Don’t outsource IT. Insource digital innovation

Outsource IT, insource digital innovation

For many SMEs IT services has become a commodity purchase, ripe for outsourcing and cost reduction. But while there might be a few dollars to be saved in outsourced IT the real value proposition is in insourcing digital innovation.

For many organisations IT is considered a non-core activity. We value it based on price, uptime, security and timely support. Although these are valid drivers of value, they ignore the big picture. Technology is one of the key drivers of change in the business environment. IT, or more broadly, digital services are increasingly important source of innovation and revenue growth (a recent McKinsey research report suggests that 1 in 5 CEOs expect revenue from digital to increase by more than 30 percent in three years’ time).

[tweetthis]IT can drive value through innovating business processes to improve productivity.[/tweetthis]

To tap into this potential we need to start thinking differently about our IT partners. We need to stop looking for a substitute service provider (where value is driven by cost) and instead look for ways that technology could drive value through augmented or modifed business processes (where value is driven by productivity and improved decision making).

The fast pace of technological change and limited IT budgets means most SMEs cannot afford a full time digital innovation resource. To access emerging value opportunities (such as cloud and mobile technologies) SMEs will increasingly need to partner with external suppliers with the requisite expertise.

But to do so many SMEs will need to dramatically rethink the role of technology in their business and will also need to trust external providers to deliver the expertise they choose not to maintain in-house. Ultimately, whether they are looking at technology as a cost or an opportunity they will probably get exactly what we are looking for.