Thinking About Outsourcing?


Don't get stuck in thought when thinking about outsourcing.

Don't get stuck in thought when thinking about outsourcing.

After hundreds of conversations with CIOs, CFOs and CEOs I noticed a few common threads when discussing outsourcing. 

The first commonality across companies was that rarely was everything in good shape in regards to IT. Because after all, if IT was in good shape all of those C-Level executives would be focusing their attention elsewhere.  The oft-quoted story that applies to most CEOs, and other C-level executives, goes as follows: “when asked what kind of problems they typically see, the CEO said ‘I only get to see or hear about the hard problems, because if they were easy they’d already been solved before they got to me.'”

If the first truism is that IT needs help, the second truism is that it might be time to make changes in your staff.

If the bulk of your IT team has been in place since the days of Dos and Win 3.11 maybe it’s time for some fresh blood. It’s not that your IT team aren’t hard-working, dedicated employees doing their best but they may be suffering from a lack of exposure to new ideas. And if they aren’t hard-working why are they still working for you? 

 Change can be tough but a team built around the needs of mainframes which emphasizes centralized control and measured changes may not be the team best suited to mobilizing data and applications. But then again they might welcome the challenge and bring an organizational and historical perspective that can prove valuable and is something very few consultants can match.

Another benefit of IT turnover is the infusion of new ideas and ways of doing things. Just as cross-pollination can create a hybrid plant that is more vigorous, so too can making sure that your staff has expertise in multiple disciplines. But of course there is danger in too much turnover or turnover merely for the sake of turnover. As with most things you have to be strategic thinking not how the team is constructed today, but how it needs to be structured going forward and what skills the organizations needs right now and which skills will be needed in the future.

If you staffed up your IT department as part of a multi-year WAN initiative and that project is winding down do you really need 6 Cisco CCIEs on staff when you won’t be making any significant WAN changes anytime in the near future? Maybe the ongoing maintenance and monitoring of your WAN architecture would be better handled by a 3rd party vendor solely focused on similar tasks that benefit from economies of scale. The cost savings will probably be significant but more importantly good CCIEs want to be challenged by the next new thing, they usually don’t fit the profile of people who want to babysit a network.  And it’s not good for anyone’s morale to have bored IT staffers.

A common mistake companies make when discussing or planning outsourcing initiatives is the “we’re going to fix everything first, then outsource it” mindset. This is a mistake for several reasons – first of all if things were easily fixable then why haven’t they already been fixed. Secondly by postponing outsourcing to some nebulous time in the future the benefits and opportunties that outsourcing can enable are also postponed. If your organization needs to outsource, waiting to do it only hurts it and puts you further behind the 8-ball when you do finally outsource.

The opposite approach, that’s equally wrong, is the “we’ll outsource everything and let them fix it.”  This approach doesn’t work either because how an organization works before and after significant IT changes can be vast, too vast to be reflected in contract language and outsourcing skills sets.  Besides the contract difficulties, the skills needed to make dramatic changes and improvements in IT are not usually the same skills needed to monitor and maintain an organization’s IT.

Everyone has seen outsourcing agreements so static and non-changing that trying to do accomplish something new six months after implementation is virtually impossible because if it’s not in the contract you have to negotiate a change order. Which sets off a new round of pricing negotiations, etc. In fact it’s that very change order process which many outsourcing vendors count on to make their profits since many outsourcing agreements are architected to be a loss-leader in the first few years.

Regardless of what you outsource and how you get there ultimately what matters for an outsourcing engagement to be successful is for all parties interests to be aligned – this can be difficult to do, but worth the time to make happen. And it needs to be revisited often. What worked 18 months ago may not work today and probably won’t work in another 18 months yet many outsourcing contracts are 3, 5, and even 7 years long.

Wholesale outsourcing is rarely the panacea that everyone dreams about, but strategic outsourcing is essential for an organization to be able to effectively meet the demands of today’s business environment. In the end only you and your team know what is strategic to outsource and what is best kept in-house.

 What’s your best outsourcing story as client, vendor or an end-user? -t

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