Tuesday, November 20, 2012

Why Insourcing IT will fail in Malaysia’s top GLCs

The rather controversial sensationalist title will hopefully create sufficient traction in readership, but before you pass judgement that this will be another negativity riddled diatribe; I promise you that I shall provide the answers to the problem statement alongside the issues, so here goes.

1) The CIO does not exist or sits 3 to 4 levels below the CEO, sometimes even below the CFO. Ultimately, the unit exists as a cost centre. Pretty much a death knell to any business unit, I’ve also heard of statements that IT should be used like “utility” and it’s a “commodity” – double ouch. Talk about watering down any semblance of pride that the CIO could have. He's no better than the cleaner's boss - that's commodity for you.

It also means that the KPIs are skewed towards punishing mistakes versus celebrating “value” that IT brings to the company.

The solution:-
Making the CIO pit boss will not change anything. Ultimately, you need dynamism, boldness and the aptitude to make IT relevant to the business. Being top dog means you get to call the shots, but if you’re shooting blanks you’ll be down the totem pole before you could yell "pull!".

Get to know the business, learn debit from credit and understand how business impact analysis is not meant to figure out Recovery Time Objective; but Business Loss/Value Outcomes (BLO).

2) There’s no means (or political will) to measure BUSINESS VALUE from IT
You’ve heard it, seen it and some of you have experienced it, the Enterprise Architecture folks have probably spent the last 2 years producing box filled diagrams with multipoint arrows and squiggly shaped outcomes that must abide by some “Principle”.

But in all honesty, nobody took the time to “measure” absolute dollar value returns from IT. I snuck in “political will” because in reality Malaysians are a shy bunch. We don’t like to call attention to ourselves, and most of all, we do not like to declare success until success is achieved. Part superstition (“my wife needs to be 3 months pregnant before I tell the world”) part playing it safe (“I might get fired if I over promise, best aim low shoot high”).

But ultimately, with power comes great responsibility. The CIO needs to put down figures “before” the IT investment, and show numbers “after” the investment. It does not take rocket science to work out productivity improvements versus hardware and software spent.

The biggest farce I’ve heard from IT thus far is -> “I’m not finance, I do not know how to count” versus the biggest farce I’ve heard from finance “I’m not IT, I do not understand IT… so I can’t count it”

The Solution:-
Mr. CEO, you know what to do; it’s about time you find replacements for both the CFO and the CIO. You’re paying big bucks for folks to run your business, not rule the playground like a bunch of kids.

3) There’s no means (or political will) period
Heard this argument enough … “IT is not our core business”. OK. I hear you.
But when I ask them “What IS your core business?”, you’ll soon realize that there’s 5 different answers from 5 different board of directors and C level executives.

When the business is schizophrenic you can bet your bottom dollar that IT will be locked up in a mental institute soon enough.

The Solution:-
Read the definition of IT -> “Information” Technology!

Business thrives on information, and decisions are made based on accurate and timely information processing. Stop spending money on data centre expansion and LAN upgrades and start focusing on the kinds of data that you need in order for you to sieve them into information; cogitate those rough nuggets and turn them into intelligence, better yet; knowledge for business consumption. All the underlying infrastructure upgrades are a by product -> NOT THE END GOAL.

If you need tacit knowledge, convert them into videos and scenario roll play sessions, if you need real time data; plunk in visualization tools with real time sensors and hire decent programmers to put the vision together.

In summary, CIOs and CTOs need to be at the driving wheel -> provided that they know what to do; more importantly, stop treating them like cost centres or like the proverbial saying – you are what you’re expected to be. Secondly, businesses need to “get real” with IT, when money is spent, return is expected, stop counting pennies and focus on business value. Lastly, the business needs to get their acts together, yes; easier said than done but there has to be an overarching leadership to drive the objectives through.

Sacred cows are meant to be slaughtered. They make good steak.


You’ve probably noticed by now that the same reasons also contribute to why Outsourcing IT fails in Malaysia… if you did, there’s hope after all for IT in Malaysia J  

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