The Revolution in Enterprise Software: Why It’s Key to Outsourcing

The adoption of object-oriented, distributed systems grew throughout the 1990s, and the systems are becoming the norm for global enterprises as of this writing. Distributed systems, in conjunction with the rapid growth of the Internet, signify a profound change in how software is built, managed, maintained and consumed, and this development facilitates outsourcing in several ways:

  • Modern systems can support unprecedented changes in business processes and even business models. Virtually all business processes are supported by IT (software), and inflexible legacy systems create a significant barrier to outsourcing when they cannot accommodate changes in process without expensive modifications, which drive up costs and delay implementation.
  • Because modern systems are built of discrete objects that are connected to each other via standardized interfaces, it is easier to define separate subsystems. In legacy systems, various parts of the system are intertwined and custom coded with non-standard interfaces. It is easier to outsource parts of modern systems.
  • Interfacing with Business Process Outsourcing (BPO) partner systems is far more challenging with legacy systems.

Service-oriented architecture (SOA) and Web services are two elements of distributed systems that enable companies to build new software according to the new model as well as to make their legacy systems more flexible. Simply put, the companies that are furthest along with using SOA and Web services are more adaptive due to the flexibility of their software. Their systems can interact more seamlessly with business partners’ systems. They can outsource more of their business processes. As of 2005, most global enterprises and mid-market companies still run on legacy systems, but these are gradually being replaced and modernized.

A prerequisite to outsourcing is the ability to define a task, activity or process that is discrete enough to be identified and therefore delegated to an outsourcing partner. Legacy systems, because their structures are so intertwined that they cannot be easily organized into distinct manageable parts, too often leave the company with a binary choice: keep the whole system in-house, or outsource the whole thing. According to 2005 research from the Massachusetts Institute of Technology’s Center for Information Systems Research (CISR) and CIO: “Companies with mature (read “modern”) architectures can utilize outsourced transactions on a plug-and-play basis, but companies with low architecture maturity might simply reinforce application silos.”

In sum, if you are interested in identifying good candidates for BPO, investigate prospects’ experience with distributed systems, notably SOA and Web services. To read more:

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