Outsourcing seems to be a dirty word in the IT community, despite the fact that it has become necessary to consider the outsourcing of non-core activities as a strategic option in the end-to-end management of Information Technology. While outsourcing for outsourcing’s sake is a fatally flawed strategy, the outsourcing of non-value-adding processes and services has to be taken into consideration by any IT organization that hopes to meet changing business needs in a timely and consistent manner. A common tendency of some IT organizations is to adopt a defensive attitude towards outsourcing and either attempt to indefinitely stall what in many cases is already inevitable, or struggle to somehow demonstrate value to the business by wearing as many hats as possible and providing every IT service in-house; as talented as a team might be, the velocity and breadth of emerging business requirements makes it impossible for most internal organizations to provide services at the levels of availability, performance, functionality, and value required by the business. The result of trying to be everything to the business is that the aggregate level of service gets watered down with each new service introduced and brought under management, until eventually the model becomes completely unsustainable. At some point, the realization needs to be made that IT requires the focus of a laser beam, not a shotgun blast, to deliver world class results. Outsourcing is not an either/or proposition, and organizations that learn to look beyond this duality and view outsourcing as an opportunity to leverage external resources to accomplish activities outside of the scope of core competencies - to reduce costs, increase the velocity of service delivery, and free internal resources to focus on value-adding activities – will gain an inherent advantage over peers that do not capitalize on the opportunity.
The Mikan Group’s position on outsourcing is that no viable option can be left off the table by either the business or the Information Technology organization when planning and executing an organization’s strategic vision. We understand the general apprehension towards outsourcing and its implications, but we also understand that much of the resistance is based on speculation and hype. And to be clear, while outsourcing and offshoring are terms that have become nearly synonymous, there is a very clear distinction between the two. But for the sake of addressing the fear, uncertainty, and doubt associated with the topic, we will cut to the core and address the issue of jobs being sourced globally at the perceived expense of American workers. Not to put too fine a point on it, nobody wants to see American jobs arbitrarily shipped overseas – especially us. The Mikan Group believes absolutely in the business value of Information Technology, and we believe in the technology leadership position of the United States, but we are also realistic in our assessment of the current state of the IT function; there is a growing disconnect between the services that IT delivers to the business and the services that the business expects from IT.
We must take responsibility for the fact that the track record of Information Technology producing sustainable business value is less than consistent, and we must find ways to restore faith in IT by leading a fundamental change in the way IT supports the business in a manner that is nothing less than revolutionary. The defensive strategies of survivalism and protectionism only make the situation worse, and while we realize that some businesses have engaged in wholesale offshoring of entire functions as a fairly short sighted reaction to cut costs and improve margins over the immediate term, the harsh reality that we can no longer deny is that IT has reached what Andrew Grove referred to as a “strategic inflection point” and we can either lead IT to new heights by focusing on tight integration with business strategy and objectives, or we can cling on to the past and hope to weather a storm that is only going to wash away IT as we know it today. Whether you are an executive looking to maximize the value of your enterprise IT investment, a business leader looking to improve the effectiveness of your function by leveraging process and technological innovation, or an IT leader looking to align your team, systems, and processes with core business strategy, The Mikan Group can enable you to reach your objectives and deliver business results within the framework of the organizational model best suits your business: in-house, outsourced, or anywhere in between.
This entry first appeared in The Mikan Group Blog on August 25, 2007. It is being published on SaaSkatoon in an effort to archive selected content acquired by Delivered Innovation in 2008.
0 Responses to “On Outsourcing (The Mikan Group Blog Archive)”