Post #252,501
4/18/06 4:28:30 PM
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Jumping in late
But I thought you might appreciate this excerpt that I have taken from an exchange I had in an online class with a classmate (CIO of a large manufacturing company in PA). Thanks for the understanding. If I remember correctly, we're about the same age/generation. I still can remember going into Proctor and Gamble's Central Office to their Accounting Center where there were elaborate wires/pulleys that physical chart of accounts passed across. The rooms were gigantic and the noise was incredible.
All that has changed now. I would caution from your response [he spoke about cost center and budget priorities], though, that IT should not be viewed as just another cost center competing with others for budgets. Keep in mind the amount and type of data/information that is stored and flowing through data centers. I used to do contingency plans (disaster recovery) and a surprising number of very large corporations could not function without their computer systems or network infrastructure, not even for a very short time.
We are both old enough to have seen technology pick off the low hanging fruit, replacing typerwriters, manual accounting systems, midlevel managers, replacing clipboard ordering systems, and paving the way for LIFO, JIT, etc. I think what sometimes gets lost is that at some point in the 1990's, computers and networks reached critical mass and now are as ubiquitous and critical as electricity and phone systems to the operation of business. Keep in mind that the efficiencies from years past that were automated can easily become "unautomated" again - but the core tasks still need to be performed, even though they dropped off the balance sheet years ago. Disruptions to these systems either through neglect, malicious harm, or internal/external threats could spell complete disaster for a company. This is the distinction that I think needs to be made between IT departments and other cost centers competing for budget dollars.
YMMV... Just a few thoughts,
Danno
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Post #252,505
4/18/06 5:41:42 PM
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And in line with this
while business may not survive an interuption in electricity supply very well...it is not likely to build its own cogen plant...because there are suppliers who can do this more effectively.
Telecom is another area that is being outsourced. Call centers (both foreign and domestic) are being managed on an outsourced basis. If you have ever called Orbitz about a ticket, you are not talking to an employee of Orbitz. Same goes for multiple airlines and many online businesses.
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 #252,508
4/18/06 5:57:35 PM
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Nor are they likely
to deliver their own mail (with exceptions). THIS are 'outsourced'?
Tell me - does the business depend on the flexibility of their wiring? Do drastic electrical code changes occur all the time? Like standard voltage, AC or DC, etc?
Of course, if ths DID occur it would usually make sense to outsource, right? Right?
And - about your 'org chart'. You did conveniently leave out the layers of management of the outsourcing company - those above the layer being managed by the one 'in-house'. The one you show might as well be in-house. No extra people to support.
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 #252,510
4/18/06 6:10:28 PM
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Keep reaching
So you are going to count he CEO of IBM as an "extra layer" of management for outsourcing.
Doesn't change ANYTHING in the analysis because even if I capitulate and allow your point to stand unchallenged, these companies are STILL managing these engagements for 15-25% less that its being done in-house...and more often that not, the business partners see increases in service levels from "their" IT department.
Tell me, if I have onsite staff and 24/7 help...and an outsource provides this at 25% less than I was paying before...what benefits do I get to having internal pc support staff? What "special things" were they providing that are not being provided to me now under the outsource?
Here's an even bigger twist...right now I have a Dell laptop supported by an IBM tech.
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 #252,512
4/18/06 6:32:22 PM
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Step 1 - steal all the underwear. Step 3. Profit.
"So you are going to count he CEO of IBM as an "extra layer" of management for outsourcing."
Yup, obviously that's the only other layer of management between your PC outsource techs and outsourced natwork admins.
And it's cost, not price. I made that distinction multiple times.
Outsource companies of course, have no agenda at all that will affect their recommendations (Windows only, NO mainframe, midrange. Or maybe all IBM solutions. or whatever. THEIR goals are not YOUR goals.
And of course they are just as flexible as having your own people. Users are added instantly, there is NEVER any 'lag time' or it is ALWAYS as fast or faster than having your own people, eh? Not in my experience. CERTAINLY not in my personal experience, and NEVER in my experience in consulting/contracting shops. The customer always wants their own people trained after they get sick of it. Even if there are on-site people, the problem remains - which gets to another point.
