Managing IT As An Investment

Scott Abel writes "Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture. In Managing IT as an Investment: Partnering for Success, Ken Moskowitz and Harris Kern explore how changing the way you think about IT can help you develop solutions that exceed your strategic goals. To achieve the highest levels of profitability, the authors say, IT organizations must be well-tuned and in alignment with the goals of the enterprise to which they belong." Read on for the rest of Scott's review. Managing IT As An Investment: Partnering for Success author Ken Moskowitz, Harris Kern pages 150+ publisher Prentice Hall PTR rating 9 reviewer Scott Abel, Content Management Strategist ISBN 013009627X summary How changing the way you think about IT can help you develop solutions that exceed your strategic goals.

For far too long, the authors argue, IT has been incorrectly viewed as a separate part of the enterprise; a distant silo, relegated to the status of a âoecost center.â Instead, the authors make the case for transforming IT into a âoevalue centerâ â" a mission-critical member of the business enterprise, managed as a strategic asset.

In order to get there -â" and to maximize IT value -â" the authors say organizations must realize that âoeIT is inseparable from the business and requires complete alignment with business goals.â Then, they have to admit that thereâ(TM)s âoeno such thing as an IT project.â

âoeIT is no longer a cost center and a growing number of highly successful firms are recognizing this,â the authors say. âoeIT is an investment and should be managed as such to increase revenue and profits. No matter what size project, IT is a member of the business team and should be accountable and responsible.â

Getting past old-world ways of thinking can be difficult for business and IT-minded folks alike; such transformations are often riddled with unexpected organizational change management issues. Moskowitz and Kern do a nice job of exploring some of these difficulties at a high level, but leave plenty of room for in-depth exploration by other authors.

They introduce readers to âoeConsequence-Based Thinkingâ in Chapter 2, a concept that promotes decision-making based on desired business results, rather than on the IT problems you face. The authors explore ways you can avoid âoethe Right/Wrong trapâ (situations in which humans forfeit the desired consequences for the privilege of being right), develop jointly produced business cases (âoea technology case is not sufficientâ), and help each department in your organization contribute to the success of the enterprise mission.

In Chapter Three, âoePartnering,â the authors illustrate the importance of creating a team that will support the goals of the enterprise. âoeIt is key that members of IT teams see themselves and their work as core to the business itself, and not view the IT function as an appendage of the business.â As this happens, the authors say, âoeothers will view them (IT) as critical and necessary partners that can be trusted to provide solutions that donâ(TM)t merely serve a process, but truly serve business outcomes.â

Business partners must change the way they think of themselves as well. Business must think of itself as âoea partner with, rather than a customer of IT,â the authors say. They recommend the development of formalized contracts that spell out responsibility and accountability for all involved; a âoecommon vocabularyâ (to help get everyone in your organization, regardless of role, on the same page); and provide words to the wise for management: âoemanagers will never have as much information as people on the front line.â

Sizeable emphasis is placed on the importance of jointly developed business cases, which the authors say, âoeforces IT and business to engage in continuous dialog in order to ensure success.â Jointly developed business cases can help align IT with business objectives, and have the additional benefit of âoemoving the business agenda forward and creating partnerships and understanding.â A sample Business Case template is provided as an appendix.

Chapter Five, âoeStrategyâ makes the case for building a big-picture strategy that âoestresses an enterprise point of view over seat-of-the-pants, silo thinking.â Organizations without an enterprise strategy often end up creating what the authors call âoeislands of automationâ that will later need to be integrated.

Strategic thinking is a skill and not something that comes easily. It involves adopting new processes and changing the way we think about our jobs. By adopting a âoeBusiness Strategy Formation Processâ that relates an enterprise-to-an-individual and an individual-to-an-enterprise, the authors say organizations can make âoeconsistent decisions that incorporate foresight.â

Chapter Six, âoeThe Small Picture,â provides guidance on communicating the âoebig pictureâ to âoesmall pictureâ folks by answering the question: âoeWhatâ(TM)s in it for me?â Chapter Seven discusses ideas for setting up and managing IT departments as âoevalue centersâ while Chapter Eight, âoeHuman Capital Managementâ deals with issues of people management, individualism, and job satisfaction.

