May 4, 2005 at 4:33 pm
Outsourcing should be used to free up staff, not replace them. That's a great mantra and one that's being espoused by the Gartner Group to its client.
The logic is simple. Much of the IT budget it just "keeping the lights on", the tedious, mundane, everyday stuff that the Operations folks do. By outsourcing these functions, you free up the people with real business knowledge, with the ability to let IT start contributing to the growth of the business to work on those projects that are strategic in nature.
When I worked at Peoplesoft, most of IT was being pushed as strategic to the company, but the reality in what we all saw was that IT wasn't strategic, but rather a functional and necessary tool for the company. Being strategic is actually contributing to the bottom line by growing the company. Not just maintaining the systems. Too many CIOs push IT as strategic, but let it get bogged down in the daily operations of keeping the company alive. If IT is like a telephone, a necessary and vital tool, but still a tool, then it's not strategic.
Note that outsourcing is being pushed, not offshoring. There's a huge difference and it's one that I think we should be aware of. I can believe that moving these functions to a more specialized group, like a large company that focuses specifically on keeping the operational side of IT stable and functional, then this can be a good thing. The cost savings should result from some best practices, the ability to shuffle people between clients as needs arise, and the standardization of practices to require less people to get the same work done.
As a DBA, I've seen a few companies start to follow this model, offering the daily administration of your database as an outsourced function, enabling your DBAs to be more on the development side of things, writing reports, building applications, rather than checking logs and applying patches. Overall it's a good idea.
The big problem that I see with all this is that many of the daily, mundane operational things that IT does, while not critical to your company, deal with critical data. And private data. File servers, email servers, and lots of databases house valuable data about your company and entrusting these systems to those outside the company brings up a potential legal quagmire if data is stolen or disclosed. New regulations have started to require more and more data security.
That's a huge issue for companies that offshore. And a single violation of some laws could erase any potential savings from cheaper labor outside your country. It may be less of a concern inside a country with outsourcing, but it still remains to be seen how things will shake out once lawyers get involved. Can you imagine if IBM or EDS had outsourced the management of the ChoicePoint systems? Who would be liable in that case?
Maybe I should go back to law school. That might be the next hot "IT" market.
Steve Jones
May 5, 2005 at 5:50 am
I think your dead on about bring in help. The only problems is getting the help not to over stay thier welcome!
May 5, 2005 at 6:50 am
As a de-facto DBA who certainly prefers development to log checking, I couldn't agree more. We have been through a great deal of off-shoring. It was sold originally as handling the tedious and mundane but became production development that did not go at all well. There is some serious backlash but we are under contract so...
We have also done on-shore outsourcing of many network functions, many being supported by people who used to be employees. That has gone somewhat better. I don't know if the location made a difference of the nature of the agreements played a larger role there. Both are certainly elements.
As you point out the potential with IBM, I CRINGE every time I think of US taxpayers data being resident in other countries, not to mention BMV data from many states. Sure, some contries have privacy laws around the internet that are almost draconian by US standards, but do all these countries we like to off-shore to have similar privacy laws around non-internet personal or corporate financial data that can be enforced by US law enforcement? I wonder...
All comments posted here are of a personal nature. They do not reflect the views nor are they endorsed by my employer.
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