Post #252,385
4/16/06 3:45:17 PM
4/16/06 3:53:13 PM
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You know me better than to
take the extreme view... But - having said, that, not having someone on staff that can do PC support to some degree would be foolish. Having support from your supplier to back up your onsite staff, sure. Not having onsite staff reduces the flexibility (and response times) you have from your own people, and having staff outsourced but onsite STILL requires that extra layer of management that must be paid for. Unless you are going to say that onsite outsourced staff should be able to take requests from users without oversight? *chuckle* Watch costs shoot through the roof as users ask for all sorts of things, and make all sorts of silly support requests.
And - network maintenance doesn't affect the bottom line? Storage maintenance doesn't? If these things aren't included in the resource plan, the plan will fail. The extra costs incurred by that failure (downtime of the office, being forced to fall back to pen-n-paper procedures, loss of records, loss of contracts due to untimely fulfillments, penalties, etc) are what justify staffing. Remember, I worked for a warehouse in my first programming job. I lost that job (I was an irresponsible teenager - put a change in on Friday and disappeared for the weekend) after my actions caused the warehouse to lose orders for a weekend. Cost them the equivalent of 2 years worth of my salary in contracts. That was a 1 weekend screwup. And IT definately was NOT their 'core competance'. And that was over 2 decades ago - IT has wormed it's way into the heart of EVERYTHING since.
Imric's Tips for Living
- Paranoia Is a Survival Trait
- Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
- Even though everyone is out to get you, it doesn't matter unless you let them win.
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Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
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Edited by imric
April 16, 2006, 03:53:13 PM EDT
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Post #252,396
4/16/06 9:21:36 PM
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Who said anything about not having onsite staff?
And why is it your assumption that an outsource provider is more likely to lead to failure than maintenance of those resources "in house".
In your example, you lost your job for a failure that cost 2 days of orders. In an outsource model, the orders may have been lost, but the revenue is reclaimed because it is very likely that repayment is part of the contract SLA.
Our PC support is handled by IBM. We have onsite staff at every major US location and several of the international ones as well. If I were to compare what I get now to what I got at ATO where PC support was in house...give me the outsource EVERY TIME.
And this is like the 3rd time I've mentioned this, outsourcing is NOT OFFSHORING. It does not require that the function or equipment even leave the building (though it scales well for storage to use someone else's farm).
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #252,397
4/16/06 10:14:57 PM
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Failure financially.
In MY example, had I been 'outsourced' or even 'offshored' for that one instance, yeah, the contracts might not have been lost. Though that kind of problem might be more likely - putting a teen - especially one like I was - in a position of responsibility like that might be just as foolish as relying on outsourcing OR offshoring for your 'core' IT needs. Communication with the home office and all.
However - what is the cost of having an 'outsourced' or 'offshored' resource in place of local personnel? Note: Not 'price' - though that IS part of 'cost'. Relying on a company who's goals are not, and cannot be equivalent to yours. THEIR goals are always going to be to maximise the money they can make from you. Those goals might (should) intersect with yours, but that's as close as you can get. No matter what, you will end up with at least one extra layer of management. Prices might be higher/hour (outsourcing) - experience and expertise might be lower. You get what you are assigned. You might be able to complain and get personnel switched, but only AFTER problems are revealed. This DOES make 'failure' more likely. At least more costly than 'rolling your own'.
Imric's Tips for Living
- Paranoia Is a Survival Trait
- Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
- Even though everyone is out to get you, it doesn't matter unless you let them win.
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Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
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Post #252,404
4/17/06 12:55:08 AM
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No more likely
than rolling your own. Like I said, been in company's where the internal people sucked. Been in places where the external people were much better.
So at least in my experience, I've seen your position not work and the position you rally against work well.
And now we're back to the beginning. If it is working well and efficiently, the outsourcing engagement will not offer savings and will likely not occur. If it is a poorly run organization and run inefficiently, it is very likely that an outsource could improve things and do so for less money. And this can be in completely "non-core" areas.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #252,410
4/17/06 7:09:09 AM
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Nonsense.
