Charles B. Kreitzberg, Ph.D.
President
Cognetics Corporation

This article discusses how the role of IS departments must change when technical development functions are outsourced.

This article (somewhat edited) was published in the January 27, 1997 Communications Week.

The outsourcing of IS functions raises profound issues about the nature and role of the IS department. For the cost-conscious IS organization, outsourcing software development seems a natural choice. Carefully structured, and implemented as part of a well-thought out strategy, it is possible for an outsourced IS function to be extremely effective. However, there is a real danger that outsourcing will create distance between technical development and the organization's strategic use of technology, at a time when IS needs to play a more central role in business strategy.

IS was once an isolated island of technology within the corporation, It must now become part of the corporate mainstream. Because technology is both ubiquitous and core to corporate activity, IS can no longer function effectively as a separate culture. Having become integral to corporate strategy, IS must actively participate in its formulation. To accomplish this, IS must foster tight links with business management. It must acquire user-centered design skills. It must integrate documentation, training and user support functions into its technical competencies. And it must do all of these in a holistic manner.

Outsourcing can work against this mission. No outside vendor, no matter how technically competent, can match the insight and understanding of a company insider. And, let's be honest: Even the best-intentioned vendor has an agenda and priorities apart from your own. IS is often criticized for not understanding and responding to its users. Outsourcing increases the risk that the design process will become even more remote.

The solution is to outsource technical functions and re-invent IS as a strategic organization rather than a technical one. By analogy, IS can be viewed as the architect, while the outsourcing firms are the carpenters. The key responsibility of IS is strategic design. IS must decide what software is to be developed and work with its user community to create specifications from which vendors can write code. Development of technical specifications can be contracted out but the design of the software interface and its integration into the business process must be led internally.

Vendors can, and should, participate in this process, but they should not run it. Ideally, the business unit, the software development vendor, and IS, would all have user-centered design specialists in their organizations. Working with software engineers, a tripartite team would develop a design which is intuitive to users, seamlessly meshed with business process, and technically sound.

As IS forges relationships with outside vendors, it must take the lead in creating this new development paradigm. IS must become the advocate of the users. It must translate the needs of the business users into technical terms and manage the development activities of its sub-contractors. This will require IS to become expert in communicating with non-technical users, and to act as in-house consultants and educators. For many technical people, this means learning new skills. A new supportive relationship with its users will erase perceptions that IS is the opposition.

Companies will only reap the benefits of outsourcing if IS can make this transition. In fact, the transformation of IS offers a more important advantage than simply eliminating the chore of maintaining a large technical organization. The deeper value lies in gaining an in-house consulting and information management organization that is deeply integrated into the business and wholly supportive of its goals. Such an IS organization would be a precious strategic asset.