Case Study: Strategic IT Management
at a Large Corporation
In past years, a Fortune 500 company has relied heavily on outside IT consultants to develop and maintain its on premise systems. The company does not outsource or remotely host systems due to perceived regulatory problems. The CIO has always taken a decentralized approach to IT sourcing. User groups have the final say on which vendors are hired. Users are responsible for working with legal and procurement to negotiate terms, and they pay the suppliers from their own budgets. Development projects only report to the CIO’s office to ensure they are following technical standards and operational requirements.
Facing forever increasing hourly rates for IT personnel, and experiencing repeated disappointment with newly implemented business applications, the user groups have now reversed course and are demanding the CIO take over responsibility for IT sourcing. The CIO has no experience or interest in evaluating and negotiating contracts with vendors.
Hiring contracts managers or buying a so called contract management software application is not enough. What is really needed are processes and methods for getting business value from vendors. SLAs that are really used and not forgotten. Competition among several vendors for all new work, instead of becoming captive to one services firm. Outsourcing that doesn’t create its own management structure.
James River becomes the CIO’s trusted advisor. Current vendor contracts are evaluated and strategies developed to renegotiate or terminate and recompete. Basic strategic sourcing and contracts management processes are put into place, utilizing existing personnel, that cover everything from writing RFPs to calculating ROI.
