Calculating Costs of Developing An Insourcing Strategy

It all seemed so easy five years ago. Outsourcing technology was hotter than the stock market, and an easy sell to the board of directors: We’ll reduce costs, improve performance and ensure competitiveness—it’s that darling of corporate-speak, a “win-win.”

But that win-win has turned into a technology hangover. Your company, a $13 billion retailer, is treading water while competitors sail ahead with sharp new systems that threaten to eat into your market share. Cost savings never materialized, and your vendor-driven technology is lagging, especially in crucial areas like the supply chain and interstore connectivity. Clearly, it’s time for bold action. And insourcing—taking control of your technology services and building an internal operation—is jus`t the ticket to help you…well, reduce costs, improve performance and ensure competitiveness.

But look before you leap. Two of every three outsourcing contracts fail, according to Gartner Inc., and the reason is painfully simple: bad planning. The same goes for insourcing, so do your homework. Your first task will be to create a comprehensive insourcing strategy, which you will build in three high-level steps: Discovery, Analysis and Execution. This essential 10-week investment in knowledge capital and planning will pay dividends in the massive deployment that lies ahead.

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