Chapter Nine, âoeInvesting In Values,â provides a brief overview of the importance of values, which the authors define as the âoeguiding principles and basic beliefs that are fundamental assumptions on which subsequent actions are based.â The authors provide several models to help you make which value decisions. They also discuss how to reap âoethe hidden harvestââ"the rewards delivered through collaborating with others toward a common, understood and measurable goal, benefits not realized through traditional, inside-the-box thinking.

While Managing IT as an Investment is indeed a value-added resource, reading the book is not enough. Youâ(TM)ll need to do a little homework before you go tackling a major change in your organization. Youâ(TM)ll need additional guidance not provided in the book to help you decide whether your IT and business staffs should work in the same physical space to help reduce communication barriers and establish a sense of âoeteamâ; if you should re-organize your management structure so both IT and business team members report to the same manager; how you should communicate information about your project in order to create project evangelists; and whether your reward structure needs some revamping (is IT currently rewarded for âoeon timeâ delivery as opposed to delivery of quality solutions that deliver the highest return on investment possible?).

Despite these weaknesses, Managing IT as an Investment: Partnering for Success is an excellent addition to both business and IT literature. At only 150+ pages â" 10 chapters, followed by 4 value-added appendices â" you can read the entire book in an afternoon. The book is well worth the effort. Includes case study information and references to other published works. Perfect for those involved in paradigm-shifting projects where strengthening the relationship between IT and business can help ensure success.

Scott Abel is a content management strategist. Look for his column, The Content Wrangler, on ePrairie.com. You can purchase the Managing IT As An Investment: Partnering for Success from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

Comments

refreshing

[Boromir son of Faram]

It's good to see IT getting increased recognition as an asset, as opposed to a necessary evil. Hopefully this book will find its way into the hands of a lot of PHBs, and we'll start to see some improvement across the industry.

The old attitudes about IT have done a lot of damage, but with some effort, books like these, and a little mutual understanding, I think we'll reach a point where IT workers will be free to flourish in businesses and achieve their goals (to become real programmers).

Re:refreshing

[TopShelf]

I think we'll reach a point where IT workers will be free to flourish in businesses and achieve their goals (to become real programmers).

You're missing the critical point here. The goals of the programmers and IT as a whole need to be closely aligned with the business, not with some idea of being a "real programmer" (whatever that means). It's not about getting the PHB's to leave the nerds alone - it's about the nerds coming out of their shell and understanding exactly how business needs and technical solutions come together.

Measuring ROI

[Surak]

The biggest problem with managing IT as an investment is measuring ROI. Sure, you can see "this process costs us n dollars and the process before costs us n*2 dollars" but then how much of that is taken up by the fact that you need to maintain additional IT resources? In many cases, IT projects end up being cost shifting rather than cost savings.

In theory you'd just figure in the IT costs, but many PHBs don't do that. All they see is the *business* side and tend to look at the IT department as some separate thing.

It sounds like this book handles that scenario. I'm eager to take a look at this book in the future.

Re:Measuring ROI

[TopShelf]

That all depends on the company's financial structure - in a chargeback environment, wherein IT bills internal departments for services rendered, these costs are readily apparent and should be easy to roll into ROI.

What happens in most cases is that there is no followup after the fact to determine whether ROI targets were really hit anyway. In my 10 years of IS experience, I've yet to see that happen.

Re:Step 1

[mirko]

I actually agree with the parent post :

The best way to earn money is to reduce costs.

In order to reduce these (I don't mean the hardware costs which are usually high but fixed, not repetitive), mangers want to drop people.

By dropping people, they usually mean to either get rid of the redundant, non-mandatory staff, or to replace whenever possible mandatory existing ones with cheaper overseas workforce.

So, I just have one proposal against this :
whenever you have the choice, ensure your money will go to local workers.

