Wednesday, December 14, 2011

What IT Functions to Outsource

CIOs often ponder upon this very important aspect of their outsourcing strategy. What IT functions should I outsource?

A broad classification of an IT department will be under two heads - Infrastructure and Applications. We can further classify these two as below:

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Infrastructure
Primary Systems: These include your Data Centers, Networks, Servers, System Software, Databases, Storage Systems, Enterprise Service Bus and Desktops. Secondary Systems: These will include Email and Softwares running on desktops.
Applications
Enterprise Applications: These will include those core applications that form the basic foundation of running the business such as ERP systems and Business Applications such as a Banking System in a Bank or a Crew Management System in an Airline. Support or Periphery Applications: These will include any Business Intelligence and Datawarehousing tools, Document Management Systems, e-Learning Systems and Intranet Portals.Can you outsource all of these? The answer is yes. 

You can buy a BI product from a BI vendor, get a Services vendor to build an executive dashboard for you and further outsource the maintenance of that platform.

You can locate your Data Centers with a third party provider and get an Infrastructure Services company to manage the same for you.

The possibilities are endless. That brings us to an all important question considering that the outsourcing funda is to manage the 'core' and outsource the "context". What is your "core" and what is your "context" - from an IT user organization's perspective?

Consider this. If you the CIO outsources all of the functions mentioned earlier in the article, what will your IT group be doing from 9 to 5? Manage vendors? Not a good idea, considering the fact that there will be a procurement group out there breathing down your neck all the time.

I think in the modern day organization, where most of the IT functions are outsourced, the "core" will be defined as 'management of service delivery to business users'. That will be the single most important function the new-age IT groups will be performing and getting paid for!

It is not as simple as it sounds. Management, Service Delivery, Business, Users - all these words and the meaning it holds are tremendously important and will define in totality what an IT user organization's core is. Theoretically, you should be able to outsource the rest!

What IT Functions to Outsource

Raj Kurup is an Information Technology professional with 11 years of industry experience. He lives and works in Melbourne, Australia.

Raj has a 4 year Electrical & Electronics Engineering degree and a Masters in Management with a double major in (information) systems and marketing.

You can read more about his thoughts on technology outsourcing at his blog http://www.technologyoutsourcingblog.com.

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