Australian Computer SocietyTom Worthington, will give an overview of the ACS's study into IT outsourcing and detail how the Internet provides new opportunities for IT Outsourcing. Mr. Worthington argues that the Internet is fundamentally changing the nature of organisations. He argues the public sector will need to retrain its workforce, particularly senior management to be able to take advantage of the new opportunities, including outsourcing.
Draft of 5 December 1997: http://www.acs.org.au/president/1997/outsrc/intout.htm The content of this talk will be developed here. The printed version (16 November 1997) for the proceedings is available and "Slides" are also available. Suggestions and comments welcome: tom.worthington@tomw.net.au
In December last year I gave an address to the National Press Club on "Australia's 'Net Futures". In this I raised the question as to if outsourcing was just the latest management fad from overseas:
However, before dismantling our public infrastructure and selling it off to overseas interests, we should examine if outsourcing really works and if some non-commercial benefits are lost. These arguments apply to outsourcing by both private and public sector organisations. While professing support for free trade, all national Governments support their local industries. One way this can be done is by funding research, another is by using the government agencies to train staff, test technology and support local industry. Before Australia abandon these mechanisms, we should make sure our competitors are doing the same and playing the game fairly. (1)
This presentation is intended to first give a quick overview of IT outsourcing , summarised from a study of outsourcing (2) commissioned by the ACS evidence presented to the Senate Finance and Public Administration References Committee IT Outsourcing inquiry by Ian Dennis and myself. Then I want to look at how the Internet might be used in implementing outsourcing, both for IT and more generally.
Preparing the study and evidence was itself an exercise in the use of the Internet, which is applicable to Government policy processes. Since April I have sent or received 294 messages on the topic of outsourcing, have appeared before the Senate and have been interviewed by radio and the press. While I do not claim to be an expert on outsourcing, I will make a few observations:
In its Senate submission the ACS recommended caution on whole-of-Government IT Outsourcing, warning that it was a high risk approach, for individuals, organisations and for the community as a whole. The ACS paper concluded that outsourcing assessment processes are a valid tool for Government and private organisations in matching operations to strategic needs. However, particularly in the case of government there is a need for processes to be open, accountable and participatory. Decisions made behind closed doors and communicated as a fait accompli are not in the public interest. It is important that all those involved understand their obligations and the risks, as well as the potential benefits.
Given that outsourcing is a valid tool for use by Government how can the Internet be used to implement it? Put simply, the Internet can be used to deliver government services and to help run the Government. This doesn't require any new or revolutionary technology; that technology is already here and the revolution is already happening. However, it requires new skills for the people involved both in the outsourcing client organisation and the outsourcing company. In particular it will require new management skills for senior executives.
In response to growing concern from ACS members I put a proposal in May 1997, for the ACS to provide advice to members on outsourcing issues. The ACS Management Committee endorsed this proposal on 13 May 1997.
On Tuesday 27 May the Senate referred information technology outsourcing to the Senate Finance and Public Administration References Committee (3), with a reporting date of 25 August. The ACS had been providing copies of its work on outsourcing to the committee secretariat and made some suggestions as to who in the IT industry would be useful to talk to.
On Tuesday 24 June, Ian Dennis, a newly elected fellow of the ACS and David Goble, MACS, both of Whitehorse Strategic Group Ltd, agreed to prepare the ACS position paper. I wrote them the one page brief for the work, which I had prepared in consultation with the ACS Council.
The brief gave them three weeks to write a four page document to provide advice to IT professional members of the ACS on issues to consider in preparing for and working with outsourcing. A secondary purpose is to provide a submission to the Senate Committee.
Ian and David met the deadline and almost met the space limitation (producing about six pages, rather than four). I issued a draft for comment on-line 4 July (4) and a media release 11 July (5).
I issued a second draft of the ACS paper on 27 July (6).
With some minor editing, the final version of the ACS paper was issued on 6 August (7). The ACS made a submission to the Senate committee the same day. The submission consisted of a one page letter (8) and a copy of the paper. As the committee secretariat was reluctant to accept an electronic submission, I printed out a copy. This was about the first copy I had to print after weeks of discussions, drafts and hundreds of comments.
On 1 September the Senate Committee formally invited the ACS to give evidence at a public hearing on Friday 5 September. Ian Dennis FACS and myself appeared for the ACS.
Dr Edward Lewis, Senior Lecturer, School of Computer Science, Australian Defence Force Academy and Professor Peter Weill, Director, Centre for Management for Information Technology, Melbourne Business School provided an experts view. At the end of the hearing I issued a media release (9), complete with this digital photo, from Parliament House. The full transcript is available in Hansard (10).
With the Senate hearing over, that was about the end of the process for the ACS paper and myself, apart from numerous media enquiries. But what was actually in the ACS paper?
Outsourcing assessment processes are a valid tool for Government and private organisations in matching operations to strategic needs. However, particularly in the case of government there is a need for processes to be open, accountable and participatory. Decisions made behind closed doors and communicated as a fait accompli are not in the public interest.
In general the Government doesn't make things, it processes information. The technology used to process information has remained relatively stable over decades: office buildings, meeting rooms, filing cabinets and the printing press. More recently the photocopier, telephone and fax machine have made a modest change the process.
