CIO is running a highly readable piece titled, “Simple Successful Outsourcing ,” which makes the case for outsourcing transaction work — those processes that have been around forever, are well defined, “with clear business rules.” Author Stephanie Overby calls these “the most straightforward of outsourcing deals.”
What type of work is she talking about? The article profiles three examples, but the one I’ll focus on here is JM Family Enterprises, which outsourced its mainframe-related functions. (Never heard of it? It’s an $8.2 billion automotive holding company.) Three business units relied on the mainframe, but one was going to wean itself off, and the other two had usage that wasn’t expanding. While costs were fixed, usage was variable. The CIO researched possible service providers, then put together a “valuation matrix” to understand what the two finalist vendors could offer in terms of variable capacity and cost. IBM came out the winner.
One interesting subplot: In order to avoid protracted contract negotiations, which mitigate the concept of “simple,” the CIO put “leaders and lawyers from both the vendor and JM Family…in a local hotel.” He gave them 72 hours to come up with the agreement. There would be no deal if that deadline wasn’t met. They met the deadline.
The other case studies cover help desk operations and database administration.