Technology As Commodity vs. The Value of Strategic Alignment

It's happening everywhere. IT budgets are being slashed and outsourcing is becoming increasingly attractive when compared to a full-time staff of IT professionals.

While it is still true that you can get a developer overseas for one-third to one-fourth of price of hiring one to sit in a cube in your office, you should think long and hard about an outsourcing strategy before you tout a significant cost savings.

Personally, when I look at traditional IT departments, I see dead people. Or, more correctly, I see dead FTEs. Many CIOs see their immediate challenge as replacing Full Time Employees with contract resources and solutions. But this will only get them so far. They'll have a couple good years of demonstrating year-over-year cost savings, but then what? At the end of the day, this alone will not change the culture or philosophy of their departments. The ones who are really good at planning and executing large projects will save a great deal of money by buying services rather than employing humans. The ones who aren't so good at planning will find that these services turned out to be more expensive than "was advertised."

And they're just as likely to outsource the wrong jobs as the right ones.

I believe that greatest challenge facing CIOs in the coming years is strategically re-aligning IT back to the best interests of the company. Walk into a typical 25+ person IT organization and ask the first person you find to briefly explain their company's business model. Ask them to briefly explain how their company makes money. How many people do you think you'd need to ask before someone got it right? Yet these people are making day-to-day decisions about how the the company will operate.

Once these people become educated and empowered, the company will value them as far more than just a guy writing an application at 4x the cost of a guy in India.