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Lets see now, an outstanding company would get more value from IT and pay less for it, wouldnt it?
Thats the not-so-surprising finding of The Hackett Group, which will soon publish its annual Book of Numbers analysis of its IT benchmark results, which are designed to reveal just what makes what it calls “world-class” organizations tick. The Hackett Groups findings indicate that world-class IT costs less and requires fewer staff per thousand users while providing higher strategic value to companies.
Just how does a company get more for less? “World-class companies outsource more and do it better. They manage to cut their overall costs significantly,” said The Hackett Groups Beth Hayes, IT practice leader of the Atlanta-based company. Companies that dont perform so well use outsourcing to fix things they havent been able to fix themselves. This can lead to higher costs and still leave the problems unsolved, the Hackett study found. One intriguing finding: Effective companies outsource 60 percent more of their IT infrastructure but outsource 34 percent less of application management.
A key to outsourcing well is setting up a project management office that keeps an eye on the outsourcer and the work being done. Leading outsourcers understand the importance of close communication with the customer and the virtues of a customer monitoring them closely. In my recent interview with Brian Keane, the Keane Inc. president and CEO asserted that his customers, far from handing off their IT work to his company and having it disappear into a “black box,” as it were, actually gain a better idea about whats going on in their IT operations than they had previously, thanks to a plethora of reports.
Its all about vendor management, which Keane said must be a core competency of companies that outsource.
Out and about
Hildebrandt International, a management consultant to law firms, is teaming with business process outsourcer OfficeTiger to form a venture that will outsource IT management of large law firms and corporate law departments. The goal of the business, OTH Services, will be to offer everything from secretarial work to marketing and business development, including corporate image and branding. Also included will be finance and accounting and cash management. The venture will target companies and departments with approximately 3,000 employees.
A significant portion of the work will be shipped to India, where New York-based OfficeTiger has major operations. Legal documents in digital format will be stored there. Is that a problem? Where data is stored depends on client desires, said Mike Short, a director of Hildebrandt International, in Somerset, N.J. But he pointed out that plenty of sensitive data is already being stored offshore, including mortgage information and human resources data. “There is nothing on the books today as to where data has to be stored as long as it meets compliance requirements. It has a lot to do with setting up very clear roles and responsibilities. If we do this right, my department is your department,” Short said.
A lot is riding on the Accenture-led Smart Border Alliances winning a 10-year, $10 billion contract to build a border security system in the United States called the US-VISIT (United States Visitor and Immigrant Status Indicator Technology) program. Watching how the Smart Border Alliance, which includes Raytheon, The Titan Corp. and SRA International, executes should be a good spectator sport over the next few years from several points of view. First, it will be interesting to see how well the Department of Homeland Security manages the relationship. The recent tribulations of the Navy-EDS contract do not augur well for large government outsourcing deals. A key challenge will be meeting the congressional mandate that US-VISIT must be deployed at the top 50 U.S. land ports of entry by Dec. 31. Also, the contract should be a proving ground for the large-scale use of digital finger scanning and digital photo technology, which are sometimes less than reliable for personal identification. Accenture will have to make the technologies work at 400 points of entry.
Stan Gibsons e-mail address is stan_gibson@ziffdavis.com.
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