Summary
Survey amongst over 600 CIO's shows a lack of insight in the costs and benefits of outsourcing IT. CIO's reporting into CFO's are blamed for this, but did they knew the costs and benefits before they started outsourcing? Large companies tend to forget their history...
Analysis
A recent survey shows that the financial effects are not clear, and even the value of outsourcing itself is questioned. After the financial crisis of the last 1,5 years not a real surprise. Many larger companies suffer from a high turnover in management and staff and tend to loose a part of their history in that way. The manager who decided to start outsourcing often is not the same manager, who, after several years of contract phases, pilot phases and implementing, looks at the end result and the running costs.
But, beside the turnover of management and staff, more aspects play a role in the lack of transparency in costs and associated value. How many companies still only see the IT investments and running costs, or even IT in general, as a cost and not as a value driver for the company? How many CIO's are reporting to a CFO in stead of being part of a management team on Executive level or an Executive Board?
Although reporting into a CFO might bring in the perception that the value of IT is naturally measured, in many cases the opposite is true. Of course, exceptions are there as well, but most likely the CFO steers the CIO (and the IT likewise) as a cost center. A different position of the CIO is a necessary change in a company to really discuss, measure and steer on the value IT brings.
Another question one could rise in this survey is the past situation in any company that stated the lack of transparency in costs and associated value after (a part of) was outsourced. Were they really to able to measure and steer the true value of IT? A next survey in the same area would be appreciated where both the old and the new situation are questioned. It is almost obvious that this will shine more light on value of the conclusions of the survey.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
