Archive | ROI

Is outsourcing the question or the answer?

Once upon a time, the answer to the question of what are the main benefits of outsourcing was cost savings based on labour arbitrage, but today that response would be superficial and incomplete.

I believe the main benefits of outsourcing are access to scarce skills, expertise and the latest technology, cost reduction, turning capital expenditure into operating expenditure, and the opportunity to concentrate resources on core business objectives.
If you think about outsourcing in this manner, you will not only start to realise areas within your IT organisation that would benefit from adopting it but also ways as a strategic leader you can add further value to your entire organisation by doing so.

The first big error people make when considering outsourcing is looking to resolve a problem without first looking to do so in-house – a problem remains a problem no matter where it sits.
Sensible outsourcing providers will often sniff this out during the RFP or other stages of the bidding process but others may look to take it on, hoping they can fix the issue(s) as a calculated risk whilst trying to win the business (the fact a vendor accepts this huge risk should really start ringing alarm bells for you as you both know there’s an elephant in the room).
Those that don’t take the business (and hopefully this is the majority) will likely make you consider going back and fixing the problem before re-tendering. Those who take it on will only delay the inevitable, leaving you not only with a larger problem downstream but also with the added bonus of a whole heap of complex contractual issues to sort out (which I imagine you will now discover were also not properly agreed or worded up front).
Many take this approach and get their fingers burnt with outsourcing, vowing never to return.
It’s a real shame, as outsourcing done in the right way is an extremely beneficial way to add to the value you provide to your organisation.

The second biggest error people make when considering outsourcing is to engage with and select a vendor by having only had a few live sales meetings/conference calls with a cursory glance over provided case studies. Coupled without ever having visited their operating/service centres to see them in action in a live environment or meet their staff that will be working with your team in person.
You wouldn’t do this if you were hiring permanent staff or running the project in-house, so why do this when exploring outsourcing? It makes no sense.
This often occurs when a company decides to outsource a small project or a portion of it to see if outsourcing works for them in an operational sense.
The vendor is often chosen just on labour arbitrage and due to this the work is often performed in Asia or Eastern Europe.
The ‘project’ is often then left with the vendor with scant and seemingly erratic communication and only poured over in detail once the deliverable is returned with obvious errors.
The end result is the project often has to be redone in-house, blowing the project budget, causing delays and delivering red faces all round.
Outsourcing is again blamed as the enemy with the lack of communication and poor vendor selection/interaction issues being swept conveniently under the carpet.

So, in reflection it may be outsourcing is not for you but you owe it to yourself and your organisation to try everything that can add value to what you deliver.
Outsourcing executed properly can provide real value when opportunities are identified, structured, communicated and managed correctly, so what are you waiting for?

This piece has also been posted on:
The Intel IT Peer Network in my position as IT Industry ‘Thought Leader’ and Featured Blogger
The Business Value Exchange in my position as CIO ‘Thought Leader’ and Featured Contributor
Outsource Magazine in my position as IT Industry ‘Thought Leader’ and Featured Columnist

5

A glimpse of the future for CIO’s

There are those that try to predict it; those that dread it and those that revel in it but you can’t deny that it’s going to happen in some way shape or form.

If you are of a certain age such as me you will remember watching the BBC show ‘Tomorrows World’ and its predictions of how we would be living now.
I remember the notions of how we would all be commuting to work in our own private flying saucers and having our meals served to us by robot butlers that seem so fanciful now.

Whilst we haven’t seen many of these predictions come true, the future will always bring new developments. Its what we do with them and how we react that counts!

One of my favourite sporting metaphors is that ‘you make your own luck’ and this really translates to if you work hard and deliver, you will start to receive kinder breaks along the way’.
Realistically, no matter how much you try to hide from it, the future really is what you make it.

When we are doing any form of business planning, we have to try and cater for what the future will bring as accurately as possible.
Whilst this is not easy, you can try to follow trends or address certain needs such as installing a CRM or ERP system (big gulp) and many of these will be able to reach the budgetary approval stage, as they are often known as being necessary for any thriving business by the CEO/CFO.

Any C-Suite will want to see innovation coming from its IT head but how far they want to go and what allocation of cash you get is down to the individual to prise away from them.
You should be strong and demand some allocation for innovation, as you really never know if this could give your company a game changing service or something to lift it away from its competitors.
Often, if you do this once and succeed in delivering ROI there will be a release of at least a couple of the CFO’s fingers from the purse strings before you next meet.

