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The Boomer Bulletin - 2010
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Are You a Quality Insourcer?

Posted By Eric Benson, Monday, February 1, 2010
Eric Benson

In past years, the mission for technology departments in firms has gone through a roller coaster. Sometimes the ride has been a positive one. For example, understanding how systems affect compliance has heavily involved the IT sweet spot. Other times (like now), technology is a place where cuts can happen and projects that might help the firm are buried, sometimes for the 900th time. In both instances, things can go well and things can go terribly. What’s the difference?

Let’s start the discussion with a seemingly unrelated statement on 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. Now, change the "out” for "in.” Does it ring true in your firm?

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.

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. This can cause quite a bit of frustration on both ends of the spectrum – from the IT team and the rest of the business.

Here are three models that might help you determine how you are insourcing your IT department.

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.

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).

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? For many, it may only be there because this article is about IT. In this model, technology is part of process management, not the solution provider.

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 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 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. Most firms don’t trust their vendors and establish good relationships with them. It doesn’t take too much headwork to realize the same might be happening in your office.

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.

A value of the insourced chargeback model comes from a friend who inherited an IT job at a large company. His model from chargebacks involved rolling out some of the ITIL demand management model to key areas. This allowed him to benefit from the ability to forecast technology growth from new business ventures. In other words, he could build in additional capacity based on the projected success of new revenue. This involved a pretty proactive involvement with the departments he worked with so that his chargeback costs weren’t looked at as just maintaining the status quo. As a result, a 10,000% increase in one venture was planned and paid for 18 months in advance. But, in order to do this my friend had to achieve a level of business acumen that made his team worth it.

Finally, the process model I mentioned above is where I stand today for much of my technology work. Our company made a strategic decision 3 years ago to get to 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, culture 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.

Which leads me to a question from the beginning of this article; 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.

For where our company is at, I know all three systems work because we use them in different contexts every week. But, for all of the rah-rahs that might come out of my mouth, we get them wrong quite often. That’s where having a track record of success and open communication helps smooth over the rough patches. Understanding why you treat IT differently if it’s based on expectations from outsourcing can lead to a lot of ah-has 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.

Tags:  Eric Benson  IT planning  outsourcing 

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