5 ms·

Longer term, outsourced IT costs for larger projects are not lower than having staff. The cost savings could be in outsourcing infrastructure too, although the

Longer term, outsourced IT costs for larger projects are not lower than having staff. The cost savings could be in outsourcing infrastructure too, although the way medical systems are required to be maintained in US it's hard to imagine they'd move their stuff to AWS, or if they did whether it would be much cheaper. Curious to know of real reasons - maybe some internal politics? Or maybe they had issues with staff skills/retraining?

kpil 10y ago
Incentives related to increased cash flow, lack of domain knowledge of the management teams, and a good "packaging" and sales from the outsourcing companies that is hard to compete with internally as all the warts and pimples are visible...
ethbro 10y ago
Not sure if this applies to edu, but here's the way it normally seems to work in corporate: Aspiring manager decides to hitch his or her wagon to offshoring IT initiative. Manager hires consulting firm to handle details / take fall if it goes poorly. Switch-over normally goes well. Cost savings are demonstrated in year 1. Manager gets promotion / bonus because of fine job he or she did. Consulting firm gets paid because they delivered. Offshore IT appears to be working well. In year 2, company finds out there's an extremely frequent business interaction with IT that wasn't covered by the contract (because management lives in a land of abstracted rather than actual business processes). Offshore IT bills them an arm and a leg for it. Repeat this for every change request. Service also seems to degrade as new faces are substituted in on the offshore side (B team for A team). In year 3, company needs to migrate to a new business system. Offshore IT (under current contract) is revealed as utterly incompetent for something this complex. Offshore IT will happily sign a new contract to make it happen, if company is willing to pay more. In year 4, company is still attempting the migration. After signing the migration contract, offshore assigned more competent resources. However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. In year 5, the migration is still ostensibly underway but has generally been accepted as failing. The offshore IT initiative is now regarded as a more expensive boondoggle that delivered worse service. The manager moved on somewhere around year 3.5, securing a better position based on his or her track record with successful IT offshoring. Which they are then asked to do for their new employer. The consultants are also in strong demand, based on their track record of successful IT offshoring initiatives. Any problems that occured when they were no longer involved obviously can't be attributed to them. Tl;dr - pump and dump with a department of employees and people's lives
- zerkten 10y ago
  This is so very true based on my experiences with pharma. The only addition I'd make in year 1 is that most of the company is told that everything will be business as usual. It's not "BAU" because the Offshore IT team brings new processes and there is often a cultural mismatch. The business teams then decide to be uncooperative and work as much as possible outside the bounds of IT for the next 4 years. This makes the environment even more poisonous for all involved.
- marktangotango 10y ago
  > However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. I've lived this a couple of times. If given time, the newbs can usually figure it all out, on the companies time (and $$$), and at the expense of forward momentum in the market and customer good will. Oh that IE6 client? Yeah that REALLY has to change now. But these costs are hard/impossible to quantify, and who wants to pay these high priced developers anyway?
- robjan 10y ago
  I have this exact experience with offshoring in my company. The management became convinced that more people = faster/better and that quality of resourcing wasn't a thing. So we now have to manage about 20x the number of people, and the people change every day. We strongly suspect that we are being used to train these offshore people because as soon as they start delivering reasonable quality things, they move off the project and get replaced with a new incompetent person. We are left with two options: let the project fail due to incompetent resources and take the fall as the only remaining in-house IT staff; or waste time training the resources and proving that the offshore model works.
Tinyyy 10y ago
What made you immediately dismiss the cost savings from outsourcing staff? In what way is that reason not 'real'?
deleted 10y ago
[deleted]
Spooky23 10y ago
There's a lot of nuance with these decisions. There's a few factors at play. - It's attractive to management to displace accountability. As a CIO, you pay a vendor for an SLA, and have an entity to blame when you have a problem who isn't in your scope of responsibility, whom you can fire or otherwise penalize. - You get to put the budget for maintaining the existing services in a box. Instead of keeping stuff running, you invest your time, energy and money on project work that is perceived to deliver new value. - There may be undisclosed labor issues that you can't fix without firing everyone. - "Cheaper" doesn't necessarily mean lowest cost. No C level type wants a smaller budget. Think about why you pay Amazon for S3 vs. going out and renting a cage and buying a SAN. It's a similar thought process, with a similar affect on employment.
- gtycomb 10y ago
  One thing to note here in HN is that, competitiveness of many a business is on the table because of this state of affairs. This is really so. The opportunity to organically develop technology with the business is always lost if the CIO skill is mostly that of a Purchasing Manager. Outside contractors will easily sell you a "roadmap" that looks nice and modular for management, with only contracts to manage :-) Engineers need to get smarter, learn something from marketing and management, develop and protect their ideas, and move on to new business strategies for themselves.
  - Spooky23 10y ago
    You're exactly right. There's a line that gets crossed where a CIO is really an operations guy. Usually that means that technology is seen as a cost center, and often the CIO is working for the CFO. When you read about fucked up states of affairs in the Federal government and Fortune-500 companies, it's usually because of attitudes like this. The most successful companies use technology to make money, the run of the mill use technology to spend it.
purple-again 10y ago
AWS has HIPPA compliant offerings.
- sheeshkebab 10y ago
  Yes, and dedicated instances, and allows you to write all the code you need to encrypt everything... Cheaper - this is not however, in either infrastructure or skilled engineering costs (plus medical and finance orgs are skittish of AWS as it is).