Innovation is the real key here and in these tough times, its what is going to bring and keep IT at the top table whilst gaining you the full support of your peers.
Innovation is what separates the old-fashioned ‘lights on’ mentality of the old school IT Director from the new school machinations of the CIO.
Indeed, many suggest that the title of CIO should stand for Chief Innovation Officer rather than the traditional Chief Information Officer (more of that on another day).
One thing is for sure, you don’t want to be stagnating as the old school IT Director any longer and in any type of organisation this can no longer be tolerated.
When the now more frequent organisational reviews take place, you certainly don’t want to be the person searching frantically for a chair to sit on when the music stops….

Every IT head needs to always have one eye on the future and in how they can bring value to the business in spotting a new trend or service that will add real value to the business.
If you spot a service that you think would be advantageous for a particular function in your organisation, don’t be afraid to get them involved in a demo or a meeting with the vendor as quickly as possible – they will thank you either way for involving and thinking of them.
If you think there is something there that can be useful, they could probably spot at least another five reasons if the service is right for them during the demo.
This not only brings quicker ROI if the service is on the money but will also display a real willingness to collaborate across your top team.
Multiply this by a few times and you could well have your very own thriving business incubator.

When in the pre planning stages for budgeting you really need to add a blend of keeping the lights on, the addition of new and proven services as well as a smidgeon for the piloting of new offerings.

Offering that smidgeon or ‘skunk works’ as American’s call it is what will really spark innovation and allow staff to spread their wings a bit by being involved.
Indeed, many US corporations such as Google and LinkedIn offer as much as one full day a week or month to staff to work on personal projects.
These ‘personal project’s’ have delivered unbelievable return and form the backbone of some of the most profitable deliverables that these companies have produced through their ‘labs’ or ‘hack-days’ respectively.

I can hear you saying that it’s all right for these huge, profitable corporations to allow staff to spare their time for this, but I can assure that it really does make a difference as long as its not to the detriment of all of your other pressing deliverables (its also a brilliant palette cleanser for staff to work on in between large projects and to rev them up for their next major challenge).
There is a reason that the best and brightest go to such companies and its not just the resources or money available to them (they could get these in most places) but its mainly the collegiate culture in which they know that if they have a good idea, it will be recognised, nurtured and noticed right up to the boardroom (how may of us can really promise that to new recruits).

I have often come across some of the best ideas or products in the strangest places (stop giggling at the back).
The smallest conversations with colleagues or strangers can provide such a spark and be more profitable than the mundane act of trawling across endless conference floors getting your badge barcode zapped by smiling vendors promising to solve all of your problems whilst you pilfer any available freebies on their stand (we’ve all done it right…?).
The difference is having the confidence to carry them through and the belief in your peers to believe and trust in you to do so.
Social Media is also making it easier by the day to find new products or services that you can follow up on.
The social media marketplace is a real melting pot of products, innovations and ideas, with some shooting up and dying like cheap fireworks but if you scratch beneath the surface and mine the seams you will find some real gems.

The obvious winner is the quality or following of the idea and these will be the kingmakers of any new product or service that you provide.
Having a great product but no following will cause it a quick and painful death and face in the boardroom if you continue to push it – know when to move on, even with a bloodied nose.

I can’t say that we will be commuting in our personal flying saucers anytime soon but one thing I do know about the future right now is that its going to be bumpy and that you have to be in it to win it.

Carpe diem.

 

4

Doing more for less

We all think we are saving costs, pushing new projects back and pruning the odd budget code here and there.

But are we really saving money and providing the best possible service?

As all of us have had to during the recent downturn, explored all of our outgoings and slashed our costs bases both where we needed to and where we were told (a story for another day…).

But are we really looking to add real innovation and projects that provide real ROI to the whole business or just thinking about our own cost bases?

Do you continue to carry on as normal, having accepted the market conditions that have affected everyone or do you think about your contribution and how you can add more value for less money.

To perform a real roots and branch review takes courage and adds a degree of transparency to the IT department; both of which are something an IT Director would normally like to leave well alone.

But this is a time when something really must be done, both to show the rest of the business that IT is really an integral part of it beyond mere statements and to add real value whilst spending less.

