Decoding the IT Value Problem: An Executive Guide for Achieving Optimal ROI on Critical IT Investments

CHAPTER 10

Outsourcing IT

EXECUTIVE SUMMARY

Since it's highly unlikely that the IT organization has access to all the resources it needs within its own four walls, most CIOs rely to various degrees on outsourcing. It's important to see outsourcing as a standard part of your business strategy and to devote the and energy required to getting it right.

Three Strategies

IT outsourcing is definitely not a one-size-fits-all proposition. Your IT outsourcing strategy should be aligned with the overall business strategy of the company, and it must directly serve the company's specific business goals.

In this chapter, we will look at three distinct types of IT outsourcing:

1. Wholesale
2. Targeted
3. Outcome-based

I've had plenty of experience with all three kinds. Some of my experiences with outsourcing have been positive, and some have been negative. All of those experiences were instructive, and I hope that you will find them valuable.

In 1985, I interviewed with General Motors and was hired. The Monday that I was scheduled to report to work, I was informed that I was not, in fact, to be working for GM, but would instead be an employee of EDS (Electronic Data Systems). That was my first experience with wholesale outsourcing. GM had outsourced its IT operations (and most of its IT staff, including me) to EDS, the company launched by Ross Perot.

I was sent a copy of the bestselling book On Wings of Eagles, which recounts the 1978 rescue of two EDS executives who had been arrested in Tehran. ...