by Beth Bacheldor

Wisconsin Proposal Says No to Cost and Benefits Analysis of IT Outsourcing

Mar 31, 2011
Enterprise Applications

A provision in the proposed state budget would axe a law requiring agencies to study the costs and benefits of outsourcing work.

Apparently, it’s a bad idea to analyze the costs and benefits associated with outsourcing. At least that’s what it seems is the message behind a proposal from Wisconsin Gov. Scott Walker.

According to this article in JS Online, the Web site for the Milwaukee-Wisconsin Journal Sentinal, Gov. Walker, a Republican, has introduced as part of the 2011-’13 state budget a provision that would eliminate a law requiring state agencies to study the costs and benefits of outsourcing work. Current law says agencies must compare the costs of having private contractors do work costing more than $25,000 against what it would cost to have state workers do the job.

Methinks such analysis is reasonable. After all, one of the biggest problems with any IT gig that doesn’t live up to its promise is a lack of ROI analysis before the endeavor gets underway.

Before I judge to quickly, however, I should take into consideration some of the arguments for doing away with such an unreasonable request. According to the article, Administration Secretary Mike Huebsch told the state’s Joint Finance Committee that the law was cumbersome and required an analysis of contractor costs to be done even in cases where state workers couldn’t do the work. Okay, a bit over the top.

Even more illuminating (and possibly humorous if it weren’t for the fact that states and well, everyone, has no money to waste):  Huebsch added that “We did a cost-benefit analysis on the cost-benefit analysis and found it was costing us money.”

Former Gov. Jim Doyle, a Democrat, also apparently sought to repeal the provision for similar reasons, saying the cost-benefits analysis limited flexibility for agencies. You know, red tape can be so rigid.

The proposal hasn’t sailed through, and I guess I’m not the only one questioning it. Sen. Luther Olsen (R-Ripon) and Rep. Tamara Grigsby (D-Milwaukee) raised their hands…  Olsen reportedly agreed such a provision shouldn’t be restrictive but also wants to ensure agencies don’t spend willy-nilly. “Can you explain why, when we’re in a time of serious fiscal trouble, we would not want to do a serious cost-benefit analysis??.?.?.?When you are cutting government and cutting programs, you can’t afford to make mistakes,” Olsen said, according to the article.

Uh… yeah.

And clearly, folks make mistakes. Not just government, but the private sector. Outsourcing has the potential to save lots of money, but if it’s done without a thorough understanding of the costs and benefits – both in the short term and the term – chances are success will be limited.

What do you all think? Is the Wisconsin Governor doing the right thing by eliminating what could be a cumbersome legal trap, or is it wise to keep the checks and balances in place?