Q

How to make the best of an outsourcing decision

My company is engaged in an internal debate about outsourcing our IT functionality, and as a line of business manager, I'm caught in the middle of the cross-fire. Our IT department and CIO are, for obvious reasons, lined up against any major outsourcing project, while the CFO is looking for cost savings and is leaning towards outsourcing at least part of our IT operations. My concern is that I have profit and loss responsibility for my line of business, regardless of how well or poorly IT functions. At least in the current environment, I can march down to the CIO's office and vent my frustrations face-to-face when things go wrong. I'm concerned that an outsourcing solution will leave me under-serviced and out of the loop. What are my alternatives?
It sounds like there's some outsourcing in your future, and rather than fight the inevitable, the better strategy is to steer your management in the right direction. This means that you need to be working to ensure that an outsourcing option doesn't ignore your prerogatives for up-time and through-put. One way to do that is to make sure that the service agreement has strong penalties and processes for keeping things running the way you need them to run. One of the positive effects of outsourcing is that service-level agreements can be written to guarantee a level of up-time that is often too costly or too onerous for internal IT to support. And the benefit of having penalties attached to the SLA is that you don't have to expend valuable internal political capital trying to get IT to keep up with your service needs: that's your outsourcing vendor's job number one. The other way to keep your P&L from suffering is to explore keeping the really strategic and/or high-value processes in-house, where you and IT can watch them more closely and have a more direct impact on their success. This is where you might be able to turn IT into an ally: instead of focusing on the drudgery of managing day-to-day commodity functionality, outsourcing can transform IT into a much more strategically focused department that works at the cutting edge of innovation and profitability. If the CFO looks like she's made up her mind, this may be an opportunity for you to build an important bridge to IT.
This was first published in March 2005

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