The Best Laid Plans

A CIO can be proactive about creating a sourcing strategy that's closely aligned with the business strategy, diligent in assessing the costs, service levels and other factors necessary to make informed comparisons between sourcing options, and politically savvy about involving the business every step of the way, yet the decision may still be made to outsource an IT function.

That happened at Carlson, where last year the company signed a major outsourcing deal with IBM to handle selected IT and finance functions. Brown lobbied against the decision and ultimately resigned.

"These [outsourcing] decisions are still going to be made," says Gartner's Anderson. "But you can at least force the business to take a breath. When these mandates come down, you'll at least have some initial argumentation. Worst-case scenario, if the decision proceeds, you have all the data to do a baseline comparison to what the provider is pitching you."

Sometimes investing time and money in a detailed examination of sourcing options can bias executives toward signing a deal. "There's a certain momentum to the process and some may feel the obligation to follow through and set up an outsourcing relationship," says Kaplan of ThinkStrategies. "But it's a healthy exercise and can be successful even if you don't end up outsourcing anything. It's best seen as an opportunity to evaluate internal requirements and external opportunities."

And one that shouldn't be done once and tossed in a drawer. A good sourcing strategy should be revisited at least once a year, experts say. "You need to keep an eye out on a continuous basis," says Kaplan. "Your own business and the IT services market is changing so rapidly."

The continued effort will pay off one way or another, not only preventing against bad outsourcing decisions but also uncovering outsourcing opportunities you might not have considered. "Even if outsourcing is not on the table, start building your case," says Gartner's Anderson. "Not to defend against it necessarily but to be prepared to have that discussion based on a business case."

SIDEBAR: When Not to Outsource

10 signs you might want to keep an IT function in-house

1. Your company is going through rapid or dramatic change.

2. You already have a low-cost IT environment.

3. Your sole rationale is cost savings.

4. You don't have an overall sourcing strategy.

5. You don't have the internal competency or a plan to manage the outsourcer.

6. You're doing it because senior executives are forcing you to.

7. You don't understand internal IT costs and quality.

8. You're outsourcing because the competition is doing it.

9. You'd have to transfer a significant amount of knowledge that's core to the business.

10. You're not clear about the overall business strategy and how IT fits into it.