CIOs’ hands-off attitude to managing outsourcing
contracts is jeopardising the success of those
projects.
IT directors put too much faith in supplier relationships,
instead of using hard metrics to judge outsourcing performance,
according to research from Deloitte. This poor policing could cause
major management headaches or even project failure.
Only a quarter of the CIOs questioned by the research company
had a formal reporting structure to judge their outsourcers’
performance. A further 16% said they monitored this informally,
while the bulk of companies (67%) did not ask suppliers for any
detailed reporting.
Three-quarters of CIOs said they used “the relationship” as
their key measurement of success over more formal criteria.
Deloitte warned that any problems are bound to strain
relationships, if there is no accountability built into the
contract.
This lack of policing, and the fact that companies still seem
hell-bent on outsourcing problems, are behind recent high-profile
failures, says the report.
“If you peel back the lid on these projects, many have been
subject to the same problems highlighted by the research, leading
to higher costs, missed deadlines and lower client satisfaction,”
says Philip Everson, a partner in consulting at Deloitte.
“A watertight contract and transparent reporting will give
management a clearer picture of what the supplier is actually doing
and will also help to avoid problems further down the line.”
CIOs need to keep outsourcing on track by explicitly specifying
tasks in the contract and how they will measure these tasks and be
reported.