The entire outsourcing business has changed, for better or for worse, the way many IT departments are viewed in firms as well as companies in general. There are many times when outsourcing technology services is extremely valuable. However, a lack of direction about what services are delivered from inside and outside the firm can lead to confusion and some very real risks.
Let’s address one of the key reasons to outsource technology. In doing so, I hope to clarify reasons why someone may want to insource the same services.
What is outsourcing? Outsourcing IT is supposed to increase productivity, decrease costs and provide high quality talent & technology from professionals that specialize in doing what you hired them to do.
I hope that definition is acceptable; it’s hard to quantify in such a short sentence.
If you think about outsourcing in this way, it broadens out to include not just managed services, but also cloud services. Anything that handles an internal technology need outside the firm is, well, outsourcing.
There are some very good reasons to look at outsourcing. However, many times the reason for looking is to address internal issues that don’t actually have a method for improvement. I think this model can be found. Let’s call this concept Insourcing.
How do you insource your technology services?
In the definition above, let’s change the "out” for "in.”
Insourcing IT is supposed to increase productivity, decrease costs and provide high quality talent & technology from professionals that specialize in doing what you hired them to do.
There is a place for both outsourcing and insourcing in your firm. Here are three models that might help you determine how you are, or could be, insourcing your IT department. Clarifying this aspect of your business will help you understand opportunities for additional insourcing and outsourcing opportunities.
The Internal Consultant Model
I have had many conversations (and experienced some myself) where technology people are brought in at the end of a project planning stage and handed requirements to complete. The IT team is treated as a consulting department and measured by matching the requirements document.
I’ve been on an insourced consulting team that worked. The biggest hurdle was making sure the IT department was a valued team in the company. In many of the situations that don’t work, this means high expectations from a low level of owner investment. Treat your team like a star vendor that you like and respect. Start rolling out the casual calls to the team, make sure the relationship is going well and foster development of that business relationship like you would any other. I’ve received calls from the owner for a job well done that extended beyond the thank you to other situations in the company where I might be of service. This encouraged me to do the same. This is the consulting model done right – fostering relationships that improve value for all parties.
The Departmental IT Budget Model
In some instances, chargebacks are used to allow IT to take internal payment for services rendered. Each department will contract with the IT department to render services for their team. This usually happens on the support and infrastructure side (servers, maintaining desktops and laptops).
A value of the insourced chargeback model comes from an acquaintance who inherited a dysfunctional IT management position at a large company. His model for chargebacks involved rolling out key services to different departments within the firm. By establishing a cost model that showed strong return, he was able to develop strong connections with key leaders.
The track record that was established over 18 months allowed him to forecast technology growth from new business ventures. His team built additional capacity based on the projected success of new revenue. But, in order to do this my friend had to achieve a level of business acumen that made his team worth it. He didn’t speak technology – he spoke business.
The Business Process Model
There’s another option that doesn’t involve the term insourcing in the same IT context. Define your technology team as a business process management department, or make them a core asset to this team if it exists. Let’s modify our statement on insourcing to look at this method:
Insourcing business process management is supposed to increase productivity, decrease costs and provide high quality talent & technology from professionals that specialize in doing what you hired them to do.
Same statement with a very different mental outcome, right? Where did technology come into your thought process? In this model, technology is part of process improvement, not the solution provider.
A business process model is where I stand today for much of my technology work. Our company made a strategic decision many years ago to get to a point where all of our coworkers could be fully functional anywhere in the world. This involved core management choices that improved on our results-oriented work style, cultural changes that allowed off-site workers the chance to be part of the team, and more. Most of the discussion seemingly had nothing to directly do with technology…and at the same time, had everything to do with technology. I was there listening and being listened to at a level that didn’t need VPN, SIP or some other acronym. It was, and continues to be, the question "How can we work anywhere?” and involved terms like communication, relationships and accountability.
Is there a best option?
The perception of IT and how it fits into a firm/company has been argued on many sides by people much smarter and passionate than myself. I’ll leave the strong positions to others. All three models work if they are used in the correct circumstances. Here are some insights I’ve accrued that might help show the benefits of each model.
The catch with all of the models above is one of misplaced expectations. Outsourcing survives and thrives because the technology services are bolstered with marketing, customer service, sales and a core drive to make the business viable.
When was the last time you received a flyer, email or courtesy call from your IT people? With a faulty insourcing mentality, the IT department is already short on core services that would make them successful at delivering quality services to your internal clients.
In addition, you might be treating them like a vendor. Many firms don’t trust their vendors orestablish good relationships with them. It doesn’t take too much headwork to realize the same might be happening in your office.
Which leads me to a question: what is the difference between successful and stressful technology projects? It’s pretty clear that all three models allow for success if, in the end, we square back to mutual respect to move forward. In each example, trust is a common element. The other measure in each situation is the ability to talk as equals in the business.
Understanding why you treat IT differently, if it’s based on expectations from outsourcing, can lead to a lot of “ah-ha’s” for all parties. Moving to a quality insourcing model can lead to great improvements in communication, morale and most importantly, results. Just think processes, not processors and you’ll be on your way.