Loaded with cliche's

[BWJones]

Man, I just got back from Philadelphia for business and I cannot tell you how much businessspeak and cliche's I heard. Reading this post was like a flashback with phrases like "Partnering for Success" and "cost center" and "consequence based thinking". I can't tell you how sick I get from hearing folks spout off tripe like "world class" etc... And most commonly I hear this stuff from folks that are absolute knuckleheads, but they have mastered the businessspeak vocabulary so they sound good to people who are not looking for real meaning.

I know all businesses are not like this, but what is wrong with simply working hard and producing your product with craft and skill and not resorting to all sorts of "strategies for success"?

Is this FastCompany or Slashdot????

[Ars-Fartsica]

The blurb for this contained so much drivel-doublespeak I couldn't bring myself to read the rest.

PHBs will always...

[Anonymous Coward]

...look at IT as a cost center (a liability, an expense) and never as an investment. You'll never be able to convince them that IT infrastructure is like the bolts that hold the wings onto the aircraft they're flying. I've been trying for 15 years and 4 different companies and it's just an exercise in futility.

Re:PHBs will always...

[Anonymous Coward]

The bolts that hold the wings on the aircraft are a cost center (a liability, an expense) too. If you could come up with boltless wings and remove or reduce the expense of the bolts, the infrastructure to replace and repair bolts that are reaching the end of their life and the risk associated with bolt failures, you'd increase profitability. The bolts themselves don't make money.

Re:PHBs will always...

[SuiteSisterMary]

Aye.

The truth of it is, if you have a 'cost center' you should dump it right away; if it's costing you money, with nothing to show for it, lose it.

If you have an 'infrastructure' center, or a 'indirect revenue center,' on the other hand, nurture it, love it. The toilets in your building aren't actively making you money, but for damn sure you need to keep them there. Same with IT. IT doesn't make you a profit, but it enables the other revenue centers to do so.

It's all about perception

[doc_traig]

IT is often looked at with a frown because of what it tends to be in most organizations: a very expensive division whose responsibility is to provide critical tools to perform business, with the ultimate goal being to produce a result, typically profit. Unfortunately, there are plenty of decision-makers who don't think far enough to recongnize the link from tool to result. Sales is seen to generate revenue. Marketing is seen to create and position the products for sale. Finance bills and spends. IT ties those pieces to one another and allows them to function, but you have to think creatively to draw a line from revenue to IT spending.

Now that I think about it, I wonder how many parallels you could draw between HR and IT. HR is the machine that provides people and benefits to those people, without which the company ceases to function. In a more abstract sense people are tools (whoa), and HR can certainly be viewed as a cash drain with no direct revenue...

Re:Noise Signal

[nharmon]

I almost have to agree. One of the first things I learned about writing book reviews is to never give a chapter by chapter summary. He even outlines it chapter by chapter.

Makes me wonder if he read the book, or skimmed it over.

I agree.. too much "value-added resource" nonsense

[doc_traig]

A little too much Harvard Business Review and not enough real-world day-to-day...

My three rules of IT

[Dark Paladin]

Over time, and working with places that (frankly) spent far too much fscking money on useless crap, I've boiled down IT to three things:

1. We provide access to data to those who need it.
2. We deny access to data to those who do not need it.
3. We increase the efficiency of access to the data in compliance with rules 1 and 2.

That's it. Now, I'm not saying computers shouldn't be used for entertainment, etc - but in the workplace, those are the 3 things that IT should be focusing on.

When I recieved requests for "Well, we need a bigger computer here!", I bring up the three rules above. Does it increase access to the data that much better? Would another alternative work?

It's not about being "cheap" - sometimes you have to spend money to do things. But an IT staff should be going out to their customers (aka - the business they work for) and saying "All right, what do you need access to. What do you do in your day? Do you fill out the same data over and over again? What can we automate for you so you're spending more time on things the computer can be dealing with? Is there a way to give you better access to your information without compromising security?"

