Outsourcing by the Government – Deloitte Offers Advice

I recently wrote a blog—this one—about whether state and local governments should consider offshoring IT. My take? No. But state and local governments should consider outsourcing, as long as they make prudent choices and don’t view outsourcing deals as simply offloading operations that are less important to their overall missions.

After all, IT is central to the success of any operation—and organizations that don’t get this might as well pull down their shades, turn off their lights, and go home. So it goes without saying that outsourcing IT is a strategic decision that, once made, will need ongoing review and management.

Interestingly, a new report from Deloitte recommends local and regional governments may be better off keeping their IT operations in-house. “Taking Control of IT. Empowering authorities to reduce costs and get more from IT,” written by the consulting firm’s U.K. member, Deloitte LPP, states that pushing IT to outsourcers (which Deloitte says has the “potential to lower operational costs and bring in much-needed expertise and capacity to transform,” a pretty darn good endorsement for outsourcing, if you ask me) can prove troublesome. Deloitte cautions that many times, government entities hire outsourcers to mind ill-operating IT systems. Outsourcing problems, as Deloitte puts it—a problem the firm says is so widespread that “successful outsourcing stories remain rare in local government.”

Of course, Deloitte doesn’t recommend governments simply run the bad IT initiatives on their own; instead, the paper offers some sage advice. First, establish a senior IT board that will consider the business aspects of IT and own and maintain control over all IT initiatives. Second, communicate the costs of IT initiatives in terms of the issues they solve, not in terms of the technology involved. Finally, the firm recommends balancing control and risk and taking ample time to search for the right IT solutions, which must be aimed at tackling business needs.

This is all great, albeit simple, advice. I’d like to throw in another bit. Do consider outsourcing, as long as you sit down with your outsourcer and discuss who is going to own and maintain control of the initiatives included in the outsourcing deal (and make sure you have a seat at that table!). And ask your outsourcer to discuss costs in terms of the business issues and whether or not those issues are being resolved or delivered. Last, make sure you monitor how well control and risk is balanced as your outsourcer carries out your IT business.

Finally, Happy Veteran’s Day. And a heartfelt thanks to those who have served or are serving.