Sourcing & Staffing

There have been no IT deals of great interest this month which is to be expected so early in the calendar year. As with any major government IT program, now that the launch of the federal government’s e-health record system is being ramped up, reports and debates on the system including any setbacks and flaws have increased this month and will probably keep doing so until July. Forecasts are levelling off, but there are interesting comments on predictions for the outsourcing landscape by the IAOP and Outsourcing Centre and it will be of further interest to follow developments over the next twelve months.

Deals during the month have been comparatively unexciting, with a real focus on analysis of major issues in 2011 and forecasts for 2012. What is a little disturbing and confusing about this month’s news items were the Federal Government announcements about areas for planned IT spending cuts, and increases. It is shaving costs on some essential IT (such as equipment upgrade and maintenance) and cutting vendor panels and new projects while it continues to invest huge amounts into spending on IT for students. While this appears to be a good idea in theory the value of diverting this spending may be questionable. The perceived need to get technology into student’s hands, within what is a tight timeframe, could be mostly for government PR. However this rush could lead to an inability to negotiate the best deals in terms of price and reduced leverage to procure quality items.

I was taken by surprise when the caller, whom I had never met, asked whether I was interested in being considered for an IT management position in a large (unnamed) organisation. Intuition told me to be circumspect and keep asking questions about the role while I gathered my thoughts. The caller had no problem in defining the role but would not be drawn on the organisation’s name or ...

While the number of outsourcing transactions has reduced in Q3 this year, the deals this month are more interesting than usual. News largely focused on project rollouts of previous sourcing deals and there seems to be a lot more tender and project announcements.

Gainshare models have started to emerge as a way of evolving IT and BPO outsourcing and increasing measureable financial benefits of outsourcing. Gainshare is immature and not without challenges, but can be a proof point of a mature outsourcing philosophy by an organisation.

In the current economic climate with potential scaling back of discretionary investment in IT, and data suggesting a decline in the number of IT skilled staff entering the workforce, CIOs have to weigh up many factors before deciding whether to hire permanent IT staff or engage contractors.

News has been very thin this month. Apple product releases, vendor offerings, the dispute with Samsung and the death of Steve Jobs have really dominated the news. IT company CEO and CIO employment was also featured quite heavily. There were a few deals and developments, but of most interest is the establishment of a new Australian outsourcing industry body. Hopefully we will get some significant insight from them in the future.

Despite a long history of IT Infrastructure and applications outsourcing in Australia and New Zealand, too many outsourcing contracts fail to maximise client outcomes due to a range of factors that are fundamentally easy to overcome. Improved outcomes start with improved process up front. Organisational failure to identify and leverage appropriate resources, in parallel with hard deadlines that are too tight to clarify the appropriate level of complexity, provide the wrong environment to start to generate value. The organisation must focus limited upfront resources on the fundamental business and technology issues that will generate the most value from the outsourcing relationship, and not waste resources on those factors that have limited long term value or potential downside.

Contracts continue to be issued in relation to the NBN build. Both Transfield Services and the Syntheo JV have been awarded significant two year contracts. On the other hand it is interesting to note that the value of IT services contracts globally has fallen again in Q2 2011. A fall of 40% in the past year now brings contract value to its lowest level in over eight years.

Enterprise architects must be systems thinkers first and foremost. Enterprise Architecture is a discipline rooted in IT, and its practitioners often have a deep IT background. However as an enterprise architect, an IT heritage can often be a burden as much as it is an advantage. Organisations that are looking for people with the “right stuff” to become an enterprise architect should cast their net wider than just the IT domain.