You hear a lot of analysts, clients and, of course, vendors touting the benefits of IT outsourcing, especially as the U.S. emerges from this economic recession, which the latest government numbers show is over. In larger organizations, outsourcing can help globalize operations, and proponents inevitably point to the bottom line: It usually saves organizations money.
But if you follow the news, you might have also heard about what must be considered an IT outsourcing failure in the state of Virginia, which is currently embroiled in controversy over its $2 billion IT outsourcing contract with security firm Northrop Grumman. Although there have been a number of missed deadlines and service failures, as we reported this week, breaking the current contract could cost the state hundreds of millions of dollars in taxpayer money – that’s no pocket change! It leaves the state with little choice but to get this deal back on track.
So what went wrong? Perhaps most importantly, there was a poor governance framework in place for overseeing this deal. I wasn’t so surprised to hear that – a lot of organizations struggle before successfully implementing a governance framework for IT outsourcing contracts. But I’m still wondering how the state could not include penalties for any missed deadlines and service levels below those specified in SLAs. Isn’t that the entire basis of a contract — to hammer out those details? It’s mind-boggling.
(And, just so you know I’m not new to such failures: As a community journalist, I covered the construction of a new high school with a budget that’s ballooned to nearly $200 million, almost double the initial estimates. So, trust me, I know government incompetence.)
I’m scheduled to speak to Virginia CIO George Coulter Friday about the corrective action plan proposed by Northrop Grumman and how the state intends to straighten this mess out. Do you have questions regarding IT outsourcing contracts or what went wrong here? I’d love your input.
Also, for those who view Virginia’s mess as a cautionary tale, remember to check out SearchCIO.com, where we have information on IT outsourcing governance, outsourcing trends going into next year, and more.
Good morning! Last week on SearchCIO.com, we focused on how to build innovation and flexibility into IT outsourcing deals, discussed how to select the right BPM tools for success, and shared Gartner’s top 10 strategic technologies for 2010. Check out the stories and podcast linked below and let us know if you have any comments to add.
How to build IT innovation, flexibility into your IT outsourcing deals — Learn how to draw IT innovation from your IT outsourcing vendors and structure your contracts to cover new technology models like cloud and SaaS.
BPM tool selection: Strategies for success — Get the most out of your BPM tools. Learn how to assess your business and technical needs and choose the best vendor and tool to meet your BPM needs.
Gartner’s top 10 strategic technologies for 2010 — Gartner’s list of technologies that bear examination during the next three years show an agile, mobile, secure enterprise that can spot early warning signs and predict trends.
We’ve written a lot lately about what leads to IT project failures and what causes CIOs to get fired. Today I heard about business failure — and its flip side, how companies go from good to great. Yes, this was a talk by Jim Collins, author of the book by that name. And though he’s probably given this talk hundreds of times, his speech during the CIO lunch at Gartner’s Symposium ITxpo was a rousing testimonial to leadership — from what makes a great leader to what distinguishes him or her from a mediocre one, and the causes (almost all self-inflicted) of business failure.
The talk was full of useful insights, especially for all of us looking ahead to 2010 and trying to figure out what to do and what’s going to happen (beyond Gartner’s prediction of 3.3% IT spending growth).
Some of it was even CIO-specific. But more on that in a moment.
First, some things he said about who leaders of “great” organizations are:
And here are some of the things they do:
As for CIOs, Collins talked to a dozen or so of them before his speech, and reported having a lively conversation on what makes a “great” CIO. (His use of great generally refers to consistency of strong results.) The outcome: “They agreed that the truly great CIOs have the leadership capacity that they could be CEOs.” In order words, all of the characteristics above apply.
Are you a “great” CIO or “great” IT leader? Do you want to be? Try Collins’ free diagnostic tool for going from good to great.
p.s. For those interested in the business failure side of his talk, another attendee blogged on Collins’ stages of decline.
Good morning! We had a snowy weekend here in the Boston area, as anybody who watched the Patriots game knows. What better way to warm up than by enjoying a piping-hot cup of coffee or tea and reviewing our latest SearchCIO.com content?
Review these trends in IT disaster recovery planning and outsourcing — IT disaster recovery outsourcing can help enterprises protect data centers more effectively than doing it themselves if catastrophe strikes. Want to show us how much you know about outsourcing DR, or looking to learn more? Review our latest stories and take our quiz?
Multi-sourcing requires IT governance strategy with multiple tiers — An IT governance strategy for multi-sourcing activities requires a multi-tier approach with participation throughout the enterprise. Read how NASA (yes, the NASA that recently bombed the moon to learn more about its surface) learned to govern multi-sourcing.