The more you involve users (and their managers) in the Three Rules of IT, the more they come to see IT as an asset - not just an expenditure.

In the end, I consider IT to be the janitors of data. They don't make the crap - but if they weren't there to keep it neat and clean and organized, the business would go to shit in a real hurry.

That's just my view - I know, I could be wrong about it. But it's served me pretty well.

Re:My three rules of IT

[Dark Paladin]

I agree with you - which I why I added Rule 3. Not every employee can get by with a Celery 500. Not every employee can use OpenOffice alone - so you have to be flexible, and sometimes say "Yup - we do need spend the money - deal with it."

I think part of the problem is there's too many "gimme because it's cool!" going on. I've seen upper managers do it so they get the coolest new laptop, just because somebody else just happened to get one. After a bit of that, people start looking at any IT expenditure as another "expensive toy" that needs to be reviewed to infinity. (Which drove me crazy as the CEO could get a new $3500 laptop, but I couldn't spend $2500 on a new server, and the latter would effect more than 1 person. I never did get a good explanation....)

Re:My three rules of IT

[killmenow]

Blockquoth parent poster:

...their customers (aka - the business they work for)...

This is the only thing you say that I disagree with. I understand IT needs to be service oriented. But the internal business associates serviced are NOT customers.

An unreasonable, unbearable, impossible customer is someone you can choose not to provide service to. But, no matter how much I may want to, I cannot tell the #$%@@^ in accounting to go away no matter how ridiculous she is.

Now, in a decent company, there should be ways of handling such problems; but, there often are not. And either way, the relationship is quite different than what one would have with a true "customer" if one were a freelance consultant.

I've done both, and being able to say, "I'm sorry. You are completely unreasonable and I refuse to do business with you any more..." is a wonderful freedom one has with customers.

"Winning in Business"

[Tony]

Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture.

To win at business, you must make a profit. That's it. You don't have to kill your competition; you don't have to fuck anyone over.

You just have to be able to pay the people who work for you, accomplish what you set out to do, and maybe make a little bank in the process.

It's this stupid "Business as competition" mentality (with "Business as war" at the most extreme), coupled with plain old greed, that led to Enron, WorldCom, Microsoft, and the RIAA/MPAA.

I'm not saying, "C'mon, can't we all just get along?" I'm just saying, winning isn't measured by how much more profitable you are than the illusiory "competition." It's measured by the good you do versus the bad you do.

Truisms

[pubjames]

Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture.

I hate this kind of truism, because people don't challenge them. The trouble with this approach to business is that it causes businesses to converge on the same thing - Hey, the restaurant next door is now selling tacos as well as burgers! We need to sell tacos too, only, erm, bigger ones! They also start to put more effort into competeting than actually thinking about their own business - Hey, they're selling bigger tacos than us next door! How should we compete with that? In my little illustration here, you end up with two restaurants selling nearly identical products, rather than two completely different restaurants, which is probably what most people walking past (the customers) would prefer.

It is interesting that this business mentality is very prevailent in the US than europe. In most cities in the US there are lots of chain restaurants which are very similar, but in Europe (or at least France, Italy, Spain and places like that) all the restaurant tend to be different and there are fewer chains. And personally, I think Europeans get the better deal.

We do this, and been doing it, but ever since...

[snatchitup]

We really provide crap.

We had been doing something more resembling XP. We had prototypes. The client used these prototypes to figure out what he really wanted.

The investment model, is better suited to the waterfall method with development going forward, and there, quality is killed. Don't get me wrong, what we deliver works, if there's a bug, it gets fixed.

But, excellence is lacking for sure because once we figure out what we need to get excellence, we've exceeded our budget, which oh by the way, has been gobbled up by all the mgmt consultants etc. trying that want to make it look like there's very little overhead in the IT org, when there's just frankly too much fat.

We pat ourselves on the back for having a "Portfolio". BUt look at what we've produced since.

Actaully, only a few small scale systems (but with the latest greatest J2EE, Portal, and Web Services. from IBM. The legacy systems run the show and get no recognition. I work on both.

