Bring any group of CIOs together and mention the word outsourcing, and stand back – it’s an emotional subject. Fear, loathing, love, tolerance: few are neutral. Many CIOs (or whatever title the IT portfolio leader is given) are either already outsourcing some functions today or are looking at whether it may be an option.
If you’re not looking at and not talking about outsourcing with the executive team, then expect your CEO or CFO to ask you why you’re NOT bringing it forward. They’re being barraged by vendors whose solutions are the magic silver bullet to solve all of your corporation’s IT needs, both those today and anything that might come up in the future.
By contrast, you’re the internal IT guy who only ever talks about problems and always has excuses for why things can’t be done (you call it reality): the high costs of maintaining legacy systems, unrealistic expectations and deadlines, lack of commitment to change by end users... Palaces in the air trump catching the alligators and putting them back in the swamp, especially around budget time if hard information hasn’t been part of the dialog.
This blog is a forum on outsourcing: to exchange ideas, ask questions, and share stories of successes, of ventures not so successful, and the apocryphal “here’s is what I learned the hard way.” So to help kick off the discussion, a few thoughts on the basics:
I’ve been a CIO who has developed and managed a number of outsourcing arrangements, from basic supply of services to complete outsourcing of all production and development functions, moving an existing outsourced set of functions from one vendor to another, and a joint venture or two thrown in. Today I help organizations determine whether to outsource, help them find and develop the appropriate relationship (RFPs, contracts, SLAs), or troubleshoot “broken” outsourcing relationships. More often than not, I talk myself out of an engagement before it starts by asking some basic questions:
§ What functions are you planning to outsource (have outsourced)?
§ How are these done today (what’s working and what’s not)?
§ What do you expect to gain by outsourcing these functions (what’s the shortfall)?
§ What business objectives are (or are not being) met by changing how these functions are done?
If the answers aren’t clear or expressed in measurable business terms (SLAs are rarely meaningful outside IT), then I offer to facilitate the executive discussion to set these.
Any gap between expectations, how they are to be measured, and the understanding of what actions are needed by both partners to achieve them, jeopardizes the outsourcing relationship before it even starts. Also, while it seems obvious, the outsourcing services partner’s success criteria are based on their organizational goals (revenues, base contract and add-on), not yours (achieving business criteria, cost control, etc).
Outsourcing presents a leadership challenge for the CIO, requiring you to gain and keep the executive team commited to the changes needed to do business in a different way, to manage organizational change in the business processes, and to manage IT’s changes in how IT delivers its services. What’s constant is that the CIO is accountable for IT’s ability to contribute to the organization’s success whether the services are delivered in-house or are outsourced.
What are your outsourcing issues?