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Thu, Apr 5, 2007 12:18 EDT

Should Innovation Stay In-House?

Topic: IT Organization Management

Blog: CIO Knowledge Space

Current Rating: 5 Comment: 1

After arguing for years that IT development is best kept in-house, our columnist decides that creativity has moved on and moved out.

For many years I’ve used this forum and others to fret about the decline of IT as an engine of innovation and competitive differentiation. For those of us who love the job more than the title, love to design and code systems more than plan budgets and write performance reviews, it’s been painful watching hundreds of ersatz CIOs, transferred in from other departments, chop off bits and pieces of IT and throw them overboard. Sadly, most IT departments are now tasked with coordinating the installation of somebody else’s software and negotiating contracts with outside companies to keep systems running on networks that are being monitored by yet another collection of third parties. For most CIOs, this voluntary and catastrophic loss of internal capability is worth the comfort of knowing that they need not worry about a shortage of IT talent and that keeping up with everybody else is simply a matter of being skilled in contract negotiations. As a result, most IT departments are now staffed by people who know how to work things but don’t know how they work.

Well, after years of arguing against outsourcing and in favor of IT organizations maintaining their own in-house development capabilities, I’ve come to realize that because of the evolution of the marketplace, the availability of talent and, in particular, the current mind-set among corporate management, this point of view is now wrong. Or maybe I was just wrong all along.

Let me give you an example. I read a poll recently that revealed that approximately one-third of your most compassionate fellow Americans believe that we ought to stop wasting money on space exploration and use it to solve problems here on Earth like housing for the poor or health care for the needy. If you happen to be one of them, you should know that physicist Stephen Hawking disagrees, and he’s a lot smarter than you are. Professor Hawking considers the inevitable world-ending consequences of the coming asteroid impact, supervolcano or hypernova to be more than enough reason for some of the human race to get off this planet and spread out a little. Sounds like a good idea to me.

Think we spend a lot of money on the space program? We don’t. The budget

Keywords:

Innovation, IT, outsourcing

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Mon, Apr 9, 2007 16:06 EDT
Anonymous user
Posted by: Anonymous
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Read the book Wikinomics - How Mass Collaboration Changes Everything

Outsourcing is a fact of life.

Don Tapscott and Anthony Williams use the example in their book how IBM benefited using Opensource. Basically by joining Linux community and collaborating outside to save in development costs ($1B of effort by Linux community done to date). IBM has benefited
in other ways which they discuss but also set themselves a new business model going forward in developing OS and software.

IBM gets $500M of development for $100M investment.

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