Wednesday, December 12, 2007

Outsourcing the Government

The Governor of our beautiful state of Georgia, which I am sure is on everyone of y’all ‘s minds (the state that is, not the Governor), announced yesterday that he is outsourcing all of state’s IT to the private sector - about 1,100 jobs will be affected by the move.

I am not a believer in outsourcing the whole Government and I am especially against the Blackwater type outsourcing the risks of which, in my mind, way outweigh the potential benefits, however, when it comes to specialized auxiliary services that the government needs, like the IT, I am a strong advocate of outsourcing. We live in a highly specialized society – we all specialize in a narrow niche and try to be the best at it, we don’t try to take care of our needs ourselves - maybe if you are an IT person you tinker around with computer issues yourself, or if you are a plumber you fix your own plumbing but generally speaking we let the experts provide to us the services we need while we provide our expert services to others.

The Government, as do many other organizations and as do we as individuals, often falls in the trap of “we can do it cheaper and better ourselves” – yes, there are cases when doing it yourself makes perfect sense, we don’t need to get into that, but, as a general rule especially for the Government doing yourself is not the best way unless it is your core expertise and responsibility.

Let’s focus on IT services for the Government, the subject that triggered this writing. Following you will find some of what I think are the disadvantages of Government handling IT itself:
- lack of flexibility/agility to respond to today’s fast changing technology – for private enterprises their very survival depends on that ability to respond quickly to the changing environment whereas for the government survivability is not an issue – removing that factor from the equation you have removed one of the strongest motivators for an organization and its people;
- lack of expertise – not only has the government with its pay scale a harder time recruiting and retaining top talent unless they have already started thinking of retirement, but even if it does manage to hire top people it lacks both the resources and motivation to maintain and raise the level of expertise;
- entitlement burdens weigh heavily on the Government’s budget – a tenured government employee simply needs to show up at work (a bit of exaggeration here probably but it helps make the point J) – don’t know if there are any studies that correlate productivity of employees with job security but I would bet that job security lowers motivation to perform and productivity suffers as a consequence;
- lack of attention - IT is just one of the services the Government needs to function but it is not in the list of core/primary functions of the government and therefore does not get the attention it needs/deserves with probably the exception of high impact, high exposure projects that may affect the image of the Government in the eyes of its people;

Now, a private organization focused on IT services, like an IBM or Accenture, must prove itself every day, they must show that they are at the top of their game or they are out. IT Services are the core of their business; they directly and significantly impact their bottom line. They must constantly work in improving their processes and procedures to make them more efficient otherwise someone else will come along and take their place. They have virtually no entitlement burdens; they can recruit and keep top talent as long as it performs. They are exposed to multiple widely varied scenarios and the expertise gained in one scenario is put to good use in other scenarios instead of getting “shelved”. Their cost of gaining the expertise is spread among multiple clients, for example, a top security expert in a “closed” IT department is only using his high level expertise 20% of the time whereas the rest of the time is dealing with other work that does not require his expertise, whereas on an IT services company he will be “floating” between multiple clients and his expertise will be efficiently utilized 100% of the time.

There are many more advantages that the private sector enjoys over the Government but in short, it seems to me that it makes a lot of sense for the government to outsource IT to the private sector.

I know, a lot of people out there will argue that the Government will end up spending a lot more than the $617 million per year (in the case of Georgia) that it spends now, and that is possible. But, I would say there are only two explanations for an increased cost – either the Government will receive higher quality and more services than it receives now from its own IT department OR they will award contracts on a non-transparent and un-fair way – otherwise the free market forces at work will result in lower costs to the Government (the people that fund the government).

This is just a personal opinion – no intention to offend anyone who works in the Government sector or to speak on behalf of IT services companies. I am indeed open to reason and can be convinced otherwise, so leave your comments here.

3 comments:

SOG IT Staffer said...

The writer of this article seems to consider Georgia State IT staff as old men waiting to retire with no motivation to do their jobs.

Since I am an IT staffer he could not be more wrong in his assumptions. All of the IT staffers were hired away from Private Enterprise in 1999 before Purdue (BP). We all know how to make a profit using scare resources. We all came from this environment.

The reason the SOG is in such shambles is because Sonny Perdue has cut all spending for IT and pretty much every agency. We have the same networking equipment since I began my employment TEN years ago.

The governor refuses to spend anything to resolve the myriade of issues we deal with every day. And as anyone in the field knows technology is extremely dynamic. Yet, we are not provided any training, spare parts, or warranty work on the aging infrastructure. So we do the best we can.

To provide networking solutions for our customers we have to purchase our own tools and train ourselves. We are a rather resilient group who solve complex issues among ourselves. We are given zero leadership from the ivory towers in Atlanta. But the governors hand picked “Customer Service” appointee has told everyone that to provide “World Class Service” all we have to do is answer the phone with "Hello, my name is Mordak, how may I be of service today". Somehow this simple task makes the antiquated hybrid switches carry datagram’s to the right destination and keeps the failing servers from crashing.

So dear writer who likes to assume State of Georgia IT staffers are lame, talk to one of us and report the ‘REAL’ reasons the IT infrastructure is falling down.

Proud SOG IT Staffer

mani said...

outsourcing software development is the double edged sword that proves to be beneficial both for the takers and the providers as it has enabled the takers to go for the A grade IT services at a competitive rate.

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