How Do You Manage The Support Gap?

With their Fortune 500 customers subsumed by implementation processes, application software developers are slashing overhead. At the same time, large and midsize companies are finding it increasingly difficult to find, attract and retain programmers. We're wrestling with a real support talent shortage, and how you manage the gap between your needs and available resources will determine your future.

Just as the drop a few years ago in cost per CPU spurred a shift from time-sharing to corporate mainframe and network computing, the high cost and scarcity of key programming resources is forcing the industry back to time-sharing.

Big Five professional services firms and tech consulting boutiques alike are offering software developers and corporate IT managers who were earning $75,000 a year as much as $100,000 to lure them away. Then the services firms are turning around and selling these workers' services back to companies at a 300 percent markup.

And managers are saying "yes" in droves. This trend is likely to be short-lived, however. Instead, we expect to see a growth is application services providers (ASPs).

ASPs like Corio Inc. are growing fast, because their proposition makes sense to thousands of companies that need a way out of seismic IT shocks. Corio delivers top-quality PeopleSoft implementation on a rental basis to midsize companies for a one-time fee and monthly per-user charge.

Ultimately, the ASP proposition will make sense to Fortune 500 companies, because it effectively lowers the customer bases and billing rates of consulting firms and cuts compensation for permanent staff and project workers.

This means that you need to rethink your corporate and career needs. ASPs need to tap corporations and application providers for project managers. Companies need to redesign IT to take full advantage of the outsourcing options.

Corporate IT managers, who face the most complex role shift, need to focus on building their value equations--delivery of systems on time and under budget. Strategic IT people need to stay in corporate and promote option-analysis models--the real costs of buying, building or renting.

Those who can evaluate the expertise, backlog and style of outsourcing firms, while assessing complete costs and benefits of options, will command an escalating premium.