Good thoughts Rebecca
If I could add to and clarify a bit - the upside to critical infrastructure outsourcing and rightshoring of services "is" the value added and flexibility that can be gained - if the contract is structured properly. Cost savings is a given these days - if you choose the right partner.
It could be said that lack of collaboration between the business units and IT created a situation where IT was not viewed as strategic or delivering innovative value - and had to be "rightsized" - losing valuabe intellectual captial.
Thus it has been said by experts that IT is either:
1) A value inhibitor - very leveraged and focused on keeping the lights on with no slack available or flexibility to change - 85% of infrastructure / support budget used to run the business - 10% to improve / grow; or
2) Tactical - not seen as strategic for long term growth. There are areas they excel such as cost management but paradoxically, these areas are likely hurdles for creativity and growth - 70 -75% of budget allocated to run the business - 20+% to improve / grow; or
3) A Value Creator doing an excellent job balancing short term performance (efficiency) and enabling long term growth opportunities - continuing to harvest IT value and communicating that value to the business - with 50-55% of budget allocated for infrastructure / support and 40% to improve / grow.
Outsourcing can actually "remove the friction of change" - and be the enabling activity (finally) to "align" IT's strategic value with business growth - if you structure the contract accordingly.
Where does the funding come from to be a value creator? Capital expenditures can be significantly reduced by shifting from the purchase of fixed assets to the purchase of services. Criteria for success would be measured by cost per transaction, quality of service, adherence to service level agreements (SLAs), business flexibility, execution of the transformation, and ongoing provision of innovation and deep industry expertise to the bank.
But the bottom line is - if the "IT answers" are the same as they have been in the past, then the results are not likely to change. The smart path to improving institutional economics and customer satisfaction is by rethinking the role of technology and the use of partners, improving governance, adhering to standards and challenging the status quo on utilization and technology ownership questions.
Cutting back is a given in this uncertain economic climate, but that leaves no excuse for underperformance. Successful IT leaders will balance the cost-saving imperative with the need to continue innovating and supporting the long-term strategic goals of the businss. It time to be creative and bold, to re-evaluate everything you do, and to relentlessly focus on delivering value.
