Friday, December 12, 2003

Knowledge Coupling

According to reports in the Financial Times, the Inland Revenue wishes to find a new IT contractor. Government IT outsourcing has been dominated by a small number of firms, particularly EDS and Accenture.

Apparently, some major service companies (including, it is rumoured, IBM Global Services) do not consider it worth submitting bids against the incumbant. Bidding costs can run into tens of millions, with very low chances of success.

Principle One: If you want to maintain the right to choose, you have to exercise your choice from time to time – otherwise, the choice becomes void.

Principle Two: If contractors have exclusive (or privileged) access to complex knowledge required both to maintain the service, and to participate meaningfully in the bidding process, then the choice may become economically non-viable.

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