Users upbeat about value of IT to business

John Riley

Tuesday 08 July 2003 03:38

As the risks of outsourcing become more apparent, IT leaders find themselves in a strong position to lobby for influence in the boardroom.

Delegates were bullish at IT's position at the centre of business change and innovation in major organisations, at the recent annual conference of senior IT users at the Corporate IT Forum (Tif).

As a result, several major organisations that were represented at the conference are now in-sourcing IT where they can, and are advising extreme caution about any form of outsourcing.

Several themes emerged at the conference, which was attended exclusively by senior IT directors and managers from some of the largest UK organisations, which reassessed the traditional IT focus on people, process and technology.

In contrast with supplier gatherings, the mood was confidently buoyant.

Most attendees were involved in work such as web-enabling their infrastructures and simplifying systems, while trying to better align themselves with the business.

The boards of many organisations now accept the role of IT at the heart of the business. "Our chief executive says that IT is a core competency for Ford," said Richard Thwaite, Ford Europe's director of IT. "For a company like Ford that is a major step."

A senior IT manager in a major retail organisation also stressed the role of IT in innovation. "IT brings innovation to the business," he said.

Another senior IT director of a public sector organisation agreed, "IT is the engine of change, and an organisation will move forward only with IT.

"The role of the chief information officer must be to put the organisation in a position where it can take business opportunities when they want to do so," he added.

That reasserted central role for IT explains why many companies, for example Ford, are moving towards in-sourcing. One global pharmaceutical company found that in-sourcing its VMS support cut costs by 50%.

For those organisations who do outsource business functions, several seasoned IT managers warned of the special skills needed to manage these relationships.

"When you outsource you change your people's careers and ask them to become consultants," said one.

"You can't influence them by pay, bonuses, reviews, you cannot fire them, but you need to manage them. You cannot tell your outsourcing partner how to run the business - you simply have to trust them."

Advice on outsourcing included:

Don't outsource everyone, keep enough people on-board to manage the relationship
Outsource commodity items
Be sure to have an emergency escape plan when negotiating
Be aware of the length of time lawyers take
Take care to sort out intellectual property issues arising in an outsourcing arrangement.

Several perennial issues were also batted around during the conference, such as the relative merits of centralisation or decentralisation. When it comes to the technology, and architectural issues, the talk focused on simplification, especially of e-mail systems and file servers and, as far as possible, commoditisation.

Users called for simplicity in any business-related areas, such as, business continuity. As one user put it, "Proper business impact analysis needs to be simple and easy to implement."

The conference illustrated how users are thinking about fundamentals such as customer orientation. "We must challenge waffle, like 'being customer-focused'," said one IT director. "What does that really mean? We're always under pressure to bring in customer service, but cannot easily prioritise because you can always justify something on customer service. It is more important for IT to understand what capabilities are needed and what can be secured and of value."

Another soundbite that is liberally used in IT was also challenged. "The phrase 'people are our most important asset' is absurd," said a senior user, "You cannot keep them all. The reality is that some of our people are our most important assets."

And one user made a case for revisiting rejected ideas. "Every company has had boardroom debates where ideas get rejected. We should analyse out the component features of rejected ideas," he said. "Today's daft idea is often tomorrow's brilliant idea."

Wrong reasons for outsourcing

To reduce staff or take them out of the organisation - "no success stories here to my knowledge", said one IT director
To get rid of a management problem
To solve a problem you are not able to solve

Beware outsourcing

During mergers, acquisitions or disposals
When there is a technology step change
If the scope of the service is unclear (stop and work out what you want)
If you are in a hurry.

Think before investing in IT

Will it enhance the customer experience?
Will it increase the capability of your users?
Will it contribute towards an agile infrastructure?
Does it have common back-office systems and process?

What is Tif?

The Corporate IT Forum (Tif) is a subscription-based user group for corporate IT users which runs workshops and benchmarking activities. Members share experiences in a non-competitive environment. Annual corporate subscription for large organisations is £8,500, and its current chairman is Jonathan Mitchell, chief information officer of Rolls-Royce.

About 170 senior IT users attended the conference, which was closed to all press except Computer Weekly. Being an uninhibited user-only environment, most speakers and participants were unwilling to be quoted on the record.

www.tif.co.uk

Ford: Bringing back the IT people

"Although we have no big outsourcing deal, a lot of roles, such as web hosting, are provided via outside agencies."

"IT people felt let down with outsourcing, and bringing them in-house brings pride back into the organisation."

However, Thwaite is careful about who he brings inside. In a gruelling day-long selection process, he is not looking first and foremost on taking the best technical skills.

His first priority is to find people with the right values and behaviours to fit in to the Ford culture, and then focus on competencies.

"You can build competencies - that is a growing process - but you can't change core integrity and instincts."

One highlight of the selection procedure is the in-tray exercise, where the applicant has to demonstrate they can prioritise through understanding the business issues as well as the technical ones.

With about 30 electronic devices in each new car, and their associated electronics costing 30% of the value of a vehicle, IT is now recognised as core to Ford's business, said Richard Thwaite, director of IT for Ford Europe.

Speaking to the Corporate IT Forum's annual conference, he said that in-house people understand best how the business runs, so he is working hard to recruit more software engineers.

His target is to raise the number of IT staff who are Ford employees from 30% to about 60% .

The business challenges include reducing vehicle development cycle time from 42 to 18 months through 3D geometry and computer simulation; and cutting car order-to-delivery time from 80 to 15 days through web-led customer-centric sales and marketing systems.