Money talks

By now you've heard that the secret source known as Deep Throat in the Watergate affair turned out to be Mark Felt, former assistant FBI director. As the story goes, Felt repeatedly urged Woodward to "follow the money" in their clandestine meetings in parking garages.

That admonishment applies to almost any organization you want to learn the truth about, including the IT department. It's budget time here so I've been following my own money trail. The numbers tell a story of how IT is changing. And in some cases, those changes are striking.

We are a small company, but that hasn't kept me from continuing to allocate serious cash to outsourcing. I've written many times about my decision more than three years ago to outsource our desktop PC and file/print infrastructure.

My provider isn't perfect but most IT departments are far less perfect due to limited service hours and lack of expertise in some areas. My advice to CTOs and CIOs who spend significant time on mundane desktop-support issues: the sooner you let that function go, the better. My budget suggests that two areas in particular still demand in-house expertise: networking and software development. With each passing year, we move more hardware and key functions out of our headquarters and into co-location facilities. The reason is simple: nagging problems such as heating, cooling, and electrical power essentially disappear, and the cost for datacentre space continues to drop. When all our assets are distributed across various networks, the rare person who has a deep understanding of the networking guts provides ongoing value that I prefer to keep in-house.

When it comes to software development, I'm a contrarian. Conventional wisdom says software development is the most easily outsourced function. But in my opinion, a talented in-house development team is key to real business innovation.

My strategy is simple: outsource operational functions that provide little or no strategic value to the business (such as desktop support) and use the savings in time and money to fund efforts to build better products and sell them more effectively. As a key part of the business, IT needs to focus its most creative and intensive efforts on supporting new business opportunities with high-revenue potential. The remainder must answer the question: can it be done cheaper and better by someone else?

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