IT outsourcing trap

Six years ago the writer Nicholas Carr stated: “IT doesn’t matter“. His point was that IT is becoming pervasive, just like electricity and running water. So businesses wouldn’t need full time IT staff any more than they need full time plumbers or electricians on site.

While I don’t disagree with Carr’s ideas about pervasive computing, I always thought it was a bit of late 20th century conceit to assume running water and power is an automatic right. That world view overlooks the massive infrastructure, decades of investment and the industries employing thousands of people to make sure your kettle boils and your toilet flushes.

The same is true for technology infrastructure – without investment and without good people running the systems, the whole thing falls over and leaves management without critical knowledge on where the enterprise is heading.

Three businesses last week reminded me of this. Two were small businesses that couldn’t access their accounts and the other was Woolworth’s managing director talking about his company’s IT spending.

“We don’t believe in having someone else do it for us” Michael Luscombe said. “We have seen, around the world, that when that happens, it doesn’t go well”. These are the words of someone who knows their systems are critical to a modern business and it takes good people to run those systems.

Many managers think outsourcing critical functions like IT and accounting to the cheapest operator is good business. They then compound the mistake by believing their agreement absolves them from any responsibility when things don’t work.

The two small businesses I dealt with were good examples. This pair couldn’t produce their business accounts within a fortnight, because the management didn’t understand the systems.

They had outsourced their IT, their bookkeeping and their accounting and as a consequence they had lost control of their systems and their businesses.

If it takes over a fortnight to check how your accounts receivable are performing, or worse, you don’t know your biggest customer isn’t paying or your main product line has stopped selling, your business could be broke before management is even aware of the problem.

In the current environment, keeping a close eye on sales and who is over 30 days overdue on their accounts is critical.

Outsourcing is a good tool to keep costs down and for doing tasks your business can’t economically do itself, but business owners should always remember no-one cares about your business more than you do.

So keep control and take care when outsourcing.

Paul Wallbank has spent 15 years helping businesses with their technology issues. Over that time he also grew PC Rescue into a national IT company and set up the IT Queries website. Today Paul assists business facing the challenges of today’s market and believes entrepreneurs and new thinking is what will fix the global economy.

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