Incentive. When you are employed by an outside agency there is always less respect for what the customer wants - until the 'extra' layer of management steps in, after the customer is already annoyed. And that's not always 'negative' incentive, either. My current boss gave me extra vacation time as a reward for my recent upgrade.
Further - more work for the outsourcer is a GOOD thing - though the cost in $$ and time increases for the victim -err- customer.
And forget about easily switching to 'punish' the outsourcer. It's bad when an employee walks and takes knowledge with them - get rid of your outsourcer and it's like having an entire department walk. Documentation - no matter how good it is - is not good enough. You have to know the people you are working with - who can be relied upon, who is all BS, who actually knows what's what in the company AS WELL as all the processes, etc. It will take time, precious time, to get your 'new department' up to speed.
As I said, outsourcing might be good on a permanent basis for a 'sick' company; it might make sense for small company, and in a medium to large company during periods of great demand - but as a 'normal' thing, healthy? Not really.
Reaching, Bill?
Hardly.
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 #252,542
4/18/06 11:56:24 PM
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Come on Bill
While I see many of the points you are making and agree with most (I did seven + years as a consultant/outsource resource), there is something that needs to be said. Taking these classes and re-evaluating the industry, the current American bizness climate absolutely sucks and I have a feeling I have a clue as to why.
You have represented the outsourcers well. I used to do a summary when called into clients. The primary reason that I found in all my time as a consultant for using an IBM Global Services (nee ISSC) was the access to resources it provided. We never, NEVER, saved the client any money. We backloaded every contract and I was billed out at $210 an hour for five years on one contract. The company couldn't hire me directly without paying a huge, huge, contract buyout. The entry level people I brought in were billed out at at least $90 per hour. But I digress. If you needed a Citrix expert, you called Corporate and one was there in a few days. You needed a Cisco magician, you called them in. This was the benefit of outsourcing and you paid dearly for it.
We just came out of a recession and accountants have been exhaulted back into the role of "decision maker" in most companies (like at the end of every recession) and this explains most of the short sighted decisions being made in corpse America currently. I think you may understand that I have a little trouble with your debate with Imric regarding outsourcing being about saving money. The folks who are saving money (and not the ones who are paying dearly for expert resources like the example above), are off-shoring to countries who have people willing to work for next to nothing (at first). I don't know about you, but I just read "The World is Flat" and I am a little disturbed that millions of US tax forms are processed in Bangalore for H&R Block. I'm sure the Indian workforce is competent, but think about how fucking lazy we are as a culture that we not only can't do our own taxes, but the companies that do it for us are too cheap to pay for it.
The "core" issue is good as business continuity is important and you need to maintain a core staff of technologists (not monkey fuck ass clowns parading as technologists who got into this field in the 90's when it was the field to be in to make gobs of money) who know why the systems went in, why the services are the way they are and all the other political/technical reasons why the datacenter exists. This gets into something even more insidious (and I don't find fucking Dilbert funny anymore) - many of those bits and bytes lying around and being mismanaged by group after group of MFACs represents the life's work of many of the people in the organization, past and present - even the smart ones that actually designed the product/s or marketing campaigns that made the product successful. Not only are the IT people devalued in these types of analysis, but also the people in the other departments whose life's work is stored in these datacenters. In all my years as an outsourced "resource", I never felt any ownership of the data. I was a second class citizen in every place I worked and my only allegiance was to the $ and to doing a good job to keep making the $. That's okay. That's business. But its also kind of fucked up when you really think about it.
This gets to what I believe is the core issue. How do you motivate someone, beyond $, to excel and innovate when they are a second class citizen? It's okay on the macro level to say we are all replaceable and interchangeable, but its not really true. To have excellence, people have to feel that they are a part of something bigger than themselves. They need to feel important and that what they do is important. This is Leadership 101. You and I are Gen Xers. We are mercenaries in the workforce because, (more motivation 101) "you get the behaviors you reward". We are the first generation where the cards have been dealt very poorly (since prior to WWII).
Bill, I know you. I know you are a survivor and play the cards that are dealt to you. I am too. I don't really have a problem with what you are saying but you don't have to sound so "joyful" about defending the business model. It really doesn't bode well for your or my children. We need to stop being so damned academic and analyze the real bottom line, we're fucking selling out this country for song. The Baby Boomers still are the "me" generation and many believe that hearses have luggage racks. We are simply enabling them.