Because the inherent disadvantage (that you keep forgetting about) is the extra layer of management.
Saying that external can suck, and internal can suck; that is irrelevant, unless you are going to say 'external is mostly higher quality and costs less'. Untrue. The price is typically MUCH higher if the people are a even little better.
So - if the people are nothing special, you have the extra layer of management; goals that can at best intersect with your company's; if the people are better than average you have all that AND a higher price.
Woo. Let's outsource everything.
Imric's Tips for Living
- Paranoia Is a Survival Trait
- Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
- Even though everyone is out to get you, it doesn't matter unless you let them win.
|
Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
|
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Post #252,411
4/17/06 7:56:31 AM
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IT is a commodity.
The smart company in 2006 treats its IT like it treats its subbies - as an organisation that provides a service. If that service can be obtained cheaper/faster/better elsewhere, it will be. There's no reason for most organisations to maintain their own IT departments; there's just no business advantage in so doing.
This reality is one of the reasons I got out, and into a job that cannot be outsourced (as it's a core competency).
Peter
[link|http://www.no2id.net/|Don't Let The Terrorists Win]
[link|http://www.kuro5hin.org|There is no K5 Cabal]
[link|http://guildenstern.dyndns.org|Home]
Use P2P for legitimate purposes!
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Post #252,415
4/17/06 9:02:11 AM
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Wait for this pendulum to swing back
As that philosophy fails. Of course, it will take many business failures before management ever admits they got it wrong, or that there is a any kind of balance.
All or nothing - put all your eggs in a basket owned managed and operated by someone else - a recipe for trouble.
Imric's Tips for Living
- Paranoia Is a Survival Trait
- Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
- Even though everyone is out to get you, it doesn't matter unless you let them win.
|
Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
|
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Post #252,417
4/17/06 9:37:49 AM
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All what eggs now?
IT's a commodity. The eggs are core competencies. They don't get outsourced. IT does.
Putting all the eggs in one basket would be outsourcing your core business AND IT AND management.
Peter
[link|http://www.no2id.net/|Don't Let The Terrorists Win]
[link|http://www.kuro5hin.org|There is no K5 Cabal]
[link|http://guildenstern.dyndns.org|Home]
Use P2P for legitimate purposes!
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Post #252,449
4/18/06 1:08:46 AM
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What you say is only somewhat true
IT is a broad field, and it is hard to generalize about it.
Let's take what you did for a start. I believe you were a system admin, administering a network with pretty much the standard Microsoft desktop stack. (Windows with Office and Outlook running against Exchange with some appropriate networking, firewalls, and anti-virus in the mix.)
No matter how important this may be to the company, it is a potential target for outsourcing. Why? Because you're administering the same bog-standard stack of software that everyone else is. An outsourced provider will add an extra layer of management, but they also get to add the fact that they do the same task at a lot of places. So they have thought up tricks, have efficient backup and installation scripts, etc. This makes them potentially more efficient at doing your job.
In short, standardization leads to commoditization. In IT as well as anything else.
Now I'm also in IT, but my job is not particularly amenable to outsourcing. My job description says "reporting", which is pretty vague. But in reality it means that I need to understand our business processes, our application, where data is captured, how it is aggregated, what custom reports have been created, etc. Given that we have an unusual business model (how many companies give away money for a profit?), this expertise is very company specific. An outsourced provider would not be able to leverage their experience with other clients in any significant way to do my job better than I do it.
In short, attempted commodization is a bad idea where standardization has not lead. Think about this before you outsource.
Given that Skip works with AS 400s, and AS 400s are not a particularly commonly chosen piece of infrastructure, I'd guess that Imric's job would be a bad one to outsource. (Unless you were planning to also kill the AS 400.)
There is always a "But..." though. And the big one here is that while it would be a bad idea to outsource me, big decisions like "outsource IT" tend to come down from people far up in the food chain. When the CEO/CIO makes a decision like that, they are not going to dive down to my level in the org chart to find out that it is actually a bad idea to outsource me or Skip. (And everyone who is losing their jobs will they that they shouldn't...) So the decision will come down and be enforced both where it makes sense and where it doesn't. (This kind of management insensitivity is, ironically, a symptom of the internal inefficiency that can make outsourcing a good idea.)
