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the key to strategic outsourcing – pt 2

core and context 

by Kenneth Rudich (author’s note: this is a follow-up case study pertaining to the content in Part 1.)

A few years back Arizona State University set out on a mission to improve its operational efficiency by streamlining processes and eliminating waste from its then current cost structure.  Management strategist and consultant Geoffrey Moore calls it “trimming the fat,” and it became not just an objective but an obsession for university administrators.

It all started because the new university president was facing a dwindling budget as federal and state sources got slashed.  The way he saw it, the university was going to have to make a significant shift by learning to do more with less.  And it was going to have to be done – in his mind at least – with immediate and relentless attention.

At the time of this announcement, many doubted whether he could actually pull it off – indeed, anyone with experience on how slowly and grudgingly universities typically handle such matters will understand why.  It was perceived as a herculean challenge, like trying to change the course of the Titanic in time to avoid the infamous iceberg.

the core and context analysis at work

Enter the new Chief Information Officer (CIO) in charge of the university’s technology office.  He was recruited by the president for the single purpose of overhauling an aging and increasingly clunky technology infrastructure.

The CIO was a big believer in core and context analysis.  So for him, efficiency enhancement was only one side of the same coin.  The other side involved the capacity to align the new technology infrastructure with the university’s strategic goals, so as to retain a competitive position in the higher education market.  An inability to achieve that outcome, to integrate technology with strategy, would simply result in the construction of aTrojan Horse system — and an extremely expensive one at that.

The full story of what this ultimately entailed is way too big for a single blog post.  So I’ll narrow it down to one example…one that illustrates how core and context analysis can be used to sharpen an organization’s strategic focus.

an abridged core & context analysis story

As you may recall from Part 1, core and context analysis aims to establish a strategic outsourcing model.  The core is defined by the organization’s specialty, and the context includes every other surrounding activity.  The primary idea is to concentrate as much as possible on core activities, while simultaneously letting go of as many context obligations as possible.

When the new CIO arrived, ASU was ripe for reaping the intended benefits of a core and context analysis. 

Like many higher education institutions, the university typically saw itself in a leadership role and was among the earliest adopters of technology.  This was at a time when getting access to new technologies frequently meant they would have to be built and managed in-house.

Combine the above scenario with decades of growth through accumulation, and the university ended up with a technology infrastructure that was a behemoth in its own right.

After taking stock of the situation, the new CIO observed that the university had its own voice and data networks, email systems, data storage, web services, administrative systems, and more.   Much, much more.  In fact, so much more that it was darn near crumbling under its own weight.

Worse yet, the institution was falling back on its heels over concerns about hemorrhaging money while trying to maintain the upkeep.  As the Technology Officer wrote, “University technology investments – investments in software, equipment and expertise – can no longer be turned over fast enough to keep pace with the increasing rate of technological development.  The rate of software innovation has outstripped an individual university development staff’s ability to keep up.”

And that was not all.  Within this state of affairs lurked an even larger danger for the university to consider.  The fact that IT was constantly playing catch-up left few resources for investing in other activities, like those that would directly assist the institution to assume a leadership role or sustain a competitive advantage.  Instead of fine-tuning its activities to make a pivotal difference, the IT shop generally found itself preoccupied with the everyday minutiae of keeping the system up and running, which prevented it from making a truly telling contribution to the institution’s value proposition. 

For instance, did operating voice and data services on-premise directly contribute to the mission of teaching, learning and research; or would it be better to outsource such services?  Could the institution do a better job of offering interactive web-based services than, say, Amazon or Google; or should some web-services, such as email, be outsourced?

In effect, this analysis revolved around the question of why the institution was dabbling in areas in which it could not excel, when outsourcing would convert them into a strength because they are core for the commercial provider, such as Google (who, btw, is subject to competitive pressures that force it to adapt more quickly than a college or university can)? 

Let’s turn the situation around.  Can Amazon or Google offer a better overall student learning experience, a coherent curriculum built on faculty expertise, or appropriately diverse lab and research facilities, than can a respected institution of higher education?  Can one institution seek to outperform another institution by concentrating on these activities, rather than focus on maintaining the best possible in-house voice and data network or web-based services like search and collaboration tools?

The developers of the strategic technology plan at Arizona State University tackled these questions, and they eventually concluded that the following areas were at the core of what the university technology office should do:

  • to continuously improve the success of its students;
  • to further the effective use of technology in support of learning;
  • to develop sustainable support services for the institution’s researchers;
  • to ensure privacy and security of the institution’s information systems;
  • to enhance the institution’s digital library;
  • to effectively use business intelligence in support of data-driven decision-making;
  • to advance student, faculty, and staff productivity.

From there, and based on this list, every part of the technology infrastructure that failed to directly support these key strategic initiatives – but was needed nonetheless — became outsourced. 

As you might guess, this resulted in the outsourcing of voice and data networks, email systems, data storage, web services, administrative systems, and more.  For instance, the Email system changed from ASU Email to ASU Gmail, with Google assuming responsibility for providing the technology service to faculty, staff and students.

Since then, ASU has made significant strides toward achieving the university’s strategic objectives as proposed by the president, and it has strengthened its rankings in the higher education market.

Have you done a core and context analysis for your business or functional area?  If so, tell us about it.   

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