How to survive – Outsourcing Australian IT and Finance Jobs

Answer to Ron C. question @ How to survive – Outsourcing Australian IT and Finance Jobs

 Business System Improvement Manager at The Mayo Group, Sydney (part time)

Over the past few years I have seen many traditional support service leadership roles become out sourced to foreign companies or hybrid (Local / Foreign) companies.

If cost is perceived to be one of the key elements of a business being competative in a an environment of slow economic growth how do Finance and IT professionals provide value back to the business and therefore be seen as an essential part of business growth rather than a cost centre?

Answer: Hi Ron, I assume that this is a question. In some (extreme) cases the executive management have the impression to throw money out of the window or in to the chimney and most of the time with little or no perceived result. The reaction is then to (and this is often encouraged by some of the large consulting groups that run outsourced service centers) to get rid of the problem to have a minimum level of at least established SLA’s, OLA’s and a “burn rate” ceiling.

If we look at some of the large outsourcing deals such as Siemens IT cost was spiraling out of hand. That is the “burn rate” had become unacceptable.From a business perspective it all boils down to a make or buy decision that is this a strategic capability in which case we can accept a somewhat higher cost, do we do this well, is the cost acceptable or at least defendable, do we get value to cost, if no let someone else do it that is buy.

This is also a logic that the CIO office will need to adapt.

Step 1) If cost is a major argument you need to understand the current cost of the IT services that you deliver as IT department. You also need to set SLA’s, and OLA’s for current services and demonstrate that you meet set objectives.

Step 2) Get your IT business model and value proposition right. Understand what the business expect (In some case the best thing to do would be to bring in a business executive. SAAB Defence have done this with excellent result). Understand how to build a delivery model that would meet these expectations. “Deliver Business Value with IT” ( that you can find @ Smashwords  https://www.smashwords.com/books/view/290604 @ Amazon http://www.amazon.com/dp/B00FOQ6T46) will give you the opportunity to ask the right question and to start to build a dialogue with the business and start to deliver to their expectations.).

Step 3) Most IT and business projects that fail do so due to the lack of formalised processes. Process Industrialisation tools (I currently work with a client where we investigate the opportunity to use sales force platform) to rapidly spell out the process, industrialise the work flow, have the client validate the result by the end of the day and have it up and running the day after where the process is tied together end to end the tool drives the process pulls and push data in to the underlying systems and validation are done via email in the platform and operated on any device (and that would of course include mobile).

That is as your innovation, marketing,  HR, Finance, IT department or the business line needs to set up a project you can provide them with the necessary access to information within the different systems within hours or days rather than months or years at a reasonable cost with a cost as you consume business model.

This should give you a head start in the right direction cheers martin

COMMENTS:

How to survive – Outsourcing Australian IT and Finance Jobs
I do agree with Martin. Very often, senior executives focus on the x% of revenue that they see in their budget spend line for “IT” or “Data Processing” as they perceive the cost being out of balance with the value they get in return. First, it is essential to make the big spending number more transparent, to show what the budget is spent for (Run, Build, Infrastructure, Busines Systems, etc). Slice it in a way that makes sense to the senior leadership team. No senior team member, including yourself will be happy if they find that 80%+ of the cost is just spent to maintain what is already there… A look at the global mix of resources and associated cost might be in order. To “run” IT, the CEO expectation will always be “cheaper, faster, and more scalable”. It has become increasingly difficult to compete against outsourced models for certain areas of “run” IT. The mere scalability of third parties which lowers their cost is a tough match for “internal” IT. Regardless how, if you can scale on that “run” side of the IT spend, you will stand a much better chance to improve the justification and business case for the “build” side of IT. Still it is crucial to understand the key areas where IT can really make a difference, and help the senior leadership team (and ultimately the entire company) to be more successful with their key value driving strategies.
By Armin Osterholzer
How to survive – Outsourcing Australian IT and Finance Jobs
Thanks for your feedback,I agree with Martin’s moment.
“Most IT and business projects that fail do so due to the lack of formalised processes.”
Additionally, they need business buy in and commitment which all part of the change process. Without the buy in and commitment they will also fail.

All of my successful projects come from formalised processes and business buy in.
(primarily based on PMBOK and ITIL)

To some extent, Business applications and IT are becoming a commodity you can pick up from a shopping trolley. For example, Sales force and Xero.

So where is the Value to the business? The Role of CIO and Architects appears to be shifting from servers and infrastructure to Innovation, business improvement and partnership. The business can still own the applications and improvements however we can facilitate the change through providing experience, formalised processes and overall business knowledge.
If the business believe they own the outcomes, they will be accountable and will work hard to ensure the success of the project. In some cases my role in the process is to act as the Traffic Cop. This ensures everyone gets can where they need to go without crashing into one another.

By Ron C. Le Mesurier MBA, Prince2 & ITIL
How to survive – Outsourcing Australian IT and Finance Jobs
Outsourcing is the hidden cost

Another observation I have seen with Outsourcing is the hidden cost. When the technology functions are outsourced the business units have more say on plug and play options. They tend to go off and get off the shelf applications to meet specific business needs. And yes, it does meet their needs but how does the solution interact with other business functions. In some cases a stand alone system can add additional costs and risks by creating silos of applications and information. In other cases it can create more work down the chain. The business units may not have the experience and training to correctly assess the overall impact on the business as well understanding the technical aspects such as DR, Scalability, security, integration and sustainability. Once the application is implemented a business resource takes over the support of the application where in the past this was managed by application support specialists who were an IT/Finance cost and shared their time over multiple applications. When the business units start supporting the silos of applications there is a hidden opportunity cost as those resources are spending less time with their core function. So how can you measure the real costs and benefits when they are capital and operational costs are hidden in the business functions. For example, are these costs a cost of sales or an overhead expense.

As an IT and business improvement professional I believe it is essential to capture and measure all benefits and costs as well as the impact on the overall business. Also it is important to prioritise all initiatives as they can be a disruptive influence on all departments and distract the business units from their key objectives.

By Ron C. Le Mesurier MBA, Prince2 & ITIL


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How to survive – Outsourcing Australian IT and Finance Jobs

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