Strategic CIO // Executive Insights & Innovation
Commentary
3/6/2009
12:44 PM
Bob Evans
Bob Evans
Commentary
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PODCAST: Outsourcing Helps Insurer Attack 80/20, Pursue Innovation

A $1 billion insurance company has sharply reduced its dependence on a brittle 30-year-old mainframe and redeployed many internal IT staffers to new initiatives by outsourcing the hosting, care, and feeding of that mainframe. The three-year project at Harleysville Insurance achieved the top-level goal of shifting big chunks of fixed costs to variable costs and allowed the IT team to focus on higher-value projects.

A $1 billion insurance company has sharply reduced its dependence on a brittle 30-year-old mainframe and redeployed many internal IT staffers to new initiatives by outsourcing the hosting, care, and feeding of that mainframe. The three-year project at Harleysville Insurance achieved the top-level goal of shifting big chunks of fixed costs to variable costs and allowed the IT team to focus on higher-value projects.And while the project certainly involved huge amounts of technical expertise, it also revealed the importance of fostering relationships with outsourcing vendors that become true partnerships rather than traditional customer-vendor interactions, according to David Capeci, Harleysville VP of technology and production services, who elaborates on this critical theme in a Global CIO podcast.

As that partnership evolves, Capeci says, the customer gains confidence in turning over higher-value work to the outsourcers whose performance merits it, and the outsourcer in turn is able to deliver more-insightful contributions that often go beyond the sterile requirements stipulated in the contract. And as a result, Capeci says he's now comfortable discussing plans for his outsourcers to take on additional, higher-value work in such areas as security, cloud services, storage, archiving, compliance, and more.

Here's a handful of the outsourcing lessons learned that Capeci expands upon in the podcast:

  • Contracts and their terms are extremely important, but if you want a partnership versus a vendor-buyer transaction, then don't use them to be heavy-handed
  • Find the right communication format for the right type of exchange: phone versus video versus e-mail; PowerPoint versus less formal; rigidly scheduled meetings to keep global interactions in sync versus less-formal ad hoc conversations
  • When in doubt, overcommunicate -- that's the best way to "minimize the drama" that can creep into complex global operations involving partners
  • Scrutinize the skill sets of your internal team: Someone who's great at running a data center might not have the tools to manage an outsourcer that takes over the running of that data center.
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