Just a few thoughts,
Danno
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Post #252,569
4/19/06 9:37:20 AM
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Sigh
Good points EXCEPT you are back to what everyone else is doing. Offshoring is NOT OUTSOURCING.
I was working as an outsourced worker (in an engagement that saved 18% of 1 billion spend) to the company in the first 6 months (Documented and tracked..and it equated to 500% ROI). I DID NOT MOVE TO INDIA TO DO THIS!!!!!!!
No it was not IT. Yes it was an outsource. My immediate manager worked for the client company. There was one "extra person" in this model who was offset by the client company getting rid of 3 sr managers (net 2 down at that level...and our savings did NOT include their headcount savings). Additionally, our team of 9 replaced 14.
If I sound "joyful" about the model then you are reading something in. I am saying simply that the model WORKS for some, and the article that started all this PROVES that it works to the tune of at least 15+%.(contrary to the claims of 50+% was its "negative twist"
Is it for everyone? NO it is NOT. Skip has obviously worked in some well run departments and with some companies that rely on DP/IT as core functions. I have worked largely for mfg companies where they simply are NOT core (regardless of your arguments to the contrary, skip). A poorly run outfit in an environment like that is ripe for BPO (please don't make me remind you that this does not mean MOVING TO BANGALORE...sheesh).
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 #252,571
4/19/06 9:43:15 AM
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Without IT, the business will fail
or at least fail to compete.
Outsourcing is less efficient than in-house, and outsourced companies are less aligned with client desires.
If the company is already sick or dying, and unable to change and adapt, then sure, go with outsourcing. Like someone requiring dialysis is outsourcing a kidney.
'nuff said.
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 #252,576
4/19/06 9:52:36 AM
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You continue to make a blanket statement that is not true
Outsourcing is less efficient than in-house, and outsourced companies are less aligned with client desires. This is NOT a universal and it is completely dependent on the structure of governance built into the agreement. In addition, the fact that companies are actually saving (documented in the article) simply disproves it. Its this universal >assumption< on your part that keeps me responding. And outsourcing doesn't mean "getting rid of"...so the "without IT the company will fail" is unwarranted. (true possibly, but unwarranted in this discussion) 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 #252,582
4/19/06 10:13:27 AM
4/19/06 10:16:30 AM
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Mmmhmmm
It is less efficient - and it does mean more layers of management. You are supporting more than the workers provided to you. Otherwise, you have hired those workers directly and that's hardly outsourcing, is it.
So - unless my oft-repeated caveat is true, and you have a company with inefficient management that for one reason or another will not change, this IS true. No matter what, you are supporting the outsourcing company. IOW, if the company is sick, or needs temporary help, or is too small to support full time staff, outsourcing might make sense. Otherwise, it's foolishness.
Further it is absolute TRUTH that outsourced resources do not have the same incentive to react that in-house does. THEY DON'T WORK FOR THE CLIENT COMPANY. They work for the outsource provider - and that will always be FIRST. The workers are always at at LEAST 'one remove'. Ignore this fact all you like. It's still true.
These are NOT assumptions, Bill. They are logical truths. They are observed fact. They are reality.
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.
|
Edited by imric
April 19, 2006, 10:16:30 AM EDT
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Post #252,590
4/19/06 10:50:57 AM
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Re: Mmmhmmm
It is less efficient - and it does mean more layers of management. These are bold statements and it behooves you to provide evidence over and above repeated assertions.
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 #252,596
4/19/06 11:18:44 AM
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Unless more management = more efficient
Unless supporting more employees means lower cost, especially when you could hire them yourself -
Unless having workers that are at one remove from the companies goals are more responsive -
There's no need.
These are NOT bold statements at all, Peter.
Have you not been reading?
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 #252,600
4/19/06 11:26:06 AM
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branched outsourcing costs more (new thread)
Created as new thread #252599 titled [link|/forums/render/content/show?contentid=252599|branched outsourcing costs more]
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep
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Post #252,630
4/19/06 2:42:04 PM
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That clears that up, then.
Just saying "well, it's common sense" or "it's obvious" isn't evidence.
