Modern Middle Manager
Primarily my musings on the practical application of technology and management principles at a financial services company.
Annual Rituals

Monday, December 30, 2002  

This article reminds me of an annual ritual I participate in. It's called The Whitepaper that Justifies My Job. Once a year for the past three years I write an analysis to senior management on why my department should not be outsourced. My competition is our corporate parent's IT contractor company. They are willing to provide, at no cost, IT services to our division. On paper it would reduce my department's expense by about 1/3. That's obviously a significant level of savings.

So why does my department survive year after year? How come I haven't joined the ranks of unemployed IT department managers in a (relatively) ugly job market? How can I compete against free? My strategy for success lies in the following points:

1. Provide a premium service to the end-users. We are very careful to not alienate our end-user computing base. We remediate their problems quickly, treat them with respect, keep their applications up and make certain we don't disrupt production operations during the day (and notify them ahead of time when nightly or weekend downtime is scheduled). I have no doubt that my user-satisfaction ratings are over 85%. We have individualized service because we know each and every one of our internal clients.

2. Foster relationships with other department heads. I believe in fostering a partner mentality with the business units, not an insular glass house mentality that end-users resent and management doesn't understand. My goal as the department manager is to get the regional vice presidents and department heads to sing our praises to their senior managers. In return, my department makes certain their requests get our full attention. Everybody's happy, everybody wins.

3. Emphasize that we understand the business. Our division has two major lines of business: wealth management and (very niche) commercial banking. We understand the systems, the data, the workflow and the information required by the various departments. We understand the regulations and guidelines for which we are accountable. The IT contractors we compete against do not understand wealth management, they do not understand banking -- they understand the title & escrow processes that drives the majority of our parent company's revenue.

4. Remind management that you get what you pay for. Unlike competing with an IBM or EDS that competes in the free market, I am competing against a corporate-mandated provider of IT services. I use that to my advantage, pointing out their (numerous) failures and the dissatisfaction among end-users at other divisions. My best leverage is the reputation they have with a sister division we depend upon for investment services. There the IT contractors have made for themselves a reputation for sloppy service, unreliability, lack of business knowledge and rotating out contractors every 3 months, guaranteeing that none of the contractors will understand the business for very long, if they get it at all.

5. My newest weapon is benchmarking. I downloaded some research from the META Group that illustrated some great metrics such as % of revenue spent on IT, IT employees as percentage of total employees and IT spending per employee for specific industries. You may want to argue the substance of those benchmarks. However, if you fall on the right side of those metrics and senior management is getting its IT information from blurbs in a four-page newsletter, it may be the deciding factor in your favor.

I'm not 100% against outsourcing. I think there is a time and place for it, which I may explore in another post at another time. However, I am 100% against short-sighted, cost-cutting measures that will eventually cause major disruptions to a business, especially a small to medium-sized one.

posted by Henry Jenkins | 12/30/2002 05:39:00 PM

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