A timeless question many of my IT clients have faced from their Business colleagues is: Am I your customer or your partner? Sounds like a pretty benign question, but the implications can be significant with respect to who gets to make the big decisions that drive how things get done.
If I’m your customer, I get to buy what I want from you (and others) in a competitive market, and can expect to be treated with respect, even deference. It hits my bottom line, so it’s my decision.
In contrast, if I’m your partner, you’ll be more likely to tell me if there’s a better deal down the road, and we’re in this together to figure out what’s best for the enterprise. I probably have to convince you that what I want is what I really need to meet my business objectives, and you may over-rule my decisions to satisfy a top-down requirement (like security, procurement efficiency, etc.)
Here’s a recent example of how ambiguity about this question can lead to a surprising conclusion:
A major banking client recently faced a $100mm IT investment decision which came down to whether or not to insource, or repatriate, a major piece of transaction processing infrastructure that they had outsourced some years ago. The corporate IT strategy said we should bring it back in-house, consolidating all the transactions in one place safely behind the Bank’s security perimeter and under its direct control. Expectation was that control would bring flexibility, scale economics and faster time to market…
When the financial analysis of options and scenarios came to a dead heat, we started talking about the non-financial pros and cons of outsourcing vs. bringing the function back in-house. As we facilitated discussions among the major businesses who depended upon this shared platform, we discovered that they really liked having this function outsourced. They knew how to hold the vendors accountable and get them to start a project on short notice, and they weren’t so sure they could get the internal IT organization to respond the same way. They were also concerned that IT resources might be prioritized away from their projects mid-year, but contracted vendor services budgets were usually safe.
These are all good corporate team players, who want to support the strategy, but only if there is a good payback for the Bank. When the analysis showed that the in-house solution wasn’t really cheaper, it was amazing how quickly they got behind the outsourced solution.
In this Bank, the IT operating model — their way of doing the business of IT and and making decisions to get things done for the Business — makes the IT organization appear to be less reliable and responsive than a good outsourced services provider. They’re great at some things, like setting security standards, controlling costs and quickly integrating mergers, but perhaps not so great at satisfying the urgent and dynamic needs of their business partners. Specifically, IT seems to have the right to re-do the annual project budget priorities when they get slammed with a cost reduction edict. If this comes over the top of the business community, it is out of their control, and becomes a risk of doing business with the internal IT organization.
And so, the tie goes to the Vendor, just for treating the Bank’s businesses like a customer.
Stay tuned for more on getting your IT operating models aligned with what you’re trying to accomplish…
