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Deciding to outsource

IT executives tell how they've made their choices.

By Joanne Cummings, Network World
October 24, 2005 12:00 AM ET

When Karl Kaiser became CIO of Minneapolis five years ago, he found the IT infrastructure was not as capable of supporting the business of running a city as he - and the city constituency - wanted it to be.

"Sixty percent of my budget and management energy went into just keeping the infrastructure alive," says Kaiser, noting that his staff was overwhelmed with break/fix duties inherent in the city's multivendor environment and seemed more concerned with gee-whiz technology than serving the city.

Minneapolis' 4,000 city workers, including police officers, firefighters and government officials, needed more than that. "They were looking for services that went well beyond installing and fixing computers. They wanted more applications, especially Web applications," he says.

Besides new Web initiatives, Kaiser had to fund a disaster-recovery program, find a new space for his data center (which was ending its lease with the county) and staff the city for 24/7 support - all within a tight budget. Kaiser took a hard look at outsourcing and decided it made sense - to a point. He sold his entire desktop, server and network infrastructure - and its management - to Unisys, while keeping application development in-house. The result, he says, is a happier constituency and an estimated $20 million savings over the seven-year life of the contract.

"I decided to get out of that business because the information technology assets and the associated support functions in my mind are a utility. It's like you come to the office and switch on the lights. The light comes on, but that doesn't mean you need to own the power plant," he says.

Minneapolis is not alone. Faced with similar prospects and the need to move quickly to next-generation data center environments, many organizations see the benefits of offloading mundane operations tasks while focusing on the value IT brings to the business.

Starwood Hotels and Resorts Worldwide, for example, outsourced its hardware and network infrastructure to HP in an effort to ease its move off a mainframe and onto a next-generation computing environment that features Web services running on Unix and Linux servers (see related story ).By offloading the operations side of the house, IT could focus on developing core profit-generating reservations and loyalty systems applications, says Tom Conophy, CTO at the White Plains, N.Y., hotelier.

"We wanted to make sure we kept the thought leadership within Starwood," Conophy says. "You can't just go out and buy our reservation system, like you would any [point of sale] or CRM application. I would never outsource a custom-built application that is extremely crucial to our business."

Because of the critical nature of the applications, Conophy has retained ownership of the hardware on which they run. He has, however, offloaded hardware support. "We still look at the Unix and Linux configurations ourselves, and then work with HP to get those engineered, configured and established. We're not quite at the point where we're willing to toss HP the keys - the applications are too custom and too crucial, and not something HP could get certified in."

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