FAQ: IT and organizational change management — The CIO’s role in organizational and IT change management is to ensure service availability and business support. In our latest FAQ guide, learn more about IT’s role in change management.
Lean thinking in IT: Case studies and advice from practitioners — Lean thinking in IT can improve customer satisfaction and business alignment and cut waste, as TransUnion, Harley-Davidson and Flextronics have found. Read each company’s story here.
Is there a difference between recession-era thinking and recovery-era thinking for IT? That was the question posed last night to members of the Boston chapter of SIM (where the percentage of the 100 people in attendance introducing themselves as “in transition” probably exceeded the unemployment rate). But the biggest challenge that people saw ahead? IT staff retention.
The good news is that budget cutbacks have taught many IT teams how to prioritize, work smarter and find creative solutions to problems they don’t have money to fix. The bad news is that companies that aren’t thinking ahead may see these teams splinter apart through attrition. Those that cut training budgets and don’t restore them in time to invest in their people, for example, won’t be in a good position to retain staff once the economy stabilizes and jumping ship doesn’t seem like such a huge risk.
It wasn’t clear how many organizations could find themselves in that position. Some members mentioned preventative measures under way, such as one company that was hiring at pre-recession salary rates in the hope that new staff would stay beyond a short stint. But for all those still coping with tight resources and few extra benefits, there is probably still time to figure out some IT staff retention measures — by most accounts, the economic recovery will be slow and cautious, and the IT jobs turnaround has just barely begun. (Foote Partners notes that U.S. labor statistics show IT-related job growth of 1,400 jobs since July, with 32,600 IT jobs lost in the first seven months of the year.)
I was on vacation when the news hit that customers of T-Mobile’s cloud-serviced Sidekick phones had likely lost their data due to a failure of the storage service provided by a company recently acquired by Microsoft, ironically named Danger. So, rather than following the story in real time, I found myself reading the historical account of the incident on Thursday. My reading of this was interrupted by another calamitous story, also related to clouds– a small boy whisked up 10,000 feet in the air by a helium balloon and carried in horrifying swoops across the Colorado skies. When the balloon landed gently some two hours later, the boy was not there and feared lost. Both stories, as it turns out, were much less horrifying than originally imagined.
“Balloon boy” was hiding in his family’s attic. The Sidekick data was not lost either; it was hiding somewhere as well. Yesterday Microsoft announced that it had recovered most, if not all, of the customer data.
Despite the good news, we’re seeing evidence now of storm clouds when it comes to cloud storage. The Sidekick data failure was attributed to a storage area network (SAN) upgrade gone awry. In this case, there appears to have been a difference of opinion about whether a backup was necessary in order to go forward with the SAN upgrade. According to sources of blogger Daniel Eran Dilger, instead of doing a backup that would have taken six days, Microsoft management is said to have decided to curtail the process two days into it. What then ensued is not yet clear, but the implication is that an Oracle system responded to some abnormality in the SAN upgrade that caused the data’s “disappearance.”
Whatever the cause, this scenario highlights the enormous complexity of cloud storage and the inherent risks involved with such a new data-handling approach. Indeed, another recent cloud mishap, in which a hacker was sending spam through an Amazon email server, elicited another calamitous response: Amazon EC2 subscribers had their email put on a spam blacklist by Spamhaus because of this one bad apple.
It’s not surprising these technology glitches are happening, given the newness and complexity of cloud computing. But I think what all three cases show — from the overblown police and media reaction to the image of an airborne balloon, to the software response to a SAN upgrade gone wrong, to Spamhaus’ Draconian solution to deal with a single hacker, is that we’re inexperienced. We don’t yet have enough understanding to deal with these unusual events in a calibrated — not exaggerated — way. The heart of the matter is that, in each case, there may have been an overreaction to an unexpected, but as it turned out not particularly serious, problem.
With all new things, there is a learning curve. Single hackers will be dealt with in a different way in the future. Microsoft will never do an upgrade without backing up first. As for “balloon boy,” it’s likely some adults will look in the attic before calling out the National Guard. And if the balloon incident was staged, a family conspiracy? Well, there are those who believe the Sidekick data wipeout was insider sabotage.
I’m a huge Boston sports fan, so forgive me for moving a bit more slowly than usual this morning. Yesterday’s “Black Sunday” (as it’s already being dubbed) really knocked me — and much of New England, I’d wager — for a loop. At least we have an excellent Celtics season to look forward to….
I’m diving into my SearchCIO.com wrap-up to chase away the blues. As always, read the stories linked below and contact us with any thoughts!
