All Posts in Strategy and Tactics

|In: Industry Commentary|Last Updated:

Why should an IT organization ship work offshore?

Certainly not because the work is “not core,” — the answer offered up by the popular but not-very-useful “core/context” theory that’s too-often used to make this decision.

The core/context theory’s deficiencies have been explored in this space often enough that wary readers might be wondering if yours truly has anything to offer beyond criticism. Yes, I do … while criticizing others is more enjoyable and less risky than offering an alternative, it just doesn’t pay the bills.

So if the core/context theory provides the wrong criteria, what are the right criteria? Here’s the starting point: “What should I send offshore,” asks the wrong question. And when you ask the wrong question, even the best answer is misleading.

What you need, that is, isn’t an offshoring strategy. You need a sourcing strategy — one that takes into account the full range of choices available to you to staff the different kinds of situations you face running an IT organization.

And you have a wide variety of staffing resources to choose from: Employees; consultants (defined here as outside experts brought in because of their special knowledge); contractors (non-employee staff brought in to perform day-to-day tasks); on-shore, off-shore, and multi-shore integrators who provide multidisciplinary teams to execute projects on your behalf; and outsourcers of various stripes to take over ongoing functional responsibilities. Each has its own characteristics, which suits it well to some staffing situations and poorly for others.

So here’s the plan: Make each of these staffing sources a column in a matrix. The rows are the characteristics used to match sources to situations. Score each cell using a ranking ranging from strongly disadvantageous to strongly advantageous. At IT Catalysts we use a –2 to +2 scale for this purpose; others prefer 0 to 5 or High/Medium/Low. Whatever works for you.

  • Immediate economies of scale — sufficient size and scope to spread fixed costs and variations in staffing needs across multiple sources of demand.
  • In-depth understanding of business/IT linkages — knowledge of how your company conducts business and the information technology available to it, so as to be immediately competent in addressing new business situations.
  • Immediate access to scarce expertise — sufficient size and scope to keep experts with scarce skills and expertise busy, and to ensure their availability when they are needed.
  • Ongoing availability of scarce expertise — the ability to staff an enduring need for a particular set of scarce skills and expertise consistently and affordably.
  • Personal investment in the company’s mission and success — “skin in the game,” loyalty to your organization, and a commitment to its success.
  • Need for a role to provide leadership — for others to recognize and respond to the direction and goals established by the individual in a particular role.
  • Low cost, risk, and impact of switching sources — so if you change your mind, either about a specific source or class of source, you can change the source itself.
  • Urgency — how quickly you need to respond to a new opportunity or situation.
  • Riskiness — not of the source, but of the venture your organization is undertaking, and the implications for how certain it is the company will need the staff deployed to it.
  • Criticality — how important the function to be provisioned or the new venture being attempted is to the company’s success.
  • Raw cost of labor — oh, yeah, let’s not forget the need to save a few pennies here and there per hour of effort expended.

    • Different companies will fill out this matrix differently. The cost of internal employees is lower in Altoona, Wisconsin, for example, than it is in downtown Manhattan; if you’re a giant multinational corporation you have economies of scale internally that you don’t have if you operate a half-dozen retail locations. What’s important is that you understand how well each available source scores in each of these characteristics for your organization (and whatever others apply to you that aren’t listed here).

    Then, when the time comes to match sources to the requirements of a specific business situation, you can choose the source that best fits your characteristics and specific situation.

    When you choose a piece of software, you assess its fit with your requirements — it’s a complex, in-depth process that requires serious effort and analysis.

    Why would choosing a source of staffing call for anything less?

    Comments

    |In: Industry Commentary|Last Updated:

    Customer Elimination Management (CEM), a term coined by Direct Marketing Hall of Fame member (and father of your loyal author) Herschell Gordon Lewis, is Customer Relationship Management’s evil twin. It is, ironically, the unofficial goal of many putative CRM initiatives.

    Don’t believe me? Here are two cautionary tales from the CEM archives:

    Our first lack-of-service provider is a well-known credit card company. One of its credit cards sits in my wallet. Nonetheless, I receive promotional mailings from this company every week offering me pre-approved credit cards. As with its competitors, most of these mailings offer me a low, low initial APR of they-pay-me-to-take-their-money for the first three months, after which they make a Mafia loanshark look like a piker (I think “APR” stands for Abysmal Public Relations, but I’m not sure). Customer disloyalty programs like these, that reward non-customers while penalizing current ones, are a hallmark of CEM programs.

    I actually opened one of these mailings, disguised as it was as a monthly statement, and read of a new card offered by the company that awards travel miles. My current card doesn’t do that, so I called, only to find that no, they can’t add travel miles to my existing account. They would, however, be more than happy to give me a second card that does award travel miles. All I’d have to do is fill out an application.

    Hold that thought.

    Second company: A Wi-Fi service provider. As it handles an airport through which I travel rather frequently, I have an existing account. So when I was traveling through another airport recently for which the same company provides Wi-Fi services, I decided to sign in, only to see …

    A different login screen — this one asking for my cell phone number and offering to add the cost of the service to my cell phone bill. A bit of searching reveals that you can just give it a credit card instead, if you’re the kind of heathen who uses someone else’s cell phone. But nowhere can I login using my existing account.

    Who cares — it costs nothing to open an new account, so I start to do so, when a link to the company’s privacy policy catches my eye. It’s a good privacy policy, too — ironclad protection of my personal information. There’s even a “supplemental privacy policy.”

    To provide further safeguards? Here’s what it says: “We disclose that information, and you consent to such disclosure, to those merchants involved in the transaction, to your credit card company and bank, the merchant bank, merchant aggregators, Payment Processor and other companies or service providers used to facilitate or complete the transaction (‘Third Parties’). Information about you received by those Third Parties will be governed by their own privacy policies, not this User Agreement or the AT&T Wireless Privacy Policy.”

    Which is to say, this provider awards to everyone in the world the right to use my information however they see fit without my ever knowing about it, all the while claiming points for protecting their customers. (Credit where it’s due: Ed Foster has written about this subject, with regard to Ticketmaster, which has a similar privacy policy, in Gripelog — www.gripe2ed.com.) This isn’t a privacy policy. This is a complete absence of privacy policy.

    No thanks.

    Two companies, two industries, but kindred spirits. Both have invested heavily in customer relationship management. They’ve issued press releases extolling the virtues of their programs and the value they’ve received. Their IT leaders have been interviewed and extolled as visionary thinkers helping their companies advance their business strategies.

    Yet neither provider is even able to keep track of me as a customer.

    The first wants me to fill out a new application form, to give it information it already has about me, so it can sell me a new product I don’t want instead of providing the service I do want. CEM at its finest.

    The second also can’t keep track of its customers — at different airports it uses independent account databases and billing schemes, while hiding a craven lack-of-privacy policy behind the excuse of third-party contracts. It could, of course, have negotiated those contracts to ensure the privacy of its customers, but it didn’t bother.

    Neither of these companies has grasped the most basic notion of CRM — that it’s about managing customer relationships.

    What about that is so difficult to understand?

    Comments