The people in question could well be a lot cheaper if they're externally hired, so yes, hiring more people could cost less.
Your point about responsiveness is interesting but probably moot in this age of zero company loyalty.
External management may well be more efficient.
My request for actual evidence instead of assertions stands.
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 #252,635
4/19/06 3:15:50 PM
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*shrug*
I could say 'every instance I've ever seen' and you could counter with 'every report written by someone to justify the outsourcing decision'.
If you would like to believe that IT is a replaceable commodity, and that outsourcers are the only safe future, I'll not argue.
I believe - that while you may be right - that IS the way business is going (at least for now) - that this is a foolish, short-sighted fad that is bad for most businesses that indulge in it. Larger places full of stagnant management cultures may derive benefit from outsourcing - that doesn't mean it's a good or effective way to go. They see dollars (or pounds) on a spreadsheet and act like that's the cost; they see numbers of employees and figure that = 'effectiveness'.
I've heard not one argument to dissuade me - even a little - from my opinion on this matter. I've seen too much. Call me jaded.
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 #252,637
4/19/06 3:28:08 PM
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you havnt even attempted to address my branched reply
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep
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Post #252,642
4/19/06 5:36:54 PM
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Skip, YOU haven't been reading
Read [link|http://z.iwethey.org/forums/render/content/show?contentid=252449|http://z.iwethey.org...?contentid=252449] and respond to that. Please.
Outsourcing can be good. Outsourcing can be bad. There are principles that you can use to identify which case you are in. Anyone who takes an absolute position on the topic - which you're doing right now - is certainly wrong at least some of the time.
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 #252,647
4/19/06 6:02:13 PM
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On the contrary!
There just wasn't much to say to your post!
And my view isn't really absolute.
I've said there are times when it make sense - especially temporarily, in times of stress for the company and/or the department, when the company is too small to be able to support IT staff of their own...
But - the idea that outsourcing provides efficiencies that can't be achieved by the companies that purchasing outsourcing services? PERHAPS outsource providers might be necessary to remain competitive - if the knowledge is highly specialized/arcane (and not transferred or transferrable). This does NOT fit with the assertions I am dealing with - that IT is a commodity that should be outsourced when IT isn't the 'core competancy' of a business. That there is no 'performance hit', no negative side effects of having outsource workers working for 'another master'. That bottom line price is all that matters.
And as to your scripts to make 'bog-standard' stacks of software more efficient? I have my doubts that any such generic scripts could make a company more efficient than scripts designed to meet the specific business needs. It could be, I suppose. I've never seen it, though.
I guess the idea of IT being a commodity might be natural if all businesses were exactly the same, if business itself were a commodity - if there were no value in having a business that could differ and distinguish itself from it's competitors. If the only business advantage was to be exactly the same as the competition.
I just don't see that as being the case, though.
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 #252,651
4/19/06 6:28:38 PM
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look at SAP, Oracle Financials, PeopleSoft
their model requires the business to adapt to them, so business financials become bog standard and the only method to distinquish business a from b is quality of provided service.
thanx,
bill
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep
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Post #252,653
4/19/06 6:53:45 PM
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There's stuff like Sarbanes-Oxley too...
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Post #252,688
4/19/06 11:50:50 PM
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A new employee is coming Monday...
How long does it take you to set that employee up?
Among other things you'll need a new computer with all necessary software, personal account, email address, phone number, etc. The work involved is pretty standard and doesn't vary a whole lot between businesses. Also most of the grunt work can be automated.
If someone has efficient procedures and the right automation this will take a lot less time for that person. If someone has inefficient procedures and there are a lot of round trips until that employee has the right thing, it can take a lot longer.
An outsourced provider can amortize the cost of building that automation and procedures over more workplaces, and therefore should be able to provide the service for less. They obviously won't pass along the full savings. But they can have enough to pass on something. (In this study, an average of 15%.)
This is an example of how your Unless supporting more employees means lower cost... can be wrong in an IT example. An efficient outsourced provider needs fewer employees to do the same job because they are better at that job than your internal group was. Needing fewer people translates into being cheaper.
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 #252,725
4/20/06 7:33:56 AM
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1 hour. Our procedures have it set up the day before.
