Information Technology Outsourcing


So here I am thinking, why do I need to blog?  How many bloggers there are with thousands of followers, what am I going to offer that would attract any sane person to read what I am typing?  So I thought about it, and I have concluded that I have opinions and thoughts that perhaps others think about, but for some reason are hesitant to make public.  So lets start with something I am very passionate about:

Information Technology OUTSOURCING

So we have in the past 10 years seen more and more companies making the “strategic” decision to outsource almost all the Information Technology department within the company.  I put the word Strategic in quotes because I think it is not a strategic decision, but more of a tactical one, predicated on some false belief that the processes your IT departments consume and create have no bearing to impacting top-line revenue.   So think about that.. NO BEARING on top-line revenue.  IT is just a cost center, consuming resources, only an input without actually producing outputs.

So what is wrong with wringing out the lowest cost model towards IT?  Nothing, if you have the expectation that your IT departments are NOT strategic in function, nor is it mean to drive top-line revenue.   This has been common again has I said over the past 10 years, as more and more companies declare IT is NOT a core-competency and will not deliver enhancements to the business.

I state that this is not what IT is meant to provide.  IT is not meant for only support function as a whole.  Now you can have segments of IT, such as Data Center, Call Centers, Application Support which could make sense to outsource.  The Data Center function is more akin to racking servers, installing operating systems of which is clearly a function of a “utility”.  Call Centers or Help Desk support can easily be outsourced due to the fact, that they route calls, or simply take a Level 1 ticket and route the call to the appropriate higher level support teams.

So what is NOT a candidate for IT Outsourcing today?  I think Level 2 and Level 3 technical support, Architects: both Application and Infrastructure Architects, including Network Architecture.  The network is the core, the backbone if you will of the business applications.  For far too long, networks were thought of as a “IT” tool or capability, and not as a core business enabler.  Today, the network is really a company asset, needing to deliver world-class services ,both for business applications and collaborative efforts.

Now lets look at IT management, in terms of compensation.  How are IT leaders compensated?  Salary+Bonus are the typical methods.  Are the bonuses predicated on cost-savings, or IT providing top-line enablement?  I venture to state most IT leadership are bonuses on cost savings, which drives behaviors to push IT to the lowest cost model.  Now wasting money is not endorsed by me or any reasonable person, but there is a concept called “Investment” that business need to make in terms of IT departments, so IT can really drive capabilities in terms of providing architectures and solutions to the business. 

So what happens today in this outsourcing model is that the lines of business hires its own technologists to further their own technology-agendas. This can be counter-productive to the overall company. This has led to the rogue IT teams being formed, leveraging their autonomy to install new platforms and applications, but at a localized levels. Then the business “dumps” those applications to the Enterprise IT teams to support, without involving Enterprise IT from the beginning. This lack of respect comes for the continued perceptions that Enterprise IT is only a support function. If the Enterprise IT has been diminished due to outsourcing, they cannot provide the guidance and strategy to the business, thus the cycle continues.

So perhaps the answer lies in splitting IT into multiple towers? One tower called infrastructure, that is the support function, Data Center, Call Centers, etc be outsourced. Then another tower of Enterprise Architecture, Infrastructure Architecture, Governance, Processes, etc.

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Filed under Information Technology, Management

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