Which means that Skip gets a front row seat for the demonstration of how bad an idea it can be at the same time that Peter gets a demonstration of how replaceable he was. And someone like Bill gets a more balanced view. And in that more balanced view, it could go either way.
Incidentally I'm actually reasonably safe from outsourcing for two reasons. The first is that I work for a small suborganization that is managed separately, so an outsourcing decision is likely to be made more carefully than in a large one. And secondly I'm on the org chart in software development, which for us is a core competency. Therefore we'd be unwise to outsource it.
(Of course there is no real protection from idiotic management...)
Cheers,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #252,412
4/17/06 8:16:39 AM
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All of your argument
relies on your assumptions. Assumptions which are simply not true.
One, you assume an extra layer of management. One, it isn't necessarily there...at least not as you think it is. IBM definitely has a layer of management over outsourcing engagements. So does EDS. This "layer" is spread across dozens of clients. Can your internal IT spread its cost over 12 engagements? No. This is one of the reasons why savings exist for these engagements. You seem to think it cannot be built without >more people.< That is, put simply, crap. I've seen it done.
2, you assume that the outsource provider cannot provide better people for less or equal cost. Also crap. These outsource providers are very big and very specialized and have damned good training programs. Their people are often much better at much lower payscales because they are hired younger and trained better. What they often DON'T have is longevity...because people often take this experience and bounce to the "private sector". Take me, for example. All I did was move from the outsource into the company (same legacy company essentially, same "level" in the org...I go a raise working for the company)...
Lastly, goals. The goal of the outsourcing company is to minimize the resources used to provide the level of service required by her business partners. IF THE OLD IT GROUP WOULD HAVE DONE THIS...THEY WOULDN'T BE OUTSOURCED. All too often the IT org gets involved in fiefdoms and empire building and loses sight of the one true point of its existence, to provide service to business partners.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #252,414
4/17/06 8:58:05 AM
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Mmmmhmmm
1. You claim it isn't there by pointing out it's there? By claiming that the management is spread out so thinly that it can't be noticed? Uh huh. Yah. SO, by that logic, if you spread one manager over 12 'engagements' (departments) management is 'still there', but then would be cost effective. Yah. No failure gonna happen THERE.
2. "These outsource providers are very big and very specialized and have damned good training programs. Their people are often much better at much lower payscales because they are hired younger and trained better." And when they 'bounce to higher payscales' they take that training with them - ore does it magically get transferred to new people via telepathy? Or are there always people in training (less effective) or do people work for free while they are training?
The fact that the people get paid less does NOT translate to less 'cost' for the company. PRICE does not translate to less 'cost' for the company - though it IS an element. Riddle me this, batman - if the outsourcer was such a good deal, why'd they put you on staff for a higher 'price', hmmm?
3. This gives the company a 'stick'. Whether they use it or not, or wimp out and turn to outsourcing / offshoring and it's inherent disadvantages rather than fix a 'sick' IT department - may be the sign that the company as a whole is 'sick'. Outsourcing won't cure it; offshoring won't cure it. Remember that the company has basically NO SAY in the hiring or firing of outsourcing / offshoring companies employees. There is far less incentive (positive or negative), the employees are less tightly bound to the company. Finally - your assertion is that the reason for outsorcing is empire-building ON THE PART OF IT. Funny - I've seen it where folks outside the department prosletyze outsourcing (and offshoring) as a way to 'cut costs' in order to make themselves look good - and then, as it fails, they blame what IT remains for the problems, thus cementing their OWN 'empire building'. To the company's detriment, I might add. YOU assert 'all too often IT gets involved in Empire Building'. I assert that this happens only a minority of the time. IT folks are usually far more interested in getting the job done than playing games, in my experience.
So if you would like to say that outsourcing makes sense the minority of the time, for sick companies, for companies too small to support their own IT personnel, or for times of great deman, OK. I'll agree. As a regular thing? As part of DtD operation? Foolishness.