It's ALWAYS ready when the employee sits at his desk on Monday. It IS automated. Even though different departments have different software, different levels of PC are given to different employees (decided by who's job can use 'older' PCs, who needs a laptop, etc. etc). Separations are handled the same way. We are always improving our scripts, procedures, and applications, too. IT is not static, a simple product to be purchased.
And if your internal people won't do it, get new people who will. They ARE there, obviously - the outsourcers have 'em, right? Scripts and automation are more effective and produce more when customized for the company. Having good people working for your company is a business advantage. Outsource workers do not work for your company - they work for the outsource company.
I'm sure outsourcers can provide adequate service. They might look better on a spreadsheet. This is not the whole story, however.
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 #252,753
4/20/06 10:39:09 AM
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If you don't have good procedures and people...
is it better to hire an outsourcer or develop the people and procedures?
While it would be great to be great at everything, companies can't realistically do this. If the company is clueless about IT, and their management is clueless about IT, and IT simply isn't a core competency, then developing that competency will take a lot of time and energy. (Time as in years. And by the time they get there, they're likely to be behind the current state of the art.) Time during which that company will (as you've rightly pointed out) be at a competitive disadvantage vis a vis competitors who do have basic IT working better.
However a company whose IT is suboptimal doesn't have to take this path. Instead they can hire an outsourcer who is better at IT than they are. 3 months later they can have good enough IT that they no longer have the competitive disadvantage. People's computers will work, email will be up, backups will be taken. It won't be cheap, but it will be cheaper than what they are currently doing. It won't be the best possible, but it will be better than what they are currently doing.
This makes sense, and not just on the spreadsheet.
The key point is that it is always theoretically possible for a company to do stuff for itself better than an outside company can, but it isn't always realistically practical to do so. If your problem is amenable to standardization, then that gap between theory and practice is the wedge that can make outsourcing make sense.
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 #252,648
4/19/06 6:02:14 PM
4/19/06 6:02:35 PM
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....
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.
|
Edited by imric
April 19, 2006, 06:02:35 PM EDT
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Post #252,597
4/19/06 11:23:38 AM
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They're using different definitions of efficiency.
There's efficiency in terms of price (which may or may not be related to cost - "my team is cheaper"/"my team gives better long-term value to the company"), and there's efficiency in terms of speed (output per unit time - "my team delivers on time"), and there's efficiency in terms of output per head ("my small team does a better job for the company than a cheaper army of workers in the Sahel"), and there's efficiency in terms of flexibility and nimbleness ("my team can do anything and do it on time and under budget"), and maybe a few more.
All management isn't equal. Presumably, e.g., $xx B/yr IBM Global Services contractors working for XYZ Corp have more layers of management than employees of $10 M/yr XYZ Corp do. It doesn't mean that the overall efficiency of the management of the contractors is worse than for internal employees. (E.g. IBM's management may have implemented processes that let them spread the management over more people more efficiently.) If XYZ Corp cans their IT people for IBM Global Services but keeps their same management structure that they had for their team, then I'd guess they're probably adding management inefficiencies. But it probably depends on the individual case.
They're both making good points, but they're not agreeing on what the terms mean so they're talking past each other.
My $0.02.
Cheers,
Scott.
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Post #252,607
4/19/06 12:32:20 PM
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Stop trying to spoil my fun :-)
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 #252,619
4/19/06 1:09:46 PM
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And mine! :-D
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 #252,592
4/19/06 10:58:37 AM
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Before this right shifts anymore
In the immortal words of Rodney King, "people, can't we all just get along?". I just want to say that outsourcing includes off-shoring. You are staffing personnel from an outside source - "out sourcing". You are correct in pointing this out.
My apology to Bill for reading too much into his posts (and I did put quotes around the "joyful" word). I think that the distinction between outsourcing and off-shoring was blurred from the original article. I understand that distinction as do you. The key issue to this discussion (IMNHO) is does the outsource add value or save money? Either way enhances the bottom line. As this article suggests, it does save money (in a static analysis) but nowhere near what the hucksters that market IT services (read Infoworld lately? Notice that SOA is just shy of SOAPBOX). As you have pointed out, many other variables are not included in these types of analysis, including morale and motivation.
