An outsource that prevents important work

Dear Bob …

I’m not your usual reader — I’m a manager outside IT, and I need some advice on how to work better with our IT organization.

A few years ago, we signed a big outsourcing contract with one of the better-known giants in the industry. Since then, a few things have improved (project completion rates, for example), others, like system uptime, seem to be no different, and, inevitably I guess, a few areas where internal IT used to be terrific have seriously deteriorated.

What I’m writing about is this third category: Every so often we need something done that’s too big to be handled as an enhancement, but certainly doesn’t qualify as a major project. From my experience before the outsource I’d say we’re talking about efforts that should involve no more than five people for four months.

We used to be very good at prioritizing these, launching them, and getting them done.

Now, they’re mostly rejected, because the outsourcer’s billing rate for project managers is … well, I can’t give you the number, but let me just say it’s more than you charge for IT strategic consulting (I know because you and I discussed your rates once upon a time).

I can almost understand paying this much to manage a multi-year, several-dozen-team-members project, but five people for four months? It’s ridiculous.

My question is, do you have any ideas as to the best way to approach our CIO to figure out a way around this problem? I’m not the only exec around here who finds this crippling. We’re all frustrated, but some big names (and egos) here have their names on the outsource and would punish someone who publicly challenged it.

– Crippled

Dear Governance-challenged …

I’m pretty sure letting you know you aren’t alone won’t provide much comfort, even though misery supposedly loves company  Nonetheless, you’re experiencing one of the most common downsides to big outsourcing deals — an inability to efficiently handle the small stuff.

That’s because these deals are usually motivated by internal IT’s failures, which most often revolve around big projects. So they focus on big projects, usually remember to include a mechanism for handling the enhancements queue, and too-often fail to make provision for the in-between work, or for the small informal favors that act as organizational lubricants to smooth the interaction between internal IT and the rest of the business.

(The other major motivation for these deals is financial, which leads to the most common reason for their failure. Ten-year outsources that include asset purchases and lease-backs that front-end load the financial benefits and back-end load the costs still happen far too often, and with predictable results. But that’s a different subject for a different time.)

How do you fix it without rattling any cages? Since you’ve made it clear there are big egos with big titles who have their names on the deal and will take any criticism badly, anything you do will entail at least a modicum of personal risk.

Here’s the best idea I have, for whatever it’s worth:

First, find another half-dozen peers who share your frustration and are willing to share the risk with you. With them, ask for a meeting with the CIO and the outsourcer’s account manager.

In the meeting, make it clear you recognize that the outsource has achieved its stated goals. And, it appears one important goal was missed — successfully dealing with intermediate-sized work, where the outsourcers’ big-gun project managers are a fifty buck solution to a five buck problem.

Your goal in the meeting is to ask the CIO and account manager for their help in figuring out a solution. Make it clear to the account manager that it’s in the outsourcer’s best interests to help develop an answer, because there’s billable work that isn’t being done right now.

Then, see what the two of them have to say.

Very important: Before the meeting, let the CIO know, amiably and informally, what the meeting will be about. This isn’t a situation in which surprising someone in public works very well. (No, there probably aren’t any situations in which it does work well.)

Leave it up to the CIO to informally alert the account manager. If the two are any good at what they do, they’ll enter the meeting prepared with an answer.

Which might be that there’s no practical solution. If that’s their answer, my advice is to shrug, thank them for listening, and then to encourage members of your staff to develop workarounds in Excel or Access that are under the radar and good enough.

– Bob