Insourcing - the process of bringing back in-house IT work that had been outsourced - is in style. Bob Mathers, principal consultant with Compass Management Consulting, points to recent high-profile IT and business process outsourcing initiatives that were brought back inside Chrysler, Delta Air Lines, Barclays and AT&T as evidence of the insourcing trend.
"We expect more organisations to seriously consider repatriation," Mathers says.
Self-praise is at best unbecoming, and at worst a sin. "We're told by our families, our teachers that nobody likes a braggart," says Peggy Klaus, workplace communication expert and author of BRAG! The Art of Tooting Your Own Horn Without Blowing It. "Brag is truly a four-letter word."
And IT professionals in particular shy away from self-promotion. "People in IT have a strong ethos around just stating facts and not exaggerating their contributions," says Nancy Ancowitz, business communications coach and author of Self-Promotion for Introverts. "It's admirable to take care of your team, [but] by increasing your own visibility, you can make the pie bigger [for everyone]."
Internal IT organisations choose to outsource for any number of reasons: to cut costs, improve service, increase efficiency. Increasingly, they're seeking innovation from their IT outsourcing partners, even though many don't have a clear picture of what innovation means in the context of outsourcing. Consequently, those IT departments are not getting much innovation from their service providers.
According to a 2009 Forrester Research survey, 38 percent of IT outsourcing customers said lack of innovation or continuous improvement was their greatest challenge with existing vendors - up from 33 percent the previous year.
Ask Paul J. Capizzi about his career plans and he'll tell you, "I'm taking the stairs, not the elevator." It's an unlikely admission from the fast-talking New Yorker, who, at 36, has already risen to the number-two spot in IT at insurer SBLI USA.
It's not that Capizzi isn't ambitious. He simply wants to make sure he succeeds. "I'm very aggressive and I'm always doing something," says Capizzi, who just took - and aced - the life insurance agent test to beef up his business know-how. "But I'm not in a rush to get to a CIO position. I want to take advantage of all the people around me-my peers, my direct reports, my managers-and continue learning. I'll get there eventually, but I'll get there with a wealth of knowledge."
The typical cloud computing contract can look downright simple to an experienced IT outsourcing customer accustomed to inking pacts hundreds of pages long that outline service levels and penalties, pricing and benchmarks, processes and procedures, security and business continuity requirements, and clauses delineating the rights and responsibilities of the IT services supplier and customer.
Aspects of cloud computing have been available to - and rejected by - IT outsourcing customers for years, from hosted applications to on-demand hardware support. But as the breadth of the cloud has expanded to include a growing number of software-, platforms- and infrastructure-as-a-service offerings that can be quickly deployed as needed with low management overhead and little vendor interaction, the temptation to move away from traditional IT services provisioning is mounting.
On the other hand, having your IT services in the cloud involves a host of risks, from data control issues to lack of transparency to the financial stability of new providers. Prospective cloud service customers must take into account a number of unique issues associated with cloud delivery in conjunction with the criticality of the software, data and services they're considering transitioning from a traditional IT services model, says Dan Masur, a partner in the Washington, D.C. office of law firm Mayer Brown.
For all the vagaries of IT services, traditional IT outsourcing has always been quite tangible - servers, data centres, networks, specifications, man-hours, lines of code. The rise of cloud computing, however, is changing all of that with flexible, asset-free IT services available on an as-needed basis for more aspects of enterprise technology.
Cloud services are a boon for many IT departments willing to forego customization: They help IT organisations chip away at hefty capital expenditures from back-end infrastructure to customer-facing software and everything in between. Consequently, the cloud is turning the traditional IT services industry on its head.
Ten years ago in IT, Y2K had come and gone without catastrophe, security chiefs were grappling with the ILOVEYOU virus, and the dotcom bubble was bursting. But in the IT services industry, the year 2000 was notable for another reason - it was the year of the giant outsourcing deal.
A total of 24 IT outsourcing mega deals (multi-year contracts worth a billion dollars or more) were signed that year - more than the industry had seen before or since. All told, they were worth more than US$54 billion, according to outsourcing consultancy TPI. They included the EDS-US Navy contract worth $6.9 billion, the Bank of Scotland's $1 billion deal with IBM Global Services, and the $3 billion IT services contract between Nortel Networks and CSC.
Breaking up is hard to do. And when it comes to IT outsourcing, it can be expensive and risky, too. But issues with an outsourcer - such as deteriorating service levels, lack of investment, excessive turnover, or even fraud - are potentially even more costly than the actual break-up.
Outsourcing relationships don't go south overnight. Customers are more likely to experience a series of subtle changes over time. And sometimes, the partnership itself may be relatively healthy but other changes - a merger or acquisition, for example - may make outsourcing less attractive than it once was. Here are nine signs it might be time to call it quits with your IT service provider - or at least get some counseling.
In the realm of IT outsourcing, disengaging from a multi-year, multi-million dollar agreement can be so difficult and costly for customers that it makes a Trump divorce seem like a tea party. But that's exactly what US apparel maker Kellwood did last year, despite the upheaval the company anticipated from ending its 13-year IT outsourcing arrangement with EDS (now part of HP).
The Chesterfield, Missouri-based company had originally signed a soup-to-nuts IT outsourcing agreement with EDS in 1996, which it renegotiated in 2002 and 2008. The most recent iteration of the deal, in which EDS would continue to manage the company's infrastructure and provide some services offshore, had an approximate value of US$105 million and was supposed to save the company $2 million dollars in the first year and another $9 million over the remaining years.
In what could be an important decision for the IT outsourcing industry and its customers, a London court recently ruled that EDS ( now part of Hewlett-Packard) must pay damages to a former outsourcing customer for failing to live up to its sales pitch.
British Sky Broadcasting (BskyB) had signed a £48 million outsourcing contract with EDS to build a customer service system in 2000, but terminated the deal early in 2002 after what it said was "woeful" performance by the IT service provider. BSkyB alleged deceit, negligent misrepresentation and breach of contract by EDS.
Everyone knows a good outsourcing relationship needs to be actively managed. So does a good IT outsourcing contract.
Most contain what Marc Tanowitz, principal of outsourcing consultancy Pace Harmon, calls "active obligations" - provisions to be completed post contract-execution that require periodic review or that may vary over time. Many of them can have a significant impact on performance and cost if neglected.
Researchers at the University of Tennessee have studied a variety of outsourcing deals - from IT and back-office work to manufacturing and logistics - and identified the most common mistakes organisations make when partnering with an external provider.
The research reveals that outsourcing customers commit a variety of sins, and the most pervasive missteps can be traced to one simple fact: You get what you pay for, says UT lead researcher and supply chain consultant Kate Vitasek. Or more accurately, in the context of outsourcing, you get what you contract for.
When it comes to the outsourcing process, going it alone is one way to cut costs. But working with an experienced outsourcing advisor may save you money during the procurement process and down the road.
It doesn't have to be a huge investment. While the biggest outsourcing advisors still charge a pretty penny, you don't have to sign up for traditional soup-to-nuts service. Although some of the bigger firms will only work on end-to-end engagements, many advisors offer à la carte menus of targeted services to reduce the upfront investment for customers with beleaguered budgets.
Wayne Shurts had no experience overseeing IT operations in emerging markets when Cadbury CEO Todd Stitzer appointed him global CIO last summer. The geographic parameters of Shurts' responsibilities at the sweets maker - with a presence everywhere from Pakistan to Palau - multiplied overnight.
The former CIO for North America now spends most of his time globe-trotting from his home base in Parsippany, New Jersey, to London headquarters to operations on six continents.