Outsourcing Management of IS

Tom Worthington

Immediate Past President of the Australian Computer Society

For: Developing and Implementing Profitable Government Strategies for Trading on the Internet

11.30 am 16 June, 1999, Rydges Hotel, Canberra

Note: These are the "slides" of the talk, intended for display to an audience in 18 point font on a 640 x 480 video display. The text of the talk is also available.

Title
About the speaker
About the Australian Computer Society
Introduction
ACS Outsourcing Paper and Senate Hearing
The Government doesn't make things, it processes information
Delivery of Government services via the Internet
Services on an Internal Intranet
Re-skilling the IT Workforce for Group-ware
Managing Virtual Employees
Conclusion

About the speaker

Tom Worthington is Immediate Past President of the Australian Computer Society and presented evidence to the Senate Finance and Public Administration References Committee IT Outsourcing inquiry. Away from the ACS, Tom works on Internet/Intranet policy for the Department of Defence.

Information Age magazine listed Mr. Worthington as one of the 10 most influential IT&T people in Australia in 1998, citing his work on national IT policy. His work since 1994 has been on the policy and practice of implementing the Internet, including appearances before three Senate hearings. He is preparing a book for publication in August 1999 on this experience.

About the Australian Computer Society

The Australian Computer Society is the professional association in Australia for those in the computing and information technology fields. It was established in 1966. The Society has over 14,000 members and on a per capita basis is one of the largest computer societies in the world.

Introduction

Outsourcing latest management fad from overseas?

Some observations:

Whole of government IT outsourcing is a high risk approach
On-line Preparation Works
Democracy works
Outsourcing can work, if done right

ACS Paper Preparation and Senate Hearing 1997

13 May: ACS Management Committee endorsed proposal for paper
27 May: Senate referred IT outsourcing to the Finance and Public Administration
24 June: Ian Dennis FACS & David Goble MACS to prepare ACS position paper
4 July: First draft for comment on-line
27 July: Second draft
6 August: Final Paper & Senate submission
1 September: ACS invited to give evidence at a public hearing
5 September: Ian Dennis FACS and myself appeared to give evidence
November:
Senate report released; majority report consistent with the ACS submission
Government Chief Information Officer leaves suddenly
Transfer of outsourcing function to the Office of Asset Sales
14 November: ACS says Government outsourcing policy in total disarray

The Paper

Definition of Outsourcing

"An arrangement whereby a third party provider assumes responsibility for performing information systems functions at a pre-determined price and according to predetermined performance criteria." Dianne Northfield, 1992

Reasons For Outsourcing

Cost Savings: However, economies of scale may have changed for IS.
Focus On Core Business
Access To Skills
Access To Technology
Flexibility
Accountability

Many of these advantages can accrue just from the process of examining the outsourcing option, as a consequence of self-examination and formalisation. That is to say that they can accrue without outsourcing per se.

Critical Issues with Outsourcing

IT Professionals Involvement

IT Professionals may be suppliers; consultants or IT operatives, in the outsourcing company or the agency being outsourced.
IT Professionals member actions will be subject to the Trade Practices Act, contract law, other streams of law.
IT Professionals are also subject to professional codes, such as: ACS Code of Ethics & Code of Professional Conduct and Practice

Wider Issues

Outsourcing is:

consistent with ACS ethics,
not a panacea for IT problems

Outsourcing can:

Deliver cost savings and other benefits
If used inappropriately, significantly diminish service levels, incur major reconstruction costs, and cause social damage

Outsourcing assessment processes are a valid tool for Government and private organisations in matching operations to strategic needs. However, particularly in the case of government there is a need for processes to be open, accountable and participatory. Decisions made behind closed doors and communicated as a fait accompli are not in the public interest.

Government doesn't make things...

Technology used was: office buildings, meeting rooms, filing cabinets & printing presses
Photocopier, telephone and fax machine haven't changed much
Internet delivering cheap, reliable, near universal electronic communications
Organisations are virtual and so suit the Internet
But can senior managers cope?

The real University...has no specific location. It owns no property, pays no salaries and receives no material dues. The real University is a state of mind. Robert M. Pirsig, 1974