Outsourcing Information Technology: One Step at a Time

Fortnightly Magazine - November 1 1995
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The challenges facing the information technology (IT) industry into the next century are significant. Yet so are the opportunities. For the first time since the industry's inception in the 1950s, strategy-minded chief executives (CEOs) are beginning to break the industrial age paradigm and look upon their technology resources as assets instead of little understood and highly questionable expenses.

Senior executives are beginning to understand the "time value of information" and the strategic value technology can provide. Organizations are demanding higher-quality IT services that use newer technologies, delivered in less time and with higher impact on the bottom line. As a result, today's chief information officers (CIOs) must release the day-to-day management of some of their more sacred business processes to third parties.

This situation should not surprise the more business-oriented CIOs. They already share a common perspective with their CEOs. A partnership is evolving as CEOs order their CIOs to seek partnerships with the corporation's

business unit officers to improve processes, enhance customer service, and generate increasingly favorable financial results.

IT Worked for Us

The practice of outsourcing IT activities, while more common in competitive industries, is receiving increased attention by public utilities. Over the past year, many electric utilities have announced outsourcing agreements that range from small single-function activities to a company's entire IT capabilities. As electric utilities continue their journey through deregulation, outsourcing of nonstrategic IT activities will likely become the rule.

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