How To Get The Biggest Bang For Your Technology Buck

There were only 24 hours left. Tomorrow the board would pull the plug on the project which had continued for well over 3 years. The total costs as per internal calculations had run into hundreds of millions of dollars.

External consultants reckoned that when you included the costs of internal resources seconded to the project from rest of the organisation, and other costs buried elsewhere in P&L’s the real total was at least double of that.

However, the project had built a momentum of its own. No one was willing to point at the elephant in the room, let alone to lead it out. Careers were at risk. Good careers – built over several years.

I will talk about the outcomes later in this piece. Before, I do that I want to spend some time talking about how did the company arrive here?

How did so many competent people miss obvious and easy signs that the project was not on track. More importantly, where did it all go off the rails?

Was this a unique situation – with no lessons for  others grappling with technology outsourcing?

Of course, I have covered these, and other similar questions in my book OUTSOURCING 3.0, and in my blogs and videos. The book, in particular, carries a very comprehensive model and diagnostic tool kit, which is value for money.

In this piece, I want to focus on only a few key points. And, I want to frame it as a positive affirmation of key things that would build momentum towards success.

  • Create Congruence in Thinking

Three kind of congruence is important:

  1. Congruence between business strategy and supply chain strategy
  2. Congruence between supply chain strategy and IT strategy
  3. Congruence between IT strategy and business strategy

In the case quoted above, while minor lapses occurred in all three, several major gaps very readily apparent in #2. It appeared as if IT team was working in total isolation from the Supply Chain and Business Transformation team – though their projects were closely linked.

  • Think Beyond Tactics

Short term, tactical thinking – predominantly related to cost savings and control issues and considerations tend to dominate. It is quite easy to lose track of the big picture in the process. All the initial discussions and dreams of gaining competitive advantage are thrown out of the window at the first opportunity.

Then, what is the point in spending all the money? The project appeared like a lot of effort, just to stay in the same place.

  • Visualise How The Life Will Change Once The New Systems Are in Place

This takes more than a flight of fancy. A lot of things will change when one thing changes. You cannot ever do enough of visualisation and preparation. Every time you do this exercise, you will discover some more things that need to change in parts of the processes, infrastructure, skill sets, SOPs, contracts, warehouses, etc. Change it.

  • Do Not Underestimate the Time and Money Requirements

That brings me to my last point. All this difficult work is highly specialised; it also takes considerable time and money.  It needs skills rarely found inside organisations, or even in IT service providers.

While it is well known that most IT projects run into time and money problems, the scope adjustment problem is less well articulated. Yet, taken together, these can wreck havoc on your business outcomes.

supply chain management

The above graphic – taken from my book OUTSOURCING 3.0 sums up the situation nicely.

In the case study quoted at the start of this post, the outcomes were a lot different than what was expected by the majority. The board made a bold decision and pulled the plug on the project in the middle. That single decision most likely saved the company in the long run. They could have saved a lot more money if, at the outset, they are created governance structure to ensure just a few key points.    After all, prevention is better than cure.

 

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Vivek Sood

I write about "The Supply Chain CEOs", "The 5-STAR Business Networks", and, how to "Unchain Your Corporation". In my work, I help create extraordinary corporate results using several 'unique' supply chain methodologies. Contact me for interesting, high impact projects, or, to get access to my IP for creating transformations using these methodologies.

  • luo.la says:

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  • saas says:

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  • Theodore says:

    People do not like change. As such, they have a natural inclination to resist any changes to their workplace, including the introduction of an outsourced IT support system. Whether this resistance is passive or aggressive, it will make it difficult for the outsourced support to succeed. To avoid this, disseminate a comprehensive plan for transitioning to the new IT system. If you do not understand why an outsourced IT bill is a certain price, it is probably your fault. There are costs involved with outsourcing IT that many do not consider. When you sit down with your outsourced support and break down what is covered and what will cost extra, you will be prepared. Also be sure to have the IT Company list everything that they are charging you for; if you do not need it, do not pay for it.

  • Flemming says:

    Outsourcing your IT functions may appear to make good sense, but beware of certain side effects that could negate the benefits. The economy has hit everyone hard. Many companies have had to pare back departments, employees, budgets on nearly every level. And many companies have done something no one thought they would ever do, jettison their IT departments in favor of outsourcing. On paper, it seems to make perfect sense. You have a company willing to handle your IT needs on an on-call basis. You’re not paying staff to sit around and wait for problems, nor do you have to pay benefits or deal with the issues that come with having computer engineers on hand.

  • Emily Johnson says:

    There are costs involved with outsourcing IT that many do not consider. For example, when you schedule an appointment with your outsourced IT company, you’re going to be charged for the drive time there and back. And what about when that outsourced engineer has no idea how to fix your issue and has to learn on the job? Are you willing to pay for that? It’s one thing if your own employees learn as they go. But it’s a different story when a contracted employee does it. There are other real costs as well, such as when you get recommendations from the outsourced company that isn’t actually needed. Up sales are common and sometimes unnecessary.

  • Jhon Davis says:

    Although some may not see this as an issue, I have come across it many times. When employees are in-house, they know one another and know how to interact well with one another. If you are outsourcing your IT, you may or may not get the same engineer showing up every time. That means your employees must get used to different contractors and how they work. With an in-house IT staff, relationships can form and solidify. Of course, that’s not to say relationships with outside staff can’t be built. But bringing in IT from the outside may cause fluctuations. It may not always be a problem, but I have seen it create issues to the point that an engineer was banned from being deployed to a client.

  • Neal Murphy says:

    A very large number of individuals don’t care for change at all. They have a characteristic tendency to oppose any progressions to their work environment, including the presentation of a redistributed IT based emotionally supportive network. There are costs required with redistributing IT that many don’t consider. To evade this, there is a dire need to spread a far-reaching plan for changing to the upgraded IT framework.

  • Sophie says:

    The economy has hit everybody hard. Numerous organizations have needed to pare back offices, representatives, spending plans on almost every dimension. Redistributing your IT capacities may seem to bode well, however, it is needed to be careful with certain symptoms that could discredit the advantages. A number of organizations have skilled themselves in such areas of IT that haven’t touched by others.

  • Murthy Horsman says:

    The financial matters such as expenditures and disbursements are required with redistributing IT that many don’t contemplate. The redistribution of IT infrastructure brings both advantages and disadvantages. The advantages are ultimately the advantages of organization and employees. The redistribution of IT is beneficial in many ways. The organizations get financials benefits by extending their IT infrastructure to other organizations and companies.

  • Richard says:

    With an in-house IT staff, connections can be framed and could be hardened. Obviously, this shouldn’t imply that associations with outside staff can’t be fabricated. Be that as it may, getting IT from the outside may cause variances. It may not generally be an issue; however, I have seen it make issues to the point that an architect was restricted from being conveyed to a customer.

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