The Internet is now starting to deliver cheap, reliable, near universal electronic communications. This is supplanting the previous technology very quickly. In the first phase of this revolution we saw the Internet used as a direct replacement for existing technology: e-mail in place of paper mail, web publications in place of paper publications. This technology-by-analogy approach is coming to an end. We will now see the Internet used in ways which have no off-line equivalent.
Information is not a physical good, it does not follow the laws of nature which govern the behaviour of objects in the everyday world and so does not follow "common sense". IT professionals have developed theories and models of how information behaves and methodologies for exploiting those behaviours. Many of these same rules and approaches are being rediscovered by people using the Internet. The models are finding there way into everyday language and business practice. The Internet is now providing insights on how to build and run organisations.
We have the opportunity to redefine, or rediscover, what an "organisation" is, what a "job" is and how to organise work. These questions are threatening to senior managers, both inside and outside the public sector. These managers don't have training or experience with on-line systems. They may have just got used to the idea of having a PC on their desk. They may be able to now use a database application or word processing, but have not been exposed to the raw frontier which is the Internet.
Without some training and experience senior executives simply can't cope with hundreds of messages arriving on-line from people inside and outside their organisation. The problem is not just information overload, it is a direct challenge to how they work, provide leadership and define their authority. At the time when organisations need a new model of leadership and direction, senior manager will try to do business as usual and not notice as the walls of their organisation melt around them.
Robert M. Pirsig wrote (12)The real University...has no specific location. It owns no property, pays no salaries and receives no material dues. The real University is a state of mind.
Pirsig only got it half right. Organisations in general are legal fictions. They can own property, pay salaries, but need have no material existence. Organisations are virtual and so suit computer technology and the Internet. The way virtual organisation are run may be much the same as we have now, minus the trappings of material reality. What will define an organisation really will not change: a common purpose shared by the people involved. But, this may be small comfort to worried managers.
Where government a service is delivered via the Internet, the outsourcing of the function can be facilitated. It should be noted that this only indicates that outsourcing is made possible; if it should be carried out is a wider public policy question.
When a service is made available on-line, all the client knows is what they see on the screen. If they put in an Internet address and up comes a service, they do not know where or who it comes from. This flexibility is one reason why Internet based services need special security features, such as those proposed for the Public Key Authentication Framework (13). Once established on-line and secured, a Government can be easily moved. Only a simple change is required to relocate an agency home page and e-mail addresses from one computer system to another. There need be no interruption to the service, and most users may not notice the change.
An on-line service could be moved from an in-house computer system to an outsourced service provider. Alternatively the system could remain in-house, while the service and support of the information on the system was outsourced, or both the system and support could be moved.
To facilitate outsourcing each service would need to have a separate set of web pages and e-mail addresses. With this in mind, agencies might want to keep separate there general policy web pages and service delivery pages. Distinct services delivered might also be separated, to facilitate separate outsourcing.
Partitioning of information and services to facilitate outsourcing will require additional work when a web service is set up. The skills required are similar to those applied by computer systems analysts and designer. They look at the application and the information needed and then use various analysis and diagramming techniques to divide the problem up into constituent parts. These are then assembled in to function units to be built.
Delivering a public service requires internal information and communication for co-ordinating the service. These have been traditionally provided using paper based manuals, face-to-face training courses, circulars, manuals and meetings. People had to be in one close physical proximity to work together.
Internal communication and information can now be provided using internet technology on an internal corporate network called an "intranet". There is nothing magical or special about an intranet, its just a bit of the Internet which has been cut of from the rest of the world, or hidden away behind a firewall. The services could have been provided by any one of a number of technologies over the last 10 years. The Internet has just popularised, standardised and lowered the cost of what IT professionals have been trying to do for years. (14, 15).
For organisations building staff information systems it simply does not make sense not to use the web. Staff manuals and commonly used information can be coded as web pages. Databases of client or product information can be interfaced to web forms. Simple transaction systems can be built using the web forms as the interface.
A fad which came and went a few years ago was "groupware"; that is computer software designed for people to work together on-line. The problem with groupware was that everyone had to be using the same product and had to be trained to use it. With e-mail, the web, mailing lists, newsgroups and web conferences, we now have simple standardised groupware, which many people are learning. This can be used to run the business. Even low cost voice and video conferences can be held via the an intranet.
Once the staff member's primary means of communication with the rest of the organisation is via the 'net, there is no compelling reason for the staff to be in the one location. This allows options of home based teleworking or working from neighbourhood offices. However, it also allows the option of the staff not working for the same organisation at all.
The information and services provided to carry out a function can be partitioned and parts transferred to outsourcing companies. Staff of the different companies can work together on-line as easily as those of one organisation.
While the internet may provide the tools for on-line business and people may know how to use them, they will not necessarily know how to use them for business.
Just as there are differences in driving a private car and a taxi, there are differences in recreational and business web surfing. The problem is to get staff to take the Internet seriously as a business tool and apply the disciplines which apply to business correspondence to on-line correspondence.
Staff have to have the security issues of the 'net explained to them. Backup and security of information is important.
The discipline of putting all information on-line can be difficult to learn. The need to keep on-line sources up-to-date and to rely on them can be difficult.
Maintaining personal contact when you are physically separated can be difficult. There may be a need to bring staff together for social events. These might need to be disguised as work meetings or training courses to make the staff feel more comfortable.
While the staff may be learning to cope with on-line working, the managers may not. If you can't see your staff, how do you know they are working? How do you measure your self worth, as a manager if you don't have an office with a size and location set by your "position" in the organisation?