The idea that IT is a cost center (to me) is completely irrelevent and dangerous given what resides in the datacenter. Everyone in an organization is a "cost center". The idea that a department is a revenue generator is arbitrary and merely an accounting convenience. At least this is how it is supposed to work. The idea of soft dollars versus hard, recurring costs, etc. They are all accounting conveniences.
So where does that leave us? You and Bill are debating an issue that I've already come down hard on your side with. I've labled most of corporate America MFAC anyway. They are starting to reap the rewards of a system that forces 3 month thinking. I also suspect that we (IT guys) are catching the backlash from all the mid-level managers we "downsized" when we flattened organizational structures with email, ERPs and scheduling software (Skip, it,s real).
What's even more ironic and sad though is that jobs like accountant are already being off-shored as they are perfectly suited to being outsourced. When I finish my CEO-algorithm, I'm going to right-size those bastards too.
;-)
Just a few thoughts,
Danno
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Post #252,595
4/19/06 11:10:29 AM
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Too true
wish I could offshore senior management :-) I'd be way more productive.
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 #252,594
4/19/06 11:07:58 AM
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No they aren't. They are oversimplifications
They ignore the simple fact that an outsource provider can provide efficiencies not available to the host company. It is NOT like for like. It is NOT a necessary fact that 100 people in a client would be replaced with 100 people in an outsource...even if the host company is operating at 100% efficiency. These efficiencies are based on scale, scale that the smaller host company can NEVER acheive alone. You assume that the level necessary to offset the "added management" offset this, which is disproved by the savings numbers given in the article.
So, your "logical facts" are unsupported by the "actual numbers".
And the "client company" dictates the structure of the outsource. And those outsourced workers must satisfy the client or they will go away. So while you may have a point in saying that they must serve 2 masters, it is NOT a logical conclusion that the goals of those 2 masters are necessarily not aligned.
The observed facts and realities, at least those referenced in the article, disagree with your obvious logical truths. These deals are providing financial savings (an obvious and aligned goal of both parties). It has not been determined and cannot whether those companies receive increased or decreased levels of service. In my personal experience, I see better service from the outsource provider that I use now compared to the inhouse service I received at both my prior employers. Another point that seems to be contrary to your logical conclusions.
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 #252,602
4/19/06 11:29:51 AM
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Straw men marching?
"These efficiencies are based on scale, scale that the smaller host company can NEVER acheive alone."
So hiring a hundred people is cheaper per person than hiring 5? For the same experience? You get volume discounts on human beings (from the manufacturer maybe)? Individual salaries aren't based on, well, individuals?
Stuff and nonsense. If you disagree, and can find volume discounts on humans, I want proof. Evidence.
And - the savings numbers? I never said that it is always wrong - just that the companies it makes sense for are already sick and/or top-heavy. Remember? A healthy company would have no need of outsourced resources, save temorarily, in times of stress. Or if they were too small.
And your experience would seem to contradict mine directly. Of course, I have seen it from both sides as well - as you know. You know my opinion is long standing. Remember my laughter about being part of parasitic organizations?
Save that you admit you have worked for 'sick' companies.
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 #252,606
4/19/06 12:30:16 PM
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You are off your rocker
IT is NOT PEOPLE. Its a corporate service that has deliverables to its business partners. Efficiency is measured on how many people AND OTHER RELATED RESOURCES it takes to meet those deliverables. (period).
Noone, not even me, is talking about 1 for 1 personnel costs.
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 #252,617
4/19/06 1:03:08 PM
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And what delivers that service? Robots?
Not yet.
Who handles support problems?
Who takes requirements and turns them into programs? Reports? Deliverables of any kind?
Who administers the systems?
Oh. RESOURCES. Not PEOPLE.
Sorry. My bad.
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 #252,634
4/19/06 3:09:46 PM
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Maybe
People manage resources. People are part of the entire set of resources. They are not all of the resources. Others are servers, pcs, software (both owned and licensed), infrastructure, documents, processes, etc.
But you know this.
When I ask for a daily sales run, I am not handed the programmer with the information printed on his forehead...though sometimes I may wish that he had been sent through the impact printer :-) How I get this is irrelevent to me. Who runs it is irrelevent to me. What server, database, OS, reporting package is used is irrelevent to me.