Here's an example. We're currently working on an application that's probably comprising about 120 tables. There are about 20 people on this project including the BA's, PM's, ARchitects.

Then, there's another system I work on, with 1,100 tables, 1 million lines of code (including triggers, stored proc, client code, etc) We just provided an additional amount of functionality that eclipses the new system with the 20 developers.

All this, with two developers, a dba, and a PM. 4 people.

Things are weird here, this IT Investment philosophy has really made things strange.

Feh!

[dutky]

First: Feh! on the business-speak drivel.

Second: The author is just plain looney. IT is not an investment any more than sticky notes are, and for precisely the same reason: Most of your IT hardware will need replacement in very short order (only a few years).

If any part of the IT department is an investment it is the expertise of the people you employ to administer your IT, but either you (as a company) already know this (by treating all your employees as investments) or you don't (which, it appears, is the far more common attitude). Even the employess are not a very good investment, since there is damn little you can do to make sure they don't leave (you can't own your employees, at least not in most places) and they require a huge amount of maintenance (salaries, benefits, training, etc.).

Everything else about IT is obviosly a simple cost (possibly amortized over a short period of time): All the hardware will be obsolete within only a few years. All the data you collect has an almost equally short shelf life (how long are individual customer demographics good for? how about marketing materials? maybe financial data has a reasonable lifespan, but it's not much more than 5 or 7 years) and have a continuing cost of maintenance in order to keep them up-to-date.

The longest lived part of your IT infrastructure is probably the network cables, which can last 10 years or so. None of these items have the lifespan of a building, however, which is the canonical example of an investment item.

Yes and No

[autechre]

At least he understands the concept that having a PC on every desktop in a business setting is bad in several ways (upgrade treadmill, wasted resources, increased administration). But IT service hasn't reached a "commodity" level, just as other services haven't, which is something that people born in an office tend to forget.

I consider IT support to be, at its core, a blue-collar job. Like other "trades" people, it is largely forgotten by many "business" people (at least until it doesn't work), and quality of service varies widely.

If your network is set up and maintained by people who really don't know their stuff, productivity will suffer. Are operating system updates tested before they're applied? Are they applied at all? Does your IT staff try to adapt the system to fit the needs of the users? Do they even talk to the users? Are you losing productivity to viruses when they should have been stopped by a mail gateway? Does the network "randomly go down"?

Similarly, if the HVAC, electrical, plumbing, etc. systems in your building are poorly maintained, that will have a real impact on your business. Someone who really understands their chosen trade can make all the difference in the world, whether you're in the planning phase or maintaining a 100-year-old building.

While it's true that many companies today spend too much on IT _equipment_, the value of good support staff should never be underemphasized. Great techs can do wonders with even a tiny equipment budget.

Wishful thinking?

[pmz]

There is appears to be a fundamental flaw in accounting methods when they totally miss productivity loss due to having crap like Windows 9x or NT and PCs with double-digit failure rates.

It is not uncommon to see someone with 32MB (or even 128MB) of RAM in their ancient PC, swapping all to hell, wasting hours upon hours of time, when "there is no budget" for a new PC. It really is sick.

Not only that, after five years, stuff wears out. Replacements? "There is no budget for replacements."

Re:Step 1

[Mac73117]

I think the parent post was supposed to be a joke. As for 'The best way to earn money is to reduce costs.', where is the income? Yes, you've reduced your overhead but you still aren't making money. By not having adequate and competent staff available you open yourself up to failure and/or buyout. If you can diversify and innovate, you can create a new market, thereby increasing income. To do that you have to spend a little money and ensure that the benefit outweighs the cost. It's sort of a no brainer but increasing income is the best way to make money.

Re:More new-age business garbage

[pmz]

... in a way that damages the long term outlook for the company.

If they cured the problem, they couldn't sell you another book in three years, could they?

Revolutionary books about revolutionizing business are their own self-perpetuating business model.