Email archiving solutions and strategies for enterprise CIOs – As an email scandal in the Boston mayor’s office is currently demonstrating, effective email archiving solutions and strategies are an important part of a CIO’s job, as e-discovery, litigation and compliance regulations require detailed email policies.
Disaster recovery is dead; long live continuous business operations – IT disaster recovery is dead, according to the head of the Disaster Recovery Institute International. Here’s how DR is becoming synonymous with business continuity.
ITIL case study: ITIL best practices at two financial services firms – When Barclays Global Investors and Wachovia invested in ITIL, they saw improved efficiencies and huge cost savings. Read their stories here and feel free to share your own ITIL experiences below.
CIOs should look to Generation X, not Generation Y, to be the early adopters of new and social technologies within their organization. Contrary to what you’d think, Generation X workers (roughly those ages 28 to 48) read blogs, participate in discussion forums and wikis and listen to podcasts at work more than Generation Y.
These were just some of the results from Forrester’s Workforce Technographics Survey, released yesterday at their Business Technology Forum in Chicago.
The survey showed that although 59% of the Gen Y (18- to 29-year-old) professionals use social technologies at home, only 14% use them in the workplace. Social media is not as much a generational thing as most people think, according to Ted Schadler, vice president and principal analyst at Forrester.
“Generation X is just better at problem solving and using their experience and authority,” said Schadler, the lead author of the report. “And using social technology to solve a business problem should be the first priority.”
The report surveyed 2,000 information workers — any type of employee who uses a computer or connected device to do his or her job — from companies with 100 or more employees.
One other point that came through was that users were not as advanced in terms of social technologies as we think. Only one in four workers uses instant messaging or Web conferencing, and one in 10 has and uses a smartphone.
So, what does all this information mean to the CIO? This type of quantitative assessment gives CIOs and IT professionals the tools to make better investment decisions. CIOs should apply these findings to benchmark their own technology adoption and satisfaction and develop a measurable strategy for adopting new technology that users want and use, and that will add the most value to the business.
I just returned from Forrester Research Inc.’s Services & Sourcing Forum in Chicago. Newsflash: Chicago is a windy city! Another newsflash: The road to creating and managing IT outsourcing contracts is a long and winding one – especially when business users start procuring their own services, such as applications via Software as a Service, or SaaS.
When my colleague Christina Torode covered the Burton Group’s Catalyst conference this summer, the buzz among IT executives was that business users were purchasing SaaS services without running these agreements by IT first. As Torode reported:
“Business users tired of waiting for IT to provision a new application or service are tapping cloud providers and bypassing IT along the way, much as they have for many Software as a Service applications over the past few years. And cloud providers are not calling on the IT department, but rather going to department heads to pitch their wares.”
But if this trend makes it harder for IT outsourcing contract professionals to oversee the company’s IT assets as a whole, there is also a flip side: When business users procure their own software, it doesn’t come out of the IT budget.
During a breakout session on SaaS services and cloud computing outsourcing contracts, Forrester senior analyst Liz Herbert said that she’s heard that some IT outsourcing contract professionals would actually prefer that individual departments continue purchasing their own SaaS services for this reason. In this economy, with all budgets and spending being scrutinized so closely, why make it look like IT is doing the spending if these other departments are willing to foot the bill?
To be fair, I noticed some snickers from the IT contracting professionals in the room upon hearing Herbert’s comment, so perhaps it’s not a common point of view but I thought it worthy of mention nonetheless. Certainly, it speaks to the need for governance in IT outsourcing contracts on an enterprise-wide level – a subject I’ll be delving into in the coming week.
Has your IT organization surrendered oversight of SaaS services contracts procured by the business, or do you still intend to oversee all these IT outsourcing contracts throughout your organization?
In a few hours, I’ll be bound for Chicago to learn more about IT services and sourcing, but don’t think I would leave you without your weekly wrap-up of CIO content! Check out the latest pieces to run on SearchCIO.com by clicking the links below:
CIO management mistakes that can harm CIO careers, cause IT failures – Are you an effective CIO or senior IT leader, or are you poised for failure because you’ve made one of these mistakes? Here are eight things you might need to change before it’s too late.
Do you have the qualities of a good leader? Test your leadership IQ – The qualities of a good leader transcend industry, organization and circumstance. Do you know what it takes to be a good leader in IT? Take our quiz and find out.
Maturing an ITIL strategy beyond incident, problem, change management – Some ITIL implementations stall once IT gets incident, problem and change management under control. Here’s what ITIL practitioners advise to keep driving benefits and maturity.
ITSM and ITIL best practices for process improvement – ITSM and ITIL processes continue to gain traction in enterprises as CIOs seek to cut costs and increase efficiencies through business process improvement. Learn more in this guide, our latest CIO briefing.