Keep IT in-house
The decision Loranger made to bring the Web development in-house was a tough one,
but the right one, according to Cutter Consortium's Highsmith.
A lack of IT talent is a constraint, but the worst strategy, Highsmith believes, is
to outsource everything. "Then you never get the agility, innovation, and
The No. 1 problem with outsourcing a Web-based project, according to a recent
survey by Cutter Consortium, is inadequate project management. Schedule delays plagued
survey respondents' e-projects 79 percent of the time. Once the systems were delivered,
the survey found that these delivered systems met business needs a mere 16 percent of
Which leads Highsmith to ask one unsettling question: "If IT is becoming a core
competency, how can you outsource it?"
The consultant believes that small project components can be outsourced, "but
managing projects and dealing with your own business staff, you shouldn't outsource
Steve Danker agrees. The CIO of Musicland Stores faced a dilemma similar to
Loranger's when his company, a Minnetonka, Minn.-based music retailer with more than
1,300 stores nationwide, decided in November 1998 to try its hand at online sales. "We
were a mainframe shop and didn't have the expertise," Danker says, "but we decided that
through a combination of hiring and training we were going to do this back-end work in-
During December and January architectural and product decisions were made. And the
sites, under the names SamGoody.com, Suncoast.com, MediaPlay.com, and OnCue.com, were
developed from January to April. The sites were launched in June of 1999 with
enhancements made through the next five months.
Challenges remain for Danker. He is developing Web-enabled in-store systems and is
shifting more inventory and purchasing processes to the Internet.
"We've been electronically trading for years using traditional EDI [electronic data
interchange] and we're eager to apply Internet technologies there as well. But we do
most of our supply with five companies, the major record labels. It wasn't even easy to
convince them to go to EDI, so we're not holding our breath for them to move to
Internet technologies." He now has 30 people working on the Web storefront.
The more things change ...
Explaining the Internet's impact on business to other executives can be a big
challenge. Loranger spent a great deal of effort educating execs during the company's
early e-commerce initiative.