by Beth Bacheldor

CIOs and Outsourcing: Tips, Strategies, and Best Practices

Nov 15, 2010
IT Leadership

Gartner’s Linda Cohen offers up some outsourcing wisdom, including the idea that outsourcing should be strategic.

Gartner analyst Linda Cohen spoke with editors at our sister publication on the other side of the world — CIO Australia – about more effective ways to approach and manage outsourcing, and I wanted to share with you some of her ideas.

First, Cohen said CIOs need to consider outsourcing as an operating strategy rather than a problem solver, or band-aid. I couldn’t agree more. Whenever any IT project or initiative is viewed as a way to fix a problem rather than as a strategic effort, there’s bound to be trouble. If an IT project or initiative can’t deliver real results (read: operational efficiencies, cost savings, productivity gains, innovation) or at least be viewed as the means to achieve real results, then what’s the point?

Sometimes, it’s a matter of perception. Instead of viewing an outsourcing deal that’s going to fix the problem of unwieldy and complex desktop management, why not view the deal as shifting the more mundane tasks of desktop management to a third-party in order to free up in-house IT staffers for more strategic IT efforts?

Another misconception Gartner’s Cohen talked about is the misconception that outsourcing will save the business money over a period of time. “The number one reason they choose to outsource is this theory that they can lower their costs… honestly, history tells us the act of outsourcing doesn’t save money,” Cohen told CIO Australia. “The real problem is how do you sustain the lower cost to operate?”

Saving money may be the fortunate result of an outsourcing gig in the beginning, but as we’ve talked about many a times here in this blog, without proper care and ongoing management and oversight, the outsourcing contract may no longer deliver the cost savings or benefits it was designed to deliver.

With most research indicating that outsourcing is only going to grow, and that more and more businesses will ultimately outsource some or all of their IT going forward, it is increasingly clear that the CIOs’ roles within their IT organizations is changing. According to Cohen, CIOs need to become more than just managers of IT. They need to become the suppliers, or brokers, of IT to the business.

That may be what many CIOs already feel they are doing, but keep in mind that being a supplier will require different skillsets. Some CIOs are quite adept at building vendor relationships and then leveraging those relationships to their advantages. They know how to call on a vendor as a partner, and to push for SLAs that require all the parties to put some skin in the game. They also know how to call on a vendor as a source of information that may lead them to other vendors.

Being a supplier of IT will also require CIOs to have a broad and deep understanding of their business’ needs, as well as the business and technology needs and trends within the industry of which they are a part.

Cohen provided CIO Australia with some top tips for CIOs looking to outsource, too. Among her tips: Take control of your outsourced technology and avoid vendor lock-in. What about you all? Have any top tips for CIOs looking to outsource? Do you agree, or disagree, with Cohen’s insight?