Sunday Mar 25, 2007

Diary of a startup - Weeks 11 and 12: the Age of Outsourcing

This is the Age of Outsourcing. Sun "makes" computers, yet it doesn't. There's no chip foundry, very little assembly, and very little shipping. It's all outsourced to hyper-efficient specialist firms. Even the loading of software onto the machines is outsourced.

Outsourcing makes even more sense for a startup. It avoids heavy capital expenditures, and it's quick to get up and running. "Monty," the startup CIO, regards his basic problem as integrating a bunch of purchased software with a bunch of outsourced services, then setting up a business process management system. In a situation like this, service oriented architecture (SOA) really comes into its own. The services are not just conventional software with SOA wrappers, but also actual human-provided services, some in Dallas, some local, but all off-site. From scanning loan applications to drawing up the note and deed of trust, it's all outsourced.

In this sense, the startup CIO is very much like a movie producer. He orchestrates the services of multiple independent contractors -- individuals  and corporations -- to produce a very complex product.

Asking "What does a CIO really produce?" is like asking the old Hollywood question: "What does a producer produce?" The answer is simple: results.


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