3. Multisourcing reduces costs and adds value.

By Don Desiderato  |  Posted 06-24-2010 Print Email

3. Multisourcing reduces costs and adds value. A strategic partnership with a global partner helps reduce overall expenses, if done properly (without introducing risk into the organization). The key thing to understand about focusing solely on cost savings is that once the advantages of the cost-benefit analysis are achieved, the CIO receives a pat on the back and a new financial baseline is established, which will certainly be challenged later. Therefore, the strategic value benefit of the relationship is as important as the cost savings.

For the CIO, a key strategic value in multisourcing is agility--the ability to quickly ramp up and ramp down. This capability allows the CIO to run as lean as possible, while still being able to react quickly to new initiatives.

Additionally, offshore partners provide expert global advice, which should be regularly leveraged. In addition, it is important to tap the sourcing partner for ideas on cost reduction and for its expertise when evaluating new projects or initiatives.

When introducing multisourcing to the IT environment, it is prudent to focus on both the cost savings and the strategic value benefits. Business executives expect IT organizations to employ responsible multisourcing strategies, certainly for cost-saving measures. However, CIOs should ensure that they are also deriving value from the relationship.

4. Relentlessly deliver as promised. Nothing helps the reputation of the CIO and the IT organization as a whole more than delivering what they've promised. Therefore, it's important for the leader to understand how to set realistic expectations for the business, then deliver on time and on budget, and, finally, demonstrate that the promised benefits have actually been achieved.

Here's the tricky part: Business leaders tend to be unrealistic about what the IT organization can deliver--and when. So it's up to the CIO and delivery leader either to set the proper expectations or to continuously deliver meaningful pieces of the project so businesspeople get value sooner, instead of at the end.

Metrics are needed to demonstrate the organization's success to executive leadership. Be honest about the successes--and transparent during failures. This will bolster the reputation of the IT organization to the executive leadership and provide an openness that will give confidence to the enterprise as a whole.

5. Move at the speed of business. As a CIO, the last thing you want to hear is that a slow-moving IT organization is preventing a new product from coming to market or enabling your competitors to gain a leg up. This is problematic because the software development life cycle or the complexity of what is being built often takes longer than the appetite of business executives.

To combat this problem, the CIO must implement a culture of inclusion. The earlier an IT organization is involved with innovation (Step 7), the faster it can figure out how to deliver business value. Bringing IT professionals to the table during the incubation stage of innovation can help them better understand requirements and give the architects a chance to figure out how best to build a design strategy that can move at the speed of business.

Of course, business partners must be comfortable with having IT at the table earlier in the process. However, if the IT organization has a good reputation and relationship with the business side of the house, partners are more likely to be open to the idea.

6. Make demand management transparent. Effective demand management is crucial to an IT organization, but many CIOs do not focus on it. The basic premise is that all work the IT organization does should be known, approved and prioritized. There should not be many "gates" into the IT organization through which work is introduced. Instead, there should be a formalized, transparent process. A CIO should never hear the words, "What are your folks working on?" And, to the dismay of businesspeople, there should be no back-door way to get things done.

Effective demand management is essential for the following reasons:

• The only way you will know the true productivity of the organization is to know precisely what is being worked on.

• Work that distracts from priorities is eliminated.

• Transparency breeds business confidence in the IT organization.

• By working on only the highest-priority initiatives, the CIO will see an improvement in satisfaction from the business side of the house.

• Contrary to what the IT organization or business may think, a solid structure around demand management will not make the IT department more bureaucratic; rather, it will make IT more transparent to business management.



 

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