclipsed by an industry-wide migration towards packaged software sold by globally-focused independent software vendors (ISVs), who could leverage the cost of developing upgrades and new releases across much broader customer bases than those reached by VARs, who tend to serve a local/regional base of customers. This migration also provided impetus for the separation of services from the provision of hardware and software (at least within large organizations), as systems integrators and consultants found customers who were willing to use a prime contractor/subcontractor approach to sourcing IT-based solutions.

 

This trend continued into the beginning of the current decade, and then accelerated with the expansion of the Internet and the widespread adoption of open source software. Now, buyers did not need to commit to multi-year, enterprise-wide, single-vendor software suites: they were able to gain access to many different software packages, each addressing specific needs, available over the Internet “as a service” or in a wide range of pricing and licensing structures, and (in some cases) designed to be integrated in a vendor-independent framework. This hugely expanded the range of options available to “buy side” organizations – especially small and mid-sized organizations, which had historically been forced to choose between a limited number of general-purpose software packages.

 

What does this change?

This evolution has had an enormous impact on the ways in which the IT supply chain functions – and on the options available to IT managers and executives looking to IT solutions as a means of improving business performance.

 

There are numerous cause-and-effect outcomes of these industry trends, many of which can be in some way seen as a “dis-aggregation” of traditional IT products and functions. Three examples help illustrate the breadth and impact of this change:

 

  •          The dis-aggregation of product supply: For much of the time covered in the supply chain evolution, buyers – especially in smaller organizations – relied on a single supplier for hardware, software, and services. In today’s market, there are different ways of “configuring” your supply source. Many implementation firms work actively with service-independent product sources (such as “direct marketing resellers” Softchoice, Insight, and CDW or Dell), enabling SMB customers to take advantage of the price efficiencies that can be gained by working with product specialists, while still gaining access to the skills of local IT experts.

 

  •          The dis-aggregation of the software suite: Open source and “software as a service” (SaaS) offerings have made it possible for buyers to acquire high-end software without “betting the business” on the implementation of a monolithic enterprise application suite – advice Denis Desautels gave some time ago in this magazine. Numerous solution providers (SPs) have developed depth in specific applications, and the expertise needed to integrate these offerings within mainstream IT environments. Buyers benefit in three ways:  they have more application choice; they have more choice in licensing/delivery methods, which can reduce the price of software; and they can purchase solutions “a piece at a time,” rather than committing to an enterprise-wide deployment, which reduces the risk associated with the implementation.

 

  •          The de-coupling of service from location: IT suppliers of all sizes are offering a broad array of services – ranging from access to software, storage, and processing power to security, network monitoring and management, and end-user support – to remote locations, using sophisticated web-based delivery systems. This gives any buyer with a high-speed connection – and especially, those in smaller accounts, which lacked sufficient scale of opportunity to attract high-end service providers – a much wider range of servi