'We've found a whole new way to meet project deadlines. We sue.' Can this be what outsourcing is all about?
Meeting project deadlines became the world's number-one problem for IT directors in 1979, according to the Price Waterhouse computer opinion surveys. That was until two years ago. Now it's been overtaken by more interesting worries: integration, or pointing the computer in the same direction as the rest of the company, for example; and enabling the New Organisation which, some might say, means pointing the rest of the company in the same direction as the computer.
What has soothed the intractable systems development problem; what balm did we apply to the jagged wounds we suffered at each progress meeting?
The answer is simple. We gave up on programming. In tune with the mass production, standardisation aims of modern times, we shopped for packaged solutions, off the shelf. And when they didn't suit, we asked outsiders to write our programs.
The same source reveals that 19 per cent of the UK's systems development was outsourced in 1994, and is forecast to increase to 28 per cent by 1998. Add to this the fact that 51 per cent of all systems are now bought as packages - outsourcing by another name - and the future for in-house programmers is pretty grim. But this is just systems development. The provisional results of the 1996 Compass World Computer Census show that 23 per cent of the whole IT operation of the world's major companies, both systems development and the hardware, is outsourced.
Scene: the coffee break at an outsourcing conference in Florida last month. I am edging closer to a group of IT vice presidents, and wondering how to get involved in the conversation.
'It's just vindictiveness,' said one. 'They're down on what they're not up on. We're experts. "But not in what our business does," my boss told me. "If I can get my IT done cheaper outside, that's where it's gonna be." '
I saw my chance. 'Conflict of interests,' I said.
There was silence. 'General Motors,' I added.
I had their attention. So I said: 'I talked to someone in IT a while back, at the General Motors subsidiary in Frankfurt, Germany.' I added: 'This man from General Motors said that "EDS (a US outsourcing company) is just interested in efficient processing. But cost reduction wasn't the god in our case, nor in most people's. We actually wanted inefficient processing - information at the desktop, waiting for when we needed it, not on some giant, batch-processing mainframe, run by somebody else. We should never have outsourced our IT".'
My story seemed to create tension. I put on my glasses and peered at the name tabs to identify my audience. The first one I saw read 'vice president, IT - General Motors'. I realised my coffee was badly in need of a top up.
But Mr General Motors stopped me. He explained: 'That might have been the case at the beginning, but we're strategic partners with EDS now.
My new job involves implementing General Motors' strategy through EDS.
That means it gives us desktops.'
He'd kept me in the group, but there was a definite need to re-establish myself. 'The IT director of a well-known supermarket chain,' I began, hastily checking name tags, 'said his company was no longer in the baked-bean business. IT determined its purchasing, stocking and marketing policy.
IT was the core activity of its business. And to outsource it was 'a dereliction of duty'.
'I don't think we should take it so personally', said Mr General Motors again. 'It's not just IT. Everything is a candidate for outsourcing in the New Organisation. What does core mean? Making motor cars isn't core for us. We could easily outsource that, and we do contract out a lot of the time. It's all part of a worldwide move to shift in-house functions out to specialists, while retaining control of the process.'
We waited. An explanation had to follow. 'Why are there two goalkeepers in a football match?' he asked. 'One is probably a lot better than the other. And you can be sure that when one is busy, the other is doing nothing.
Surely there's a skills improvement and an economy to be made here?'
We laughed, and felt we'd got the point. You should outsource everything to people who can do it better, and cheaper, by specialising. But you should never outsource control.
It makes sense. In the end, it's all about motivation and job satisfaction.
A good programmer isn't appreciated, because good programming doesn't mean good business - not unless you work for a software house.
I know what you're thinking. Where will it all end? Couldn't the specialists outsource too? I guess you're right. Why do you think I write this column at home?
Sources: The IT Review from Price Waterhouse; and the Compass World Computer Census, conducted by the LSE.
Kit Grindley is Price Waterhouse professor of systems automation at the London School of Economics.
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