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"The cost benefits get better the more incompetent / incapable your internal IT organization is. "

Yes. There will always be a less stupid solution out there that is not as bad as the bad solution.

Or, you could fix IT. But that takes thought.

Easier to give money to a vendor you can blame...?

Fixing completely dysfunctional F500 IT organizations is something that many, many people have tried across completely different company cultures with maybe a handful of successes I've heard of. Leading huge organizations (especially ones damaged by previously failed leadership efforts - think how attempts to refactor a legacy codebase go and multiply by an order magnitude in number of variables) is very hard and because large organizations tend to have so much capital working for them, IT management failures create a large opportunity (in theory) for optimization by others. In practice, consulting for organizations that don't want to fundamentally change how they do X (or think $ must solve everything and leadership becomes so fragmented into non-communicating middle managers) while wanting large changes to X are the equivalent of an obese person wanting to lose weight without changing their diet or exercising. Yet we know there's a huge "fitness" industry with large profits being made off of those that do not use their products and subscriptions effectively.

Change is tricky. What you said reminded me of an interesting tweet I came across: https://twitter.com/JICare/status/662339652825780224

This is a fairly naive way of looking at it. Often it's easier to deal with an external organization than to fix your own organization's behaviour.

In a lot of pathologically-managed companies or divisions, there is effectively zero chance of an employee being able changing the pathology.

I have heard of a few poorly managed companies pulling out of ruin by using consultants and third party labor to supplement their collapsing workforce. But I've seen poorly managed companies on occasion fire their executives and stabilize as well. People love to spend 7 figures on consultants and refuse to take their advice in favor of suck-ups that recommend that they just slightly change what they're doing or just sit in silence and continue to bill out. This is why I stopped consulting / contracting in the federal government space - nothing I do even if I was a company founder can fundamentally fix even a tiny fraction of the deep flaws. People got rich off of manipulating contracts to do as little as legally possible while the best at delivering were cut because they actually finished the job right. Reward for failure is a system that exists plenty in the private world, but only in public sector is it institutionalized.

This sounds about right. This is why I don't believe in the "industry is more efficient than government" dogma. Large organizations of people are generally inefficient unless extraordinary care has gone into the engineering and maintenance of the organization.

Are there any particularly memorable situations in your consulting career that illustrate the political realities of such organizations? Would be really awesome if you can share any :)

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