Not possible I hear you say but if you actually start with taking away the projects you think the business needs as well as the time/resource trying to tell them so and actually engage with them, you can start working with them on delivering projects that make a real difference as well as sharing the costs and resources.

I know this may already have your palms sweating and thinking that its easy for him to say as he doesn’t know my company, but working together more often (other than agreeing to and never doing so over that late night drink at the 2-day senior management offsite or flashing a forced smile at them at a board meeting when given ‘friendly’ feedback) will become easier and even rewarding over time.

In fact, rather than an IT presentation becoming target practice for disgruntled peers taking pot-shots over project delays or regaling you for not understanding what they really want, you may start to procure positive engagement from them once you start listening to their real issues.

Now, these projects could range from collaboration on systems such as replacing the creaking CRM tool or better empowering the Intranet that nobody seems to use except the CEO for broadcasting their message to the company or for looking up extension numbers….

There are a number of obvious areas right away to look at for where you can save costs and seek to improve service levels such as how you are providing internal desktop support, vendor pricing/contracts, software development or network provision.
Are you really providing these services as best you can or just holding on to them, as you don’t want to relinquish any of your ‘power’ bases?
Are the teams you have working on them the best available or what you can afford?
When you negotiate new vendor contracts, do you squeeze the best out of them regarding service provision or cost?
Are you courting new suppliers or just staying with your current ones you’ve been using for years as they ‘know you’ and are already offering you their best pricing options……cough?

The size of your operation doesn’t really matter here, obviously the larger you are the more money you can save but cutting fractions from the smaller operations all add up to something whole that will not only please you but may also mean that monthly meeting with the finance team will be a far more pleasant experience each month.

Of primary importance is the need to engage your own team(s) in this roots and branch review and make sure all of them are as focused on doing this as you are.
Having your own people switched on and fully engaged in this is vital and will allow real collaboration both internally and externally facing when getting the message across.

There is always overlap in your own areas you already know of but this type of review brings to light those grubby little things that always need to get done but are often overlooked and never looked at with a more meaningful eye.
Often when these smaller issues are reviewed, they naturally lead in to larger discussions on how they can be improved or even eradicated.
These are normally reviewed with much gnashing of teeth but are often the stepping-stones up to allow you to look over the wall to a brighter future!

More often than not, there are manual interventions that keep systems running such as the stored procedure that ‘Steve’ in IT Support runs every Thursday morning which updates the invoice tables in your finance system (something the new vendor told you would be fixed if you chose their system but obviously never was despite an extra couple of consultancy days and a looming maintenance release….).

These little interventions that provide the knitting between systems often cause the most angst between IT and the rest of the business.
They are typically the first thing mentioned in monthly meetings and are the gremlins that eschew system reporting across the business.

Naturally, is it time to look at outsourcing, offshoring etc.?
Most of the time, outsourcing any or all of these services will provide a better service at a lower cost than you are currently managing in servicing it yourself.
Also, throw in 24x7x365 support across the piece and being woken up in the night or being hassled first thing in the morning by foreign support issues will start to fade away with a happier user experience had all round.

This may be a scary step for those that haven’t done it but do you really want to control every flashing light in the business or make a real contribution to its future?

With the advent of cloud computing, some of the management and operational control of systems will naturally flow in to the business.
You won’t be needed for aspects of change control, permissions requests, report creation or extra disk space but will you miss this?
This is something that needs to be embraced but doesn’t mean control is ceded but shared as you will naturally be involved on an advisory basis.
You are a trusted advisor to your business and rather than regale them on moving to a cloud solution, get on board and help them out as they will need you more than you think.

You will find that the business and peers will in fact respect you for even performing this roots and branch review, as all senior people know how tough it is to do so.

I truly believe that not only providing more for less cost is possible but the business will be able to recycle the cost in to providing more meaningful services and hopefully propelling you towards a rightful seat at the top table (or adding a more comfortable cushion on to your seat if already there).

Some may say that IT is dying, which is far from happening but it is the start of another cycle in technology where cost and results are more prevalent than ever.
IT Directors are no longer able to stay in the shadows and hope the market picks up around them but rather it is time for them to step out into the sunlight and lead the way.
You never know, it could be exactly what you have been waiting for.

Good luck and let me know how you get on.

 

4