Nice to See the Return of the In-House vs. Outsource Debate

The recent story about First Tennessee deciding to take IT back in house caught my eye because it was the first article I have seen in a long time about a most popular issue from the past. In fact, I looked up my own electronic archive on the subject and found ten articles I had written between 1981 and 2002.Today, I would write a very different story on the subject. It would begin with this statement. Political Correctness (PC) is never a good reason to decide the issue of In-House vs. Outsource; Presidential Choice (PC) is. Bruce Livesay, the CIO in the recent article I mentioned, spoke volumes when he was quoted saying, "It's probably different for every bank in their situation."

It sure is different. There are lots of rules, and in a closet, both methods are right. It's just that when you attach each method to a specific bank, it becomes the right one or the wrong one. That's why the CEO is the critical decision-maker.

Here's a look at reality represented by a story from a client experience. After a five-month project to select the right solution for a $4-billion ten-bank holding company (now $13 billion), the holding company CEO took me aside and said, "Your job isn't complete until you convince 10 independent-minded bank presidents that we're doing the right thing." I said, "Don't worry, I can't stay for golf and I'll be gone right after lunch." He said, "Take my advice, pack a bag for three days."

You had to be there to appreciate what was happening. The holding company CEO was a former U.S. Navy submarine captain. Picture an equal-parts hybrid of John Wayne and Gregory Peck, and you'll understand this man. He ruled with determination and strength but he did it with integrity. He was also an anticipator. The ten presidents were geared up for battle. The "captain" had his resources lined up.

At the end of my rather conventional presentation, the ten mavericks confronted the CEO and asked what he thought. "I accept the recommendation and our IT department is behind it, so we're putting our label on it, and to a man, we are committed to serve your needs."

I went home with four sets of fresh clothes because I always add a little buffer to what smart people tell me. I had packed for five days. Don't give up on smart bank CEOs. They don't have to be computer programmers or loan officers to lead effectively. And consensus management doesn't mean deciding with the crowd, or taking a vote. It means influencing the crowd with correct decisions.

In this case, the CEO worked with the project team from beginning to end. He understood the recommendations and he saw a nice fit for the whole organization. Each bank president saw only one-tenth of the situation based on his limited experience. Twelve years later, the recommendation is still right, thanks to presidential choice, and a succession team that learned well from the now twice-retired boss.