Outsource your core IT? Never!

Outsourcing is a no-no for some, who believe their IT is just too important for anyone else to handle, reports Julia Vowler.

Outsourcing is a no-no for some, who believe their IT is just too important for anyone else to handle, reports Julia Vowler.

The temptations of outsourcing are clear. At a stroke the whole kit and caboodle becomes that wonderful thing, an SEP (Someone Else's Problem).

All you have to do - having, of course, invested enough time and effort in setting up the world's most watertight contract and service level agreement - is sit back and keep a watching brief on the outsourcer as it struggles haplessly with recalcitrant end-users who don't know what's good for them and inch its way through the minefields of software licensing and the new technology maze.

But Peter Knight, IT director of credit card company Capital One, will never outsource his corporate IT. This is, he says, because IT is simply too critical, too crucial and too core to let go of.

The entire credit card operation of Capital One is built on its information-based strategy. In the fiercely competitive world of credit cards, as a an invader from the US, Capital One makes its mark here by intense specialisation.

One-size-fits-all is not the corporate motto when it comes to credit cards, the company says. Instead, endless segmentation and resegmentation of its actual and potential customer base is the key to keeping market share. Mass customisation is the name of the game.

But to do that successfully, reliably and repeatedly, Capital One needs to be able to target each type of credit card at very specific groups of customers, depending on their age, preferences, spending habits and so on, a whole host of significant personal parameters that are fed into the offering.

And to do that, of course, means knowing a huge amount about actual and potential customers.

At the heart of its strategy is a customer database that is exhaustive in its knowledge about who might like to take out what kind of credit card, and why.

"Every month we try out new products," says Knight.

Moving at that kind of speed, the only way to keep the information-based strategy racing is by keeping IT in-house, he believes.

By being in-sourced, "we can turn around so much faster," Knight says. It's also more flexible. "I have the capacity to make changes when I need to and move resources from one project to another - I'm not in a queue of clients at the outsourcer," he points out.

Last, but not at all least, keeping IT in-house means keeping the corporate culture in-house too.

"We can generate an enormous wellspring of 'can-do'," says Knight. "I can't overstate that."

This was last published in July 2000

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