CIOs' Challenge: Two Views Of Managing Outsourcers



Daniel Sheehan says that of all the new roles he's taken on as CIO at Advo Inc., a direct-marketing company, perhaps the most unexpected is marriage counselor. With an internal staff of 60 IT employees working alongside 110 on-site technologists from IBM Global Services, Sheehan spends a lot of time encouraging communication, trust, and teamwork. And as with any marriage, there are plenty of tense times to work through.

"I've been in situations where you're almost in a position of IBM versus Advo, and you're sitting there like a judge trying to figure out who messed up and who didn't," Sheehan says.

The role of relationship manager is one of increasing importance for CIOs as the pressure to lower costs and improve performance drives a growing number of companies to outsource at least some of their IT work to service providers.

Some CIOs don't relish the job of managing outsourcers. As CIO of Fireman's Fund Insurance, Billy McCarter whittled the IT staff from 1,100 to 600, with much of the work going to offshore outsourcers. The move fit with his philosophy that companies need to focus on their core skills. But McCarter left the job in December, joining the insurance-technology vendor ePolicy Solutions Inc. in search of a new challenge-one that let him be more hands-on when it came to delivering technology, rather than spending much of his time policing third-party providers.

But Sheehan at Advo embraces the role of relationship manager. The match with IBM Global Services started six years ago with mainframe operations, and in recent years IBM has added server maintenance, support, and development, plus desktop support for 3,900 Advo employees. About half of the 200 IBM employees working for Advo are on-site, and Advo's internal IT staff has shrunk from about 80 people to 60 in recent years.

Outsourcing puts Sheehan in a better role as a business strategist because the lights-on work is handled by IBM, he says. "That allows me and my staff to concentrate on the fun areas," he adds. "I can allocate my time to being more productive, more visible to the business, and understanding what the business needs versus worrying about whether one of the servers needs additional RAM."

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