Never outsource the brain
About a year ago I took over the position of CIO at a Slovenian retail store chain. Well, to be honest, I did not take over anything as that position did not exist when I joined the company. They had 17 stores, about 80 employees and a yearly turnaround of 7M€. And an unfinished ERP implementation.
I was shocked to hear a company of such size did not have anyone inhouse understanding any of the IT infrastructure that was running the company. Everything was outsourced. But I quickly understood why that happened and went on a path of deep restructuring.
The number one reason why people outsource IT is understanding. They understand that they don’t understand IT and they don’t want it in the house because it costs money. While this is fantastic and provides a great shift from the “everything in the house” approach, it is a textbook overshoot of management. IT is like an engine, you don’t have to understand the compression ratio, torque or BHP, but you must know how to drive the darn thing and how to check oil levels.
We solved the IT problem pretty quickly and shifted focus to the main problem and the reason of my adventure in that company: the ERP implementation.
The second lesson in business management (the first is the title) should be to never trust outsiders on a first meeting. No business adviser in the world can identify a problem in a single chat with the CEO. For one simple reason: the CEO acts on interpreted facts that are mostly false. This is true whenever there is a problem. Advisers are here to produce answers, and they unfortunately do too often, making catastrophic mistakes and failing to identify true causes of problems. A good adviser listens.
Nobody in the company knew how an ERP should be implemented. And nobody, including the external company that took over the implementation and IT management, understood all the implications of decisions made in a isolated space. This is not regulated business, anyone can be an IT consultant and “sell” their services on the market.
Never outsource the brain. You can outsource the hands and ears, but never the brain. Never!
Every problem that needed my attention was 99% info gathering and 1% action and delivery. In the end, my IT knowledge was almost unused, while project management came into prominence as the right hand did not know what the left one was doing.
It is a common problem. Static points of view often create fake perceptions and representations, turning decisions into lines of less resistance. I often used the ER metaphore in order to explain what management should do. First is triage, you simply mark what can be saved and what should be left to die. Then is stabilization where you treat the “wounds” and stop bleeding. The last step is recovery, where you implement changes and realign the business.
These three steps are really simple to explain and a whole hell to implement. The first step is painless (and the most important), the second step is reassuring (and the easiest) while the last step is often equal to breaking a leg (almost revolting) because the later you do it, the more pain it will cause. And nobody makes the last step soon enough to avoid pain.
The project ended in success and with casualties. When things turn south in your company, you’ll quickly see who is a general in your team and who runs for cover.