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 #252,636
4/19/06 3:25:31 PM
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As long as you get it in a timely fashion,
With accurate data, and for a decent price. No argument. You shouldn't have to care.
That doesn't mean that the means to those goals is unimportant. Or an interchangeable commodity. Or that it might not be best not to keep IT processes and resources in house, and in the hands of the company. It just means that you don't need to know, personally.
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 #252,638
4/19/06 3:44:17 PM
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Ah, we've taken the first step, grasshopper.
You're close. The department that is IT is measured in cost to provide those deliverables that the business partners expect.
There is no other value that can be quantified. Dollars for services rendered.
So while you have raised valid concerns about what may happen in an outsource (loss of control, mismanagement, intellectual capital loss, misaligned goals)...the true end is this...
If an outsource can deliver that report to me more cost effectively than an insource...then you have no argument. And this article validates that in the engagements they studied, you have no argument.
You may consider this "short-sighted". Unfortunately for you, this is also how it is in the real world. Its not a pendulum. It will not swing back, so don't wait for it.
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 #252,641
4/19/06 4:52:00 PM
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Cost <> price.
The fact that it will not fit easily into an Excel spreadsheet does NOT change that fact. Businesses that indulge in outsourcing based soley on a overly-simplistic bottom line of a spreadsheet will end up incurring costs that will hurt them competitvely.
And it WILL swing back, when delivery dates are missed, dollars are spent on additional resources to compensate, infrastructure is mismanaged and not fixed in a timely fasion, when the agendas of the outsourcers are foisted off on the clients, etc - management will get tired of it. After going through a few different outsource providers, and dabbling in offshoring, they'll get it. This madness may take a long time to play out, as people are rarely willing to admit mistakes. It will happen, though. (Again, except in companies that have fundamental problems or resource/budget constraints - those that NEED to 'outsource a kidney via dialysis')
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 #252,649
4/19/06 6:03:32 PM
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I have a hard time agreeing with any of this
as long as there are companies that continue to do this and put themselves in a competitive cost position amongst their peer companies. The rest of your rant is assumption you treat as given (missed deadlines, reduced service, additional resources et al)
If industry benchmark says company X spends 2.25% on IT and via an outsource company Y reduces that number to 1.75%, then they have, in that area, given themselves an extra .5% margin which they can use to price their services/wares at more competitive offerings to their customers...or simply to earn more profit.
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 #252,678
4/19/06 10:43:42 PM
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So dollars are all. The spreadsheet is king.
YOUR assertion.
Outsource everything business depends on then. Everything is a commodity, interchangable, right?
The price you pay is always on the spreadsheet, the number of employees used = productivity.
After all if outsourced employees 'save' you money by charging 1.75% instead of 2.25%, it must be just as effective, as flexible, and as aligned with your business goals as employees you hire yourself, given that salary levels are the same, and that an outsourcing company has additional overhead (additional management).
Right. Whatever.
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 #252,700
4/20/06 12:44:05 AM
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Not everything.
But good portions of IT are. And in those cases, like it or not, the spreadsheet does become king (because thats what management and the shareholders look at)
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 #252,724
4/20/06 7:09:38 AM
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roundandroundandroundandround
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 #252,511
4/18/06 6:22:57 PM
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Plants
"while business may not survive an interuption in electricity supply very well...it is not likely to build its own cogen plant...because there are suppliers who can do this more effectively".
If a function is core - you might outsource it - but you'd be crazy to rely on one outside source exclusively.
My employer purchases electricity from the big utility company. My employer is also fully capable of generating enough electricity to keep the servers humming should the utility company fail to deliver. Ditto the fiber networks interconnecting the data centers.
Does this make sense? Down time is measure in thousands of dollars per minute. Its core and the cost is dead easy to justify. I believe the generation capability leased BTW, but this is a financing detail as it is a dedicated resource.
Its not "do I outsource?" Its "how to I measure the risk of losing that capability vs the cost of providing it myself". Its always different.
The important question is "how do we tax foreign goods and services to allow US citizens to remain competitive"?
