Want business innovation from IT outsourcing? Start with your company’s Operating Model for IT.

A lesson from the field: business innovation begins at home. I got in after midnight this morning from two-days intensive work with a CIO client in Scotland. He and his team are deep into the process of restructuring their IT sourcing model, evaluating potential partners. I count myself very lucky to work with some really innovative people. Contradicting the stereotype, most of them are in established, industry-leading organisations, not just-off-the-blocks startups. In this case, the CIO and his team know exactly what they want from their new sourcing model, with the full backing of the company executives. Efficiencies of course, and some risk sharing – but equally the oportunity to work with some of the IT industry’s leading players, and use their knowledge and experience as part of a “captain’s table” for business innovation. The reason I’m helping them right now is because the first port of call for their business to innovate is in the company’s Operating Model for IT. The existing operating model will just not work with the redesigned sourcing structure, nor make sure the company exploits it for maximum gain. The IT management team will need to move up the value chain, make a different contribution to the company’s success and with it gain more influence over business decisions, behaviors and outcomes. By contrast I’ve noticed that the IT management teams that don’t innovate their company’s Operating Model for IT as they restructure their IT sourcing model seem to be the ones who can get stuck in no-mans land once the sourcing deals are done. Being neither wholeheartedly part of the mainstream business, nor one of the suppliers, they can easily feel disenfranchised or relegated to contract managers of the IT service providers (an outpost of procurement, if you like). So the lesson from our colleagues in Scotland: when you’re looking for business innovation from IT outsourcing – the best place to start is at home, with the company’s Operating Model for IT, and well before the deals are done.