The big conundrum in the question of outsourcing is in deciding what is a core business process that must be handled in-house in order to deliver value to the customer, and what is peripheral and can be handled outside the business without effecting the expertise of the service being offered. In other words, at what point in outsourcing are you starting to outsource that which makes your business of more value to your customer than does whatever organization you are outsourcing to? When are you just a middleman? What makes up your core business and what differentiates that from your competition?

In IT, the answer to this question has evolved with technology. Once upon a time, we all built our own websites, put together our own servers, ran our own data pipes, because the ability to do that better than our competitors was something that differentiated us... even if those functions otherwise had nothing to do with our core services.

Today, you are hard pressed to find anyone who builds their own sites, and outsourced hosting has become de rigeur. Managed IT services are becoming more and more accepted; now, not even internal technology processes are considered to have much core value and can be easily and cheaply outsourced at no great risk to customer services.

You may be thinking that much of this has been neatly foreshadowed in Nick Carr's "IT Doesn't Matter" but Phil Waineright has an even more forward-thinking take on outsourcing up in his post "Amazon EC2 offers a shortcut to SaaS." Phil suggests, quite correctly, that Amazon's web services and others like them which are springing up will allow potential SaaS vendors to skip much of the hard part of developing reliable, scalable infrastructure and move directly into offering their value services. One might argue that simply having a reliable, scalable infrastructure is one of the values of using SaaS, so this is a significant step in outsourcing technology.

Of course, it's not only applicable to SaaS providers-it's available to anyone who needs scalability and reliability, and it almost certainly costs less than developing it yourself.

Although such services are in their infancy, it's easy to see how their availability might affect SaaS and other technology-reliant businesses on a large scale, in the same way that cheap, easy-to-use website creation and hosting services helped fuel the explosion of the web in the late nineties and early part of this century. Better minds than mine may be able to fathom the possibilities; all I know is that it is bound to be big, whatever directions it goes.