[link|http://www.blackbagops.net|Black Bag Operations Log]
[link|http://www.objectiveclips.com|Artificial Intelligence]
[link|http://www.badpage.info/seaside/html|Scrutinizer]
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Post #252,521
4/18/06 7:43:00 PM
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No it's not
The important question is, "Why are companies in other countries able to beat U.S. prices by so much?" If it's because[1] of lesser workplace-safety or worker-rights protections, it seems reasonable to insist that products sold or services offered in the U.S. be produced under comparable conditions.
[1] Yes, I'm making an assumption.
===
Purveyor of Doc Hope's [link|http://DocHope.com|fresh-baked dog biscuits and pet treats].
[link|http://DocHope.com|http://DocHope.com]
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Post #252,562
4/19/06 9:06:01 AM
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If we are talking about offshoring, you are right.
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 #252,660
4/19/06 7:51:40 PM
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True
===
Purveyor of Doc Hope's [link|http://DocHope.com|fresh-baked dog biscuits and pet treats].
[link|http://DocHope.com|http://DocHope.com]
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Post #252,560
4/19/06 8:59:53 AM
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And one more time.
Outsource DOES NOT MEAN Offshore.
You can outsource to an offshore..but that is NOT what the article was talking about. It was talking of large scale BPO. This occurs in many places and with many functions. Most of these engagements are IT, but there are A/P, Credit, HR, Recruiting (as a subset), Purchasing, Manufacturing and others.
And it is about risk. And for most (certainly not your company), the server farm hosts an external website, erp processing and data storage. Downtime in these of a few minutes to an hour is an inconvenience and not a loss of revenue (customer service and phone sales offer a call back when the system comes back up).
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 #252,662
4/19/06 9:10:16 PM
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Where did I say offshore?
I was just pointing out that - if it matters enough to you - you will generate your own electricity - process your own water, or whatever it is you can't afford to be without.
[link|http://www.blackbagops.net|Black Bag Operations Log]
[link|http://www.objectiveclips.com|Artificial Intelligence]
[link|http://www.badpage.info/seaside/html|Scrutinizer]
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Post #252,666
4/19/06 9:34:32 PM
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Re: Where did I say offshore?
Thought it was implied by The important question is "how do we tax foreign goods and services to allow US citizens to remain competitive"? 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 #252,672
4/19/06 10:08:14 PM
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Ah - well that is the crux of the offshoring problem
but the rest was meant to point out why people choose to outsource/inhouse what they do.
[link|http://www.blackbagops.net|Black Bag Operations Log]
[link|http://www.objectiveclips.com|Artificial Intelligence]
[link|http://www.badpage.info/seaside/html|Scrutinizer]
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Post #252,701
4/20/06 12:45:24 AM
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Understood...
but it was something like the 5th post that had an offshoring reference...so I was getting punchy :-)
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 #252,538
4/18/06 10:37:18 PM
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Me too
My old boss called me today.
He has a problem with his outsourced data center.
Note: The data center is physically 50 feet from
him. But his company canned the MIS directer and
outsourced the entire functionality.
He seems to be having a performance problem.
He has an EMC SATA based SAN. His Linux system
is FC attached to it. The outsourcing firm
replaced a Linux server with another one, supposedely
identical hardware, but upgraded the OS. Went from
RH 2 to RH 3.
His processing got SLOW.
The outsourcing firm said he was imagining it. That
it must be his application.
They then found out the ne server had 1GB, not 4GB like
the original one. Fine, they upped it, got a bit faster.
But it is still MUCH slower than the old one.
The array IO rate dropped from 90MB per second to 1MB
per second.
hehehehehehehehehehehehe.
hahahahahahahahahahahahaha.
He has no say concerning the outsourcing. He has no pull.
His server is 1 of 20 or so, and the rest seem to be OK.
Wrong time to be making waves. The people who made the
deal with the outsourcer have the political pull, saved
a bit of money, got rid of a few employees.
Who cares if his department is tanking, not their problem.
He might limp along like this for a few months before key
deliverables are missed. Maybe then he'll grow a spine
and do something about it. Or maybe he'll find a new job.
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Post #252,563
4/19/06 9:12:03 AM
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Or maybe youhave the data
to challenge them and a spineless manager that created the situation in the first place.
Yes, he made his own bed.
I've had similar situations and phone calls to the "appropriate" people have always resulted in quick action.
Of course, my baseline experience is certainly with an organization that I would term as "sick".
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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