Get the Balance Right eWeek May 16, 2005
Smart companies are now multisourcing - contracting with multiple vendors to provide services so that they don't fall prey to vendors who get lax in staying lean and competitive. Single point vendors are prone to treat themselves as a monopoly as their services become difficult to replace. This leads me to consider why companies turn to outsourcing. Sometimes it simply just makes good economic sense We don't build our own corporate automobiles, why should we build other IT components from scratch? If you have just a few firewalls - it is simply too expensive to have your own trained staff monitor them 24 x 7. But there are other reasons - bad reasons to outsource such as poor upper management governance and leadership which results in poor overall management governance. When executives lose faith in their managers and staff they will turn to an outsourcer to provide credibility:
Replacing GM's own internal IT with that of an external provider merely cloaked the same management problems in a different garb.
Technical professionals have great anxiety about outsourcing - but these technical people are usually in the greatest demand and normally find a position waiting for them as a result of outsourcing either as a new employee at the service provider or in managing projects that require an understanding of the business needs. Management however is taking a large risk in shifting the skills requirements for managing large outsourced contracts managing external provider places far greater demands upon management from contract creation to compliance and measurements as well as additional and unexpected security risks.
The French Connection eWeek May 16, 2005
Even the outsourcers admit that you should be careful about your cost savings expectations:
Citing one CIO's experience, Unilog executive committee member Jean-Pierre Parra asserted that people tend to outsource what they don't know very well. However, Parra continued, it makes more sense to outsource what you do know well—that way, you can manage the relationship better. Parra also cautioned against seeking instant payback. "It's a myth that it's possible to cut costs immediately," he said. "It takes several years to realize real economies."
Failure Must be a Part of the Plan SC Magazine May 2005
It is hard for me to usually get passed Richard Clarke's highly politicized rhetoric but in this article I find myself agreeing with many of his statements (perhaps because he is no longer trying to influence an election?):
With most of the nation's critical infrastructure owned by private companies, part of the onus falls to companies' C-level executives to be more proactive about security. "The first thing that corporate boards and C-level officials have to accept is that they will be hacked, and that they are not trying to create the perfect system, because nobody has a perfect system," he says.
"Organizations have to architect their system to be failure-tolerant and that means compartmentalizing the system so it doesn't all go down... and they have to design it in a way that it's easy to bring back up," he says.
Relying too heavily on perimeter security and too little on additional host-based security will fall short, says Clarke. Organizations, both public and private, need to be much more proactive in protecting their networks from internal and external threats. "They spend a lot of money thinking that they can create a bullet-proof shield," he says. "So they have these very robust perimeters and nothing on the inside."
If he keeps talking this way I might have to buy one of his books...
No End in Sight ComputerWorld May 16, 2005
Frank Hayes talks about IT as a commodity and outsourcing comparing Nicholas Carr's analogy between IT and electrical generation 100 years ago. At one time individual companies generated their own electricity but then as the electric grid developed companies found it more reasonable to purchase electricity. While Hayes further analyzes this analogy - I can't help but consider that electrical micro generation is the next version of the electrical grid.
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