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What Price Innovation?

CIOs say they want more than the traditional “your mess for less” relationship with their outsourcing providers. And the providers want to market themselves as partners in innovation. So why isn’t it happening?
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Reader ROI

  • Why SLAs inhibit innovation
  • Where customers and providers misunderstand each other
  • How to build an innovation-friendly relationship

John Smith had high hopes when Science Applications International Corp. (SAIC) took over Entergy's IT. Before the New Orleans-based utility signed the five-year, $US400 million contract in 2000, SAIC's sales team described a rosy future in which it would lower Entergy's IT costs and improve service levels on everything from application development and maintenance to data centre management to desktop and infrastructure support. And more than that, SAIC said it could become Entergy's partner in IT innovation.

"A partner in innovation" - those were magic words for Smith, then IT director for Entergy's Southern Nuclear fleet.

If you really want innovation, you can get it, says Robert Fecteau, CIO of BAE Systems Information Technology, "but you'll pay for it". Dearly

"We were looking for a company that would do more than just manage our IT service delivery," says Smith. "One that would not just provide best practices and run IT like a railroad but could also provide some vision about where IT was going." Smith, currently in a temporary role assisting in the reorganization of Entergy Nuclear, was particularly interested in SAIC's nuclear domain experience and its ability to apply that knowledge to the introduction of new business-specific systems.

But as the relationship with SAIC matured, Smith's disappointment grew. "Innovation was an expectation that wasn't delivered on," he says. SAIC met its service-level agreements (SLAs) and kept Entergy's IT costs under control, but there were no new ideas coming from the outsourcer, no guidance about emerging technologies Entergy should pursue. In short, no partnership in innovation.

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More about: American Express, BAE Systems, Big Blue, Billion, CSC, EDS, Entergy, Fluor, Forrester Research, Gartner, Gartner Research, HIS Limited, IBM, MIT, Morgan, PLUS, Promise, Science Applications International, Tata, Tata Consultancy Services

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