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Technology Management | Concept of Verticalization in IT Industry

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Concept of Verticalization in IT Industry

by Varun Gupta *

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Page - 3

Ultimately, verticalization means not just adding a new functionality specific to a given industry solution, but adding vertical functionality to the horizontal functions with the ERP package as well, resulting in the verticalization of workflows, supply chains, data warehouses and analytical tools.

Verticalization, which incorporates additional assets / resources, such as those acquired through patenting software applications or through developing web services, may result in developing a strategic differentiator against other competitors and rivals.

Drivers of IT Sourcing

Economic Strategic & Organizational
To save costs To focus on core business
To control IT cost (cost predictability) To eliminate a burdensome IT function
To sell surplus capital assets To gain access to high quality IT services and skills
Accountability of control To reduce backlog of application development
To free resources for core activities To restructure (devolution of IT), i.e., downsizing
  To handle fluctuating IT demands
  To exploit new technology
  For speedy response to IT needs and to accelerate re-engineering benefits
Technical Reasons Political & Other Reasons
Access to expertise / technology Government legislation
Perceived poor performance of internal staff Enhancement of credibility
Access to better quality services To solve internal conflicts
  Reaction to the bandwagon

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* Contributed by -
Varun Gupta,
B.E. (Electronics), Mumbai University,
MBA, ICFAI University, Hyderabad,
Currently working as Business Analyst with NSE.IT Ltd., Mumbai.

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