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April 19, 2004 (Computerworld) -- What business are you in? If you're not in the IT business, pull the plug on your IT department. And I'm not talking about sending the jobs to India.
Kansas City, Mo.-based H&R Block decided in 1999 that it's not in the IT business. So, rather than building an IT infrastructure, the tax preparer turned to Eden Prairie, Minn.-based Digital River.
H&R Block wanted someone to handle the IT that pumps out all those tax forms. It wanted round-the-clock uptime. It wanted all the bells and whistles that come with remote and redundant data centers. And it wanted an easy interface so it could quickly change product offerings and promotions.
Sure, in every company there are those who contend that homegrown IT is necessary because the business is unique. Or that you need your own IT operation because there's no way to offload responsibility for maintenance and changes in a high-pressure environment.
Well, imagine compressing a year's worth of business into four months.
That's life at H&R Block, where frantic taxpayers download tax-preparation software at the last minute. (January and April are the heaviest months.)
The company has moved 97% of its software business to the Internet and doesn't have an IT department keeping an eye on things. Instead, Digital River runs routine tests to measure the ability of H&R Block's Web site to handle the strain of all those downloads.
The strategic advantage of having a third-party partner operate your site is clear: You get to do what you do best.
For your IT needs, you simply build a relationship with a vendor. Then you're just one phone call away from high-quality service.
And you save money. Erik Johnson, H&R Block's manager of online software marketing, says breaking out of the traditional method of delivering software in boxes has cut H&R Block's cost of shipping and materials while helping customers, who don't have to wait for tax software to arrive. It has also eliminated expensive inventory.
Of course, H&R Block is reaping the rewards of greater consumer access to broadband connections. But it has been able to translate that trend into a 10% drop in the number of customer support questions. It has also cut the number of phone operators and mail-processing agents.
What trend have you taken advantage of lately?
And since Digital River handles all IT support, all uploading and downloading of software, and all upgrades and problems, H&R Block can concentrate on marketing and product changes. The company also gets immediate access to sales-traffic and transaction reports.
So stop spending time and money owning and operating an IT system. Do something useful, like your taxes.
Pimm Fox is a London-based journalist. Contact him at pimmfox@pacbell.net.
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