Global CIO: Outsourcing Flip-Flop: A CIO Brings IT Back InsideGlobal CIO: Outsourcing Flip-Flop: A CIO Brings IT Back Inside

--Here's then-CTO Ruckh from above: "We had been managing our technology support in-house and saw an opportunity to cut costs . . . . We expect to see immediate costs savings as well as opportunities for long-term savings."

--And FIS executive Roger Leitner, in the same February 2008 press release issued by his company about the new deal with First Horizon, said FIS would "continue to provide solutions to help our clients, such as FHNC, decrease costs and improve service levels."

First Horizon CIO Livesay would not identify the outsourcing company, saying via an email exchange that "we have not disclosed the company that is currently handling information management." So while it is entirely possible that First Horizon and FIS are maintaining some level of contractual arrangement, the banks' press release from last week made it expressly clear that "computer technology infrastructure, including all servers and its mainframe," would be brought back in-house, and that the bank would be building its own dedicated data center.

Last week, First Horizon said its new intent is to leverage IT as a strategic differentiator to provide greater levels of customer value and to adapt more quickly to customer needs and to rapidly changing consumer-banking dynamics.

"We will be able to more quickly and efficiently respond to customer needs to be as competitive as possible in today’s marketplace," said First Horizon CIO Livesay in our e-mail exchange.

"Given the dynamic rate of change in the banking and technology industries, there is a significant need for quick, reliable technology solutions to emerging challenges. The need for rapid responses to regulatory changes, positioning with capacity for growth, and the need to operate with efficiency and effectiveness are all key drivers behind the in-sourcing decision."

Livesay also noted via email that the move away from outsourcing will let First Horizon treat IT more as a strategic business asset and less as a flabby chunk of overheard requiring incessant trimming.

"Information technology fulfills a strategic business enablement role at First Horizon," he said. "Information management is a core competency and competitive differentiator in financial services. Our anticipated growth requires more nimble and flexible information management capabilities that are better managed within the company."

In a related comment, last week's press release about the "in-housing" decision quoted Livesay as saying, "The desire to serve our customers better than any other bank is what's driving us to bring our technology management back inside the company."

This look at one company's radical strategic reversal in just 30 months reveals a long-time truth about outsourcing: like all other tools at the CIO's disposal, it has its place, it has its value, and it has its limitations. I applaud First Horizon's decision to reevalute—and to relentlessly continue to evaluate—the ability of its IT operations to not just meet but exceed and pace business expectations and results, whether ministered in-house or by a services provider.

The core message from Livesay is this portion of what he said above, and it applies to non-banks as well as to First Horizon: "The desire to serve our customers better than any other bank is what's driving us." Of course, he goes on to say, ". . . driving us to bring our technology management back inside the company; but just 30 months ago, his predecessor, Ruckh, was equally bullish about the business value outsourcing would deliver at that time.

So I'd suggest CIOs think much more about the front part of that statement—"The desire to serve our customers better than any other bank is what's driving us"—and then pick the best approach to achieve that rolling objective.

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