Humbug

[DABANSHEE]

"Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger." Faster

Crap, to win at business one simply has to make a real genuine profit.

Look at Morgan Cars. They have about the most atiquitated auto factory in the world, using some of the most obsolete production methods arround (such as pushing rolling chassis from one plant to another plant across the yard for fitting on body work). They have a virtually nought marketshare & even then can't meet demand & don't even bother marketing their product. But guess what? They make a genuine real profit & actually have increased production (from 9 cars a month to 10 cars a month) This means Morgan's doing better business-wise than the many billion dollar car plants arround the world that don't make a profit (For example all the of Ford US's car divisions which are kept alive by the huge profits of Ford's small truck division).

At the end of the day, the point of business is making a profit, everything else are just s'pose to be ways of doing it.

& this is why IT's now failing, business wise.

The IT segment still locked into past expectations from the 'tulip boom' caused by venture capital gambles, the dot.bomb share price pyramid schemes & the Y2K scams. Consequently IT employees & management expect too much money, relative to the profits the IT segmant actually makes (afterall considering the amount of time IT personel spend bumming on the web, LANing counterstrike, wasting time on office gossip, making coffee, going for promotions, etc; & taking into account the fact that when IT personel are actually doing some real work, more often than not it's on a project that's not really genuinly productive, do IT people really deserve to be paid anymore than brickies labourers, panelbeaters & council road workers)

What's needed is for 25+% of the IT industry to go belly up. This would couse a flood of IT labour & bring down their unrealistic wages. Ontop of which the remain 75% of the industry will gain in marketshare, turnover & economies of scale, making them more productive at less costs per revenue dollar. This brings profits, IE real business success.

Audience and scope

[UnknowingFool]

The book might be worth reading to PHB types who don't realize the role and value of IT. But here is my 2 cents when addressing managers.

1. IT is not a panacea. IT will not solve world hunger or help your products sell better if they're crap.

2. IT is infrastructure. A good IT department will keep things running without fanfare, but like most infrastructure, its ROI is hard to compute. After all, how valuable is the interstate highway system to US commerce? Most people can acknowledge its value but few can actually quantify it. IT can provide solutions to problems but the success and value of solutions is dependent on the nature of the problem. Sure, an IT department can automate TPS reports and save productivity, but the business question should be whether TPS reports are necessary and the best solution to its problem.

Two better alternatives...

[mbakaitis]

Having just finished a master's degree which involved both an MBA and an MS in Information Systems, I'd recommend these as *very* good guides for the technical who want to work better with the business (without the pain of the MBA):

"Achieving Business Value from Technology : A Practical Guide for Today's Executive" by Tony Murphy
A *really* good book that addresses the whole "how to measure ROI" when so many of the returns of an IT investment are soft.

"Corporate Information Strategy and Management: Text and Cases" by Applegate &c.
A textbook, but a good one. The cases teach some really valuable lessons. The text is, itself, a good overview of the different business-technology challenges that occur.

Having used these both at school and at work, I think they are far better at explaining (a) how to explain the hard (cash) aspects of an IT project as well as (b) helping to show the value of the soft (architectural, organizational, etc.) benefits that can't easily be transferred into financial terms.

If nothing else, they are both good for one other reason: they can both help you decide which project or option would be better...even if money is not involved. The simple ability to decide which project will be better in the long run and the ability to explain this in clear terms is an important skill that these books will also help readers develop...

Re:We do this, and been doing it, but ever since..

[syslog]

I could not agree more.

I was part of a large project that involved 20 people, PM, BPMs, architects etc. Took years and cost millions. The resulting application worked, but its internals made me cringe.

The next project was supposed to be a tweak of the original project for a different target market. I essentially reimplemented the bulk of the application in 6 months with 1 PM, 2 hard core developers and an outstanding DBA.

In my experience, the best way to accomplish projects is to have a small squad of 4 people (at the most). One PM who understands the business and technical aspects of the project, and can also do some hard coding. 1 to 2 hard core developers who also have some business sense. 1 great DBA with some business sense.

