To be strategic, IT companies must align with business strategy

Last year, Singapore Airlines (SIA) announced a strategic relationship with the Chinese cloud giant, Alibaba. The term “strategic” is often bounced around the IT industry and usually means the organisation in question has an IT strategy in which a major component is based on products and services from a so-called strategic vendor.

But in the case of SIA, the strategy is very much business focused: from using AliPay to enable customers to pay for the airline’s products and services to the use of the Alibaba ecommerce platform. SIA has also been working closely with Cainiao Network, the logistics arm of Alibaba Group, to enhance international air cargo services, joining Cainiao Network’s broader efforts in building a global smart logistics network that delivers across China within 24 hours and globally within 72 hours.

At the Gartner Catalyst conference in London this week, Gartner analyst Dave Aron said that the airline has now extended the relationship even further, enabling passengers to buy gifts via Alibaba’s ecommerce platform, and have them delivered to their destination airport. Gartner believes that web giants like Amazon, Google, Baidu, Tencent and Alibaba can extend into every industry sector because they provide so many products and services that they are effectively infrastructure for everything. And it is no surprise that car makers have partnered with the likes of Apple and Google, to offer value-added services on their cars, which then become four-wheeled mobile technology platforms.

Are mega vendors strategic?

What is interesting about Aron’s observations, is that the traditional IT mega vendors – the likes of IBM, Microsoft, Oracle and SAP – are not present. In the past, for an airline like SIA to integrate its products and services with another ecommerce platform, would have required a huge amount of costly work, probably using products and services from one or more these mega vendors. While it may well be complex, connecting and taking advantage of  the network of  products and services available through an organisation like Alibaba, via an application programming interface, has  made it far easier to achieve business objectives that would have seemed near impossible a few years ago.

For the CIO, the question is: how strategic is IBM, Microsoft, Oracle or SAP to your business? This is not a question about whether they are relevant to the IT strategy, but how well these IT giants fit with the organisation’s mid and long-term business strategy. If these mega vendors are not aligned close enough, then CIOs should actively look at reducing their footprint, in order to invest more of their valuable IT budget with the new breed of strategic IT providers that are better aligned.

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