kpil 10y ago

Incentives related to increased cash flow, lack of domain knowledge of the management teams, and a good "packaging" and sales from the outsourcing companies that is hard to compete with internally as all the warts and pimples are visible...

ethbro 10y ago

Not sure if this applies to edu, but here's the way it normally seems to work in corporate: Aspiring manager decides to hitch his or her wagon to offshoring IT initiative. Manager hires consulting firm to handle details / take fall if it goes poorly. Switch-over normally goes well. Cost savings are demonstrated in year 1. Manager gets promotion / bonus because of fine job he or she did. Consulting firm gets paid because they delivered. Offshore IT appears to be working well. In year 2, company finds out there's an extremely frequent business interaction with IT that wasn't covered by the contract (because management lives in a land of abstracted rather than actual business processes). Offshore IT bills them an arm and a leg for it. Repeat this for every change request. Service also seems to degrade as new faces are substituted in on the offshore side (B team for A team). In year 3, company needs to migrate to a new business system. Offshore IT (under current contract) is revealed as utterly incompetent for something this complex. Offshore IT will happily sign a new contract to make it happen, if company is willing to pay more. In year 4, company is still attempting the migration. After signing the migration contract, offshore assigned more competent resources. However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. In year 5, the migration is still ostensibly underway but has generally been accepted as failing. The offshore IT initiative is now regarded as a more expensive boondoggle that delivered worse service. The manager moved on somewhere around year 3.5, securing a better position based on his or her track record with successful IT offshoring. Which they are then asked to do for their new employer. The consultants are also in strong demand, based on their track record of successful IT offshoring initiatives. Any problems that occured when they were no longer involved obviously can't be attributed to them. Tl;dr - pump and dump with a department of employees and people's lives

zerkten 10y ago
This is so very true based on my experiences with pharma. The only addition I'd make in year 1 is that most of the company is told that everything will be business as usual. It's not "BAU" because the Offshore IT team brings new processes and there is often a cultural mismatch. The business teams then decide to be uncooperative and work as much as possible outside the bounds of IT for the next 4 years. This makes the environment even more poisonous for all involved.
marktangotango 10y ago
> However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. I've lived this a couple of times. If given time, the newbs can usually figure it all out, on the companies time (and $$$), and at the expense of forward momentum in the market and customer good will. Oh that IE6 client? Yeah that REALLY has to change now. But these costs are hard/impossible to quantify, and who wants to pay these high priced developers anyway?
robjan 10y ago
I have this exact experience with offshoring in my company. The management became convinced that more people = faster/better and that quality of resourcing wasn't a thing. So we now have to manage about 20x the number of people, and the people change every day. We strongly suspect that we are being used to train these offshore people because as soon as they start delivering reasonable quality things, they move off the project and get replaced with a new incompetent person. We are left with two options: let the project fail due to incompetent resources and take the fall as the only remaining in-house IT staff; or waste time training the resources and proving that the offshore model works.

Tinyyy 10y ago

What made you immediately dismiss the cost savings from outsourcing staff? In what way is that reason not 'real'?

deleted 10y ago

[deleted]

Spooky23 10y ago

There's a lot of nuance with these decisions. There's a few factors at play. - It's attractive to management to displace accountability. As a CIO, you pay a vendor for an SLA, and have an entity to blame when you have a problem who isn't in your scope of responsibility, whom you can fire or otherwise penalize. - You get to put the budget for maintaining the existing services in a box. Instead of keeping stuff running, you invest your time, energy and money on project work that is perceived to deliver new value. - There may be undisclosed labor issues that you can't fix without firing everyone. - "Cheaper" doesn't necessarily mean lowest cost. No C level type wants a smaller budget. Think about why you pay Amazon for S3 vs. going out and renting a cage and buying a SAN. It's a similar thought process, with a similar affect on employment.

gtycomb 10y ago
One thing to note here in HN is that, competitiveness of many a business is on the table because of this state of affairs. This is really so. The opportunity to organically develop technology with the business is always lost if the CIO skill is mostly that of a Purchasing Manager. Outside contractors will easily sell you a "roadmap" that looks nice and modular for management, with only contracts to manage :-) Engineers need to get smarter, learn something from marketing and management, develop and protect their ideas, and move on to new business strategies for themselves.
- Spooky23 10y ago
  You're exactly right. There's a line that gets crossed where a CIO is really an operations guy. Usually that means that technology is seen as a cost center, and often the CIO is working for the CFO. When you read about fucked up states of affairs in the Federal government and Fortune-500 companies, it's usually because of attitudes like this. The most successful companies use technology to make money, the run of the mill use technology to spend it.

purple-again 10y ago

AWS has HIPPA compliant offerings.

sheeshkebab 10y ago
Yes, and dedicated instances, and allows you to write all the code you need to encrypt everything... Cheaper - this is not however, in either infrastructure or skilled engineering costs (plus medical and finance orgs are skittish of AWS as it is).