If a project is too big for such a squad, then it should be broken down into chunks that the squad can handle. And it will end up being the same squad, since putting together another such squad will take too much money :)

One expensive, good developer is better than any number of cheap, mediocre ones. One good PM who understands the business and the technology and is able to architect a solution is worth his weight in gold.

Just me $0.02

You're correct if...

[mill5ja]

You're correct if you swap "data" with "services".

1. We provide services to those who need it.
2. We deny services to those who do not need it.
3. We increase the efficiency of access to the services in compliance with rules 1 and 2.


Otherwise, you have made some excellent points.

-jason m

Is this all there is?

[mattypants]

"Itâ(TM)s no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster." -

Sometimes, you americans really lose sight of the facts.

Firstly, there is no 'winner' in business; at any one time, in any given market, on some particular scale, someone is ahead of their rivals - but it never stays that way for very long.

Secondly, is 'winning' actually the point of being in business? Surely it must be just as important to look after your staff and customers? Without them, you can't 'win'.

To use a pair of americanisms, give us a break from this total bullshit.

Re:Costs vs. Revenue

[junkgoof]

Both of the previous points make sense, and they point out the fallacy of ignoring IT.

"If I reduce costs enough I can make money without selling any products" is a Dilbertism.

"The Mythical Man Month" made the point 20 years ago that there is no point in hiring cheap for IT projects. You are better off with a small group of good people who stay with the company than with cheap outside labor that could care less.

I would also like to hear of an example where outsourcing works. HP is still recovering from its attempt. Bell Canada's outsourcing encourages people to switch phone companies. I've been involved in outsourced software projects (as a unix admin, I just watched the chaos) and the code produced is crap because no one cares about quality, and everyone has an incentive to leave stuff in that needs to be fixed.

Un-outsourcing is difficult and costly (look at Nortel, billions in outsourcing, and now they don't even need the people they contracted in, they paid enough the outsourcing companies outsourced, and the quality of the doubly outsourced people was unbelievably low), and it involves blaming highly placed people, so it does not happen. If you can't be part of the solution there's lots of money in prolonging the problem (see demotivation).

No it doesn't

[junkgoof]

It doesn't even work for those, actually. HP's clients are furious that HP outsourced their support. It already took time to get answers, now clients don't get answers, but they do get insulted.

Outsourcing programming does not work either. You get some code, but if you don't have a continuing relationship with the guy who wrote it or quality control there is no point. Most places I have even minimal respect for outsource menial stuff to co-op students. If you need it done right do it in-house.

Brings up an interesting point, though. Most companies I've seen outsource (eg Nortel and HP), have tried and failed to run things inhouse. They outsource because they figure it can't fail worse (or more expensively) than it did inhouse. They are wrong, of course, things can always get worse if you don't fix the real problem (bad HR, bad management, bad priorities).

Real management

[junkgoof]

Any time you start talking about core business you should check out Nortel's strategy:

1. We only care about our core business

2. We can change our core business any time.

You have to concentrate on what brings in money, but if you ignore the stuff that doesn't your company will die. HR may not be core business, but if you do it badly, or leave it to people outside your company (eg headhunters), you can expect failure.

Most forms of downsizing fail. Remember about 5-10 years ago when every department had a secretary? The secretary usually made peanuts considering the work she did, and s/he saved time for more highly paid employees. Now the secretaries have been downsized and you have coders, engineers, and other technical people writing stuff up (often in different standards or formats with varying quality of English) at 3-5 times the cost/hr. But it saved money, sure it did.

Outsourcing truly generic stuff, like payroll, works. Outsourcing company-specific stuff, like IT is foolish.

maintenance?

[junkgoof]

How about continued maintenance? Most companies outsourced their web pages (or laid off the IT guys who put them together), and now they look silly. Even tech companies (eg Rogers) have non-functional pages, or ignored input (forms that submit to /dev/null, but inform clients that they will be contacted/served/helped).

IT REQUIRES continuity.