Many companies feel that their IT organizations are "broken" or irreparably damaged, and indeed, some are. The symptoms of a damaged IT organization are all too familiar: failed projects, big write-offs, high CIO turnover, an outdated technology base and uninvolved executives telling the latest CIO, "Call me when the problems are fixed". These companies are often tempted to succumb to the siren song of the outsourcers who offer to take over all of IT and promise to fix it.
However, companies that expect to leverage an outsourcer's expertise in this manner usually find that their costs increase dramatically. In addition, the outsourcer often requires numerous changes to corporate business processes, some of which may be unacceptable.
When an IT organization is badly damaged, outsourcing the whole thing is truly tempting, but such a desire often means "Let's abdicate all responsibility for IT." Such endeavours can be classified as "desperation outsourcing" and rarely succeed. Outsourcing IT can be successful, but not when the organization is damaged. Fix the problems first, then revisit outsourcing options.
Like the damaged arm of a starfish, the failed IT organization needs to be regenerated, not amputated. Successful regeneration efforts require a strong CIO who will say "no" loudly and clearly when needed, even if it makes powerful executives unhappy.
Regeneration efforts aren't a popularity contest. The leadership role is generally best performed by an OOTA (out of town agitator), a specialist from outside the company. The OOTA is hired as CIO to focus solely on successful regeneration, which usually takes two to three years. When the regeneration is complete, IT will be turned over to a new CIO whose skills are better suited to running a stable organization. Make sure to wait until completion to make this turnover; the two CIOs aren't interchangeable, since they have widely different skill sets. Switching too soon can undo everything that's been accomplished to date without reaping the full benefits of the regeneration effort.
Yes, the right OOTA can be expensive, but not as expensive as outsourcing your whole IT organization, and certainly not as expensive as outsourcing IT, failing and then having to bring it back in-house.
A firm foundation for successful regeneration also includes the following requirements:
- Executive buy-in. IT isn't a spectator sport. The other CxOs need to actively support the regeneration effort. Most new IT systems require changes to the underlying business processes, particularly when replacing outdated systems. Midlevel managers who prefer the status quo must not be allowed to withhold their cooperation or ignore or undermine the efforts of the regeneration team.
- Sufficient time. Problems that took many years to develop require substantial time to correct -- usually measured in years, not months. Unfortunately, there are no silver bullets.
- The right team. Regeneration isn't sexy, but don't be tempted to put a second-level team on it. Regeneration requires a talented, focused and dedicated team, and prior regeneration experience is invaluable. While the team may find it helpful to supplement existing staff with experienced consultants the internal members must be held responsible for the final results.
- Stability. Make any needed staffing changes at the start. Changing leadership or key employees midstream will almost certainly derail the effort.
- Focus and execution. Start regeneration with a clear, well-thought-out plan. Then focus ruthlessly on delivering against that plan. When an IT organization hasn't delivered for several years, there is inevitably pent-up demand for IT services. When the rest of the company realizes that the IT organization may be productive again, demand will be enormous. But the CIO must delay most new projects until regeneration nears completion. Undertaking unanticipated projects can severely hamper regeneration success.
Although it's tempting to believe that outsourcing a broken IT organization will magically fix it, this "out of sight, out of mind" approach usually spells disaster. When your IT organization is damaged, don't succumb to desperation outsourcing. Instead, take your cue from the starfish at the bottom of the ocean to make sure your IT organization doesn't end up at the bottom of the dumpbin.
Bart Perkins is managing partner at Leverage Partners