Imric's Tips for Living
- Paranoia Is a Survival Trait
- Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
- Even though everyone is out to get you, it doesn't matter unless you let them win.
|
Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
|
|
Post #252,425
4/17/06 12:20:11 PM
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Just simply wrong on many levels
You claim it isn't there by pointing out it's there? By claiming that the management is spread out so thinly that it can't be noticed? Uh huh. Yah. SO, by that logic, if you spread one manager over 12 'engagements' (departments) management is 'still there', but then would be cost effective. Yah. No failure gonna happen THERE. CIO->Dr->Sr Mgr->Manager->Staff. In this pretty damned standard org...the outsource will cut the bottom 3 and replace with outsourced staff. Now, the outsourcing company will have Dr levels engaged certainly...the "company" in this model should be able to manage the outsource with fewer. Your continual insistance that there is a complete layer of management that makes the outsource non-competive does not mean it actually exists. It generally does not, and the reduction in internal staff to manage outsourced staff will more often offset any "additional" staff of the outsource. And you STILL insist that a management hierarchy is MORE LIKELY to break in an outsource than it is in a traditional org. This is also conjecture and in my experience unsupportable by fact. 2. "These outsource providers are very big and very specialized and have damned good training programs. Their people are often much better at much lower payscales because they are hired younger and trained better." And when they 'bounce to higher payscales' they take that training with them - ore does it magically get transferred to new people via telepathy? Or are there always people in training (less effective) or do people work for free while they are training? Generally, knowledge transfer is better in an OUTSOURCE because there is "planned obsolesence". And there are ALWAYS people in training to follow up. The great thing for the company is that these underlings are an available pool of resources that are not billed to the company, do not have a 30% benefit package payable by the company, etc. Those are costs that have to be borne and paid for out of the profit margin of the outsourcer. And before you challenge that "Aha, see the outsource costs more"...remember that it doesn't...which this study VALIDATES...just not at "published levels". he fact that the people get paid less does NOT translate to less 'cost' for the company. PRICE does not translate to less 'cost' for the company - though it IS an element. Riddle me this, batman - if the outsourcer was such a good deal, why'd they put you on staff for a higher 'price', hmmm? Simple payscale. The outsourcer pays less than the scale of their clients. Did I magically gain more experience by switching sides? No. Just shows that an outsource can get equal talent for less which is counter to your arguments. 3. This gives the company a 'stick'. Whether they use it or not, or wimp out and turn to outsourcing / offshoring and it's inherent disadvantages rather than fix a 'sick' IT department - may be the sign that the company as a whole is 'sick'. Your logic doesn't follow. You've assigned "inherent disadvantages" that you have yet to prove actually exist anywhere but in your mind...and in fact you allow those to remain inherent advantages in Andrew's business case. Remember that the company has basically NO SAY in the hiring or firing of outsourcing / offshoring companies employees. I'll remember no such thing. I manage an outsource engagement...and have managed outsource relationships for 15 years. I absolutely have a say in the hiring and firing of the employees on my engagements. I don't care if the outsourcing company keeps non-effective personnel...but I don't have to pay for it and don't. I've also been involved in the interview process of each "direct report" in these engagements. I've said no several times...and that person has not been hired. So this is a mythical issue you have created. There is far less incentive (positive or negative), the employees are less tightly bound to the company. Are you operating under the notion that there is ANY loyalty left? There isn't. Change your notion. Finally - your assertion is that the reason for outsorcing is empire-building ON THE PART OF IT. Funny - I've seen it where folks outside the department prosletyze outsourcing (and offshoring) as a way to 'cut costs' in order to make themselves look good - and then, as it fails, they blame what IT remains for the problems, thus cementing their OWN 'empire building'. To the company's detriment, I might add. YOU assert 'all too often IT gets involved in Empire Building'. I assert that this happens only a minority of the time. IT folks are usually far more interested in getting the job done than playing games, in my experience. Simply put, we have different experiences. If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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