Outsourcing

Business knowledge management helps boost offshore strategy

How important is business knowledge management to the success of your offshore strategy? Pretty important, one CIO who offshores to India told me recently.

Offshore workers are often at a disadvantage when providing services for U.S.-based companies. Sure – you can find a tech person in India who can code java without any detailed knowledge of your business. However, for other outsourced services, such as customer support or software development, the more knowledge your offshore workers have about your business, the better service they can deliver and the more productive they can be.

“How can they participate and anticipate, if they don’t know about our business?” said Cornelia Pool, CIO of San Jose, Calif.-based Covad Communications, a national provider of national provider of integrated voice and data communications. Pool, who outsources the company’s software development efforts to India, makes extra efforts to ensure her offshore workers are treated like company employees.

At the beginning of the outsourcing relationship, she involves team members from both the offshore group and U.S.-based team to review the project goals and determine the best ways to communicate on a regular basis – ways that are convenient for both groups. Regular communication regarding not only project deliverables, but also the company’s message and goals, are key to the success of working together. Continued »

Microsoft hosts midmarket CIOs – Vote for the biggest CIO challenge

A midmarket CIO’s challenges are many, and I’m always amazed by the stories I hear when I’m out on the road meeting many of you.

This week I touched down in Redmond for Microsoft’s US Midsize Business CIO Summit, an invitation-only event for about 400 midmarket CIOs. It’s a press-free conference, but I was privileged to be a speaker and thus join the technology glitterati on site.

My conversations covered a lot of topics, but what I’ll share with you here is a sampling of the folks I met. If you think your job is tough, consider those of these CIOs – then I’ll ask you to vote or share your story of trying circumstances.

- The CIO for a firm that conducts clinical trials. He has five staff in the U.S. and 25 in Europe. Based on the West Coast, he had just spent over a week on the road, first in London and then in Russia, then came directly to the conference. At home he’s on calls early in the morning and late in the evening, syncing up with staff around the world. Challenges? Language, culture. … He absolutely wasn’t griping about the travel or the hours (he didn’t even look tired!) and I know he’s hardly alone in living such a global lifestyle. But to me that seemed the most challenging part.

- The CIO who was hired to bring a food distributor into the 21st century. The company had all sorts of aging or aged systems – but the hard part was when this maverick CIO announced capabilities he wanted to roll out to the employee base. The CEO told him that sales reps were not going to use computers. Period.

- The CIO who had endured several offshoring contracts (some negotiated by his parent company), all with ill effects. In one case, employees at a provider hacked into his systems; in another, a key offshore contact left for another firm just after completing his Oracle training in the U.S. Meanwhile, he grappled with undeveloped infrastructure – he couldn’t get a switch for a new plant he was building — and bureaucrats who promised fixes and then didn’t deliver.

Do you relate to any of these experiences or have your own story of obstacles to share? Vote below for the one that seems most challenging and feel free to offer advice to the CIOs in question.

Justifying IT expenditures: Outsourcing isn’t always the answer

Accountability, budget constraints and cost of provisioning services – these are all issues that CIOs hear about when presenting IT budget numbers. “Why does this cost what it costs?” and “Can’t we outsource some of these functions?” are both questions that you’ve likely encountered when justifying expenses to your bosses.

The Naked CIO argues that outsourcing and offshoring IT projects isn’t necessarily the right move to make. In fact, he thinks it may cause more problems than it could potentially solve:

“Cost-based models drive a wedge between business and IT and this type of services-based arrangement makes business alignment more difficult.”

Keeping a project agile through a grass roots-style approach is, in his opinion, the route CIOs should go.

From where I sit, this makes the most sense. When contracting an outside company to do the dirty work that you need done, improvisation and adaptability is necessarily curtailed. In most cases – unless a contract is reworked – the company tapped will produce what you ask for and deliver it, hopefully, in a neat box with a bow on top of it. But project parameters are often subject to change and having the flexibility to address new needs is key for a CIO, not to mention IT on the whole.

I’ll give you a real-life example. A friend of mine works for a large hardware company whose name you would know if I mentioned it. Half his team is stationed abroad in the Middle East, and the other half is located right here in the Bay State. Because of cultural, religious and time zone differences, the half of the team that is abroad works on Sundays, while the Massachusetts-based cohort does not. Changes in his project are often subjected to approval from managers on both side of the Atlantic, and just getting a simple OK can be an ordeal. My friend has occasionally been called into the office or forced to work on a Sunday afternoon to sync up with his team, while the foreign contingent sometimes takes conference calls in the late evening local time.

The company has an internal instant messenger client that, in theory, should allow team members to speak to each other when they are all online over the course of the day. Yet still, my friend’s project has been delayed numerous times. Some of those delays are because of the problems inherent with developing a new product. But to think that the location differences and the limited communication doesn’t play a role into the delays is just naive.

Now translate that to your organization. My friend is working with co-workers who, albeit in a different country, draw their paychecks from the same source, teleconference regularly and communicate daily. When CIOs outsource a project, a direct line of communication is often lost. I doubt that when you have a question about why an application or piece of hardware isn’t working properly that you get to speak directly to the programmer who designed it or the tech who built and maintains it. My friend does. He still experiences delays and setbacks.

It might look well and good on the bottom line when a CIO produces numbers that cut costs because an outside contractor is doing the majority of the work cheaply. But what those numbers often time don’t include are the cost of delay in rolling out the project due to communication snafus and the cost of ironing out wrinkles that always seem to appear.

Have I got a solution for you? No, I haven’t – but if I did, I’m sure I’d be making the big bucks advising CIOs on how to keep projects in house without driving up costs. But ultimately, when you go to the bigwigs with the purse strings, you have the option to tell a couple of different stories. One involves up-front platitudes about the lower cost, while hidden snags lie around the corner. The other involves using the staff whom you’ve likely hired, whom you trust and with whom you can speak directly to develop whatever solution your company needs.

The question is really: Which are you going to tell?