I recently left a large company well known for its technology acquisitions.  In the course of my tenure there, the company acquired as many as 30 firms a year!  In virtually every case the successful purchases were those strongly grounded in immediate, short-term, and tactical improvements to the technology portfolio.  Less likely to succeed were acquistions that were designed to build market share.  Failures tended to hinge on some unknown factor — the mythical “synergy”.

But I think there is a valid place in technology portfolio analysis for the term synergy when it’s used in a restricted sense.

Technological synergy is a powerful concept that describes how multiple products or technologies work together in a clearly defined and differentiated system.   This system could be a solution that incoporates a number of products in a new and compelling way.  It might be a number of code modules that are recombined in a unique manner.  It might be as simple as a mashup of web information into a single interface that drives consumer interest.

In all such cases synergy provides

1. Something unique and different
2. Something greater than the sum of its parts
3. Something compelling

Because I frequently work across technology companies (usually strategic technology alliances) and with a wide range of portfolios, I’ve seen technical synergy frequently occur when assembling multi-vendor solutions. 

One such solution was the first Video-over-IP (TV over Ethernet) delivered by FastWeb in Italy.  The solution included encoders/transmission gear/set-to-boxes/etc. from a number of vendors all brought together in a new and powerful way.  While working on this early deployment of what has become commonplace I was struck by how all the parts were already available.  Not a single new product needed to be developed, they were all already in place.

Another technology synergy I worked with was an MPLS open-access system for DOCSIS cable modem ISPs (Comcast, etc.)   When designing this system we used all off-the-shelf code already resident on the CMTS systems from Cisco.  No need to write new code or develop new products — we just needed the creativity to combine old products in new ways to build “synergy”.

• Outsourcing IT.  IDC recently reported that by 2012 9% of all IT will be outsourced.  At the IAS session there was a lot of talk about what this means for those of us who work in IT as either vendors or practitioners.  I think it first that the number is low.  I think a lot of IT will be outsourced and that IDC’s definition of IT is limited.  Technology trends like VDI, cloud providers, and virtualization of development environments will suprise the industry and we’ll see a lot more “outsourcing” that most people expect.  However, I don’t think it will result in a loss of IT jobs or a devaluing of IT skills!  What will occur is the transfer of non-core activities away from some companies and into the hands of others.  This will allow both the outsourcing company and the IT provider to focus on their own business strengths rather than on IT busywork.  One speaker at the event claimed around 70% of an IT manager’s time is spent on low-value maintenance tasks and only 30% on higher-value architecture/support/planning functions that provide strategic value to the firm.  But, when a firm outsources the 70% problems of delivery and support arise.  We’ll see a lot of focus on SLAs for outsourcing companies and the firms that supply IT as a Service (ITaas) and delivery realistic SLAs to their customers will be the winners in this game.

• Offshoring IT.  Are IT jobs in the USA moving offshore?  Definitely.  And this is a good thing for two reasons.  First, for most large IT teams a global presence is a business necessity.   Global business presences require highly available data centers, support teams, and delivery capabilities.  To make 24/7/365 delivery a reality, a global physical presence is required.  Geography, natural disasters, and timezone issues necessitate moving some activity offshore.   And lower costs associated with offshored business make companies that pursue a global physical presence more competitive in many cases.   But what about US jobs in IT?  One should remember that a global business presence can only be accomplished by companies with solid competent IT departments.  IT enables offshoring, to a great extent.  Therefore I say high-quality IT jobs are not only safe in the US – but demand for IT professionals that can think strategically and globally will only increase over the next 10 years.