IT outsourcing requires internal oversight

Outsourcing your company’s IT infrastructure is a proven way to support innovation but internal subject matter experts must remain engaged to ensure autonomy is not lost.

An important part of any innovation initiative is having a solid information technology (IT) infrastructure which can support new technologies that allow for organizational growth. Building this support internally is time consuming and expensive, leading many large enterprises to heavily rely on outside solutions such as SAP and Salesforce.

These firms provide the depth and breadth of services large enterprises need, but if internal teams are not actively and continuously vetting these solutions, it’s easy to lose autonomy over your infrastructure.

We know that big ships turn slowly. As with most aspects of business, evolution and diversification in your IT infrastructure can be the difference between success and failure. A company of substantial size that manages to remain agile has a huge competitive advantage. The faster your company can adapt your infrastructure to new needs, the faster new products and services can be developed. That’s why IT outsourcing, which offers agile and scalable support, is one of the most efficient ways to pursue innovation initiatives that lie outside of an enterprise’s core competencies.

Typically, the procurement department is tasked with reviewing large technical proposals, which is understandable from an operational controlling standpoint. But for an IT outsourcing strategy to be effective, it is paramount internal subject matter experts (SMEs) critically analyze the merits of proposed IT solutions and work with consulting teams to establish priorities.

These SMEs could be technical members of the Procurement team or a group of departmental delegates that form a board. Either way, the responsibility of these experts is to remain knowledgeable of relevant technologies and trends, and help inform these important operational decisions.

Additionally, these experts should be responsible for integration. This doesn’t just apply to IT, but to all types of service providers. By thinking of integration from the start, you can help develop a roadmap that allows outsourcing partners the potential to support future product and service offering development.

Whatever the setup, the point is to have internal stakeholders steer decisions and provide input to help your company maintain infrastructure control and direction. Otherwise, how can you expect a sound strategy and flawless execution?

A recent example of this is the Corona Warn App, a COVID-19 contact tracing app launched by the German government earlier this year. The app’s technology is relatively simple and was developed in collaboration between SAP and Deutsche Telekom. Cost of development was 20 million euro, with monthly maintenance costs of 2.5–3 million euro. Any developer can tell you that is an absolutely obscene price tag for an app based on Bluetooth technology — an oversimplification maybe, but not by much. One explanation for this discrepancy is that lack of technical expertise within the German government. There was no one to determine the why behind these costs or hold the service providers accountable.

While engaging third party IT providers is often necessary for innovation, it doesn’t mean you can then ignore it. If you don’t have internal ownership and knowledge of your company’s infrastructure it is nearly impossible to own your innovation strategy. Companies must have deep enough knowledge of specific technologies and trends to steer, control, and provide input to IT partners. This will result in a leaner, more agile environment that supports innovation rather than hinders it.