Vital IT areas of an organization like architecture and strategy should remain inhouse and not be outsourced to vendors, according to Kerry Purcell, Vice President and Managing Director of IT services provider EDS Asia.
Purcell was speaking at a panel discussion on the relationships between companies and their outsourcing vendors moderated by Don Tennant, Vice President and Editorial Director, Computerworld and Infoworld
“These three areas are an intrinsic part of an organization. Our business model as a supplier is to advise customers not to do that,” explained Purcell.
According to Purcell, EDS personnel always tell its customers to see how they themselves are growing and decide carefully what aspects of their business to outsource, he added.
Today, the outsourcing model has evolved into one called multisourcing, Purcell pointed out. This is to take advantage of the local expertise from the different regions that companies are expanding into. “From a supplier’s point of view, geographical distribution of partners is important,” he added.
Previously, there had not been enough work done in the localization of IT services, but increasingly more companies are now looking to leverage offshore services from countries like India, China and Malaysia.
Also important in a customer-outsourcing partnership is the area of maintaining compliance, said Purcell. It is critical to provide transparency and standards from an outsourcing company, he added.
Purcell also took time to talk about HP’s acquisition of EDS. When questioned by Tennant on more details about the takeover, Purcell replied that EDS is still focused on serving its customers. “This is what we have been reiterating to our partners and employees the past few weeks.”
Keeping IT Real
No surprise: vendors and customers need to work closely together.
Also speaking the CIO Perspectives panel discussion on Day 2, Joseph Alhadeff, Chief Privacy Officer, Oracle Corp., delved into the hard, honest and invariably complex truths of enterprise IT in the private and public sectors. Here are a few of the many insights he shared with his fellow panelists and the audience.
Ensure Your Customers Get It
The acquisition needs to make sense for the customer at large. The acquisition is beneficial to the acquiring company when the customers of the acquired company also remain happy and remain customers So clearly that has to be foremost in mind when looking at the acquisition. You also want to be making sure that you are creating a greater whole for both sets of customers. Both your existing customers as well as your new customers. And that the service offerings are beneficial to the greater good of all your customers. And the last thing you want to look at is–which is exactly what you were talking about–the ability to provide information to your customers, so they understand and they can factor in the process as it’s going on, understand how the process as it’s going on is working, where the benefits are, give assurances of the product continuity, and the service continuity.
And then as the merger finalizes and the products begin to merge, keep them apprised in an efficient fashion and in a forewarning fashion of all of the things that are going on and how their service will be improved and who their service channels are going through and things of that nature.
Change Management & Outsourcing
In this day and age we have companies looking at change management as a critical thing they have to deal with. I’ve stopped calling it outsourcing, I might call it global sourcing because it really is–you have a global footprint, and how do you service and support that global footprint, in the way that optimizes skills, optimizes the resources that creates the greatest cost benefits.
And as you go through that, there are some components that you will decide that are better outsourced and some components that you need to handle internally, because there are some things that you will do better internally because of their subject matter knowledge, and it doesn’t make sense to externalize those. Other things other people might have better skillset on and those make sense to outsource. So I think it’s got to be a company-specific set of decisions to figure out how outsourcing a system and optimizing their global processes and their change management and their ability to deal with market forces.
CSR, Self-Interest, Skills Development
The one thing that is true across all IT companies and some of the major users is they’re very interested in skills development and capacity building and education, because that’s both perhaps corporate social responsibility, but it’s clearly self-interest. It actually benefits you to benefit the economy, to benefit the workforce, to benefit education. And those are important priorities for all companies and I think what we’re trying to find in those priorities is what is the right mix–both of the skills which will be needed in the future for that economy as well as a way in which those skills can be imparted effectively.
Regulatory Compliance
When you look at the vast majority of legal regulatory initiatives, they’re very well-intentioned and they make sense in the geography that they’re occurring. But the problem is we’re now working in a much more globalized society, and information systems don’t stop at the border. Nor does information stop at the border. And as you look at things like privacy laws and laws with security requirements, you sometimes start having disconnects between them. So as you’re looking at global information flows, it’s very difficult to make them work because at some point you actually have conflicting legal infrastructures. A case in point was in the US as part of Sarbanex-Oxley there’s a requirement to set up a whistleblower line. In France the data protection law doesn’t allow you to make an anonymous complaint. So you have a law in one country that says you must have a whistleblower line, and you have a law in another country that has a law that says it’s illegal to have an anonymous complaint mechanism. You have to figure out how to resolve these things and what ends up happening is in many cases, companies in the middle ground of this discussion that occurs between governments at one level and citizens or users at the other level. And it’s a delicate place to be. And one that you have to figure out how to work these situations and in many cases the intergovernmental organizations provide the basis upon where you can develop some of the principle approaches that help you deal with these conflicting pieces of legislation.
