October 16, 2000

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IT Managers Face Challenge From Outsourcing

Now that departments throughout companies are initiating E-business projects, IT outsourcing isn't always orchestrated by traditional IT managers. Others, such as departmental VPs, are hiring outside contractors as a way to bypass internal bureaucracy and get E-business initiatives finished fast. "VPs can outsource almost everything today," says M. Victor Janulaitis, president of consulting firm Janulaitis Associates Inc. in Santa Monica, Calif.

The problem with non-IT managers handling this kind of outsourcing is that these executives may get into the habit of looking outside the company before considering what projects are best-suited for management and execution by internal technology resources. "IT needs to demonstrate they can set up E-business infrastructure at a cost that makes it undesirable for marketing or a different business unit to use some other provider of those services," says Meta Group analyst Maria Schafer.

Ad hoc outsourcing of E-business projects is a source of agitation for many IT managers. Evelyn Follit, senior VP and CIO at RadioShack Corp., says that if another VP ever tried to leave her out of a decision about how to execute an IT-based project, she would remind the manager that her cooperation is necessary for its success. After all, it's her department that manages the core IT infrastructure on which the departmental project will run.

When Tom Thomas served as CIO and VP of E-business at 3Com Corp. before taking his current job as CEO of Ajuba Solutions Inc., he allowed marketing managers to control E-commerce projects and seek outside IT services providers for help. "I wanted to let them learn," he says. "If the marketing person wanted 15 to 20 outsourced programmers to put up some Web sites and get that moving, the choice I had was to cut it off at the knees--or let it move along."

And learn they did. Thomas says the Web sites looked great, but when customers asked for guaranteed delivery dates or real-time pricing, marketing managers realized the sites lacked integration with 3Com's other applications and data. It was a painful experience--one that IT eventually had to rectify--but it taught marketing managers a valuable lesson. Says Thomas: "They realized our customers want detailed information on these Web environments, not just static HTML pages."

Return to main story, " Who'sin charge of IT?."

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