The Decision To Pull IT in House

Still catching up on my reading. The August 15, 2003 issue of CIO Magazine had two brief but useful profiles of “resourceful CIOs” who had to make outsourcing decisions.

Jim Burdiss, Smurfit-Stone Container, actually spent part of his career as a consultant with service provider CSC. Yet when it came time to consider what should be outsourced in the operations he was newly running, he concluded that six of the eight IT services should stay in house. The basis for his decisions? Baselining costs, comparing his staffing levels to those at peer organizations, determing what service levels need to be and putting in place SLAs and constantly revisiting the decisions around outsourcing.

Michael Palmer, Allied Office Products, brought in-house nearly everything that was being outsourced, in the process, saving half a million dollars a year. He could do this because his internal staff was involved in daily operations being run by the service provider, so pulling the plug on those outsourced services wasn't as painful as it might have been if there'd been only high-level oversight of the IT operations. Like Burdiss, Palmer also baselined the expenses of the IT services and figured out where costs would go up or down should those services come in-house.

The guidelines from each are worth checking out when considering your own outsource/in-house decisions.