The key to successful IT outsourcing management lies first in defining the boundaries and scope of the role, then in conducting it prudently. The IT outsourcing manager should ensure that: both parties in an outsourcing contract fulfil their obligations; maximum value is achieved throughout the contract; and that risks are appropriately identified and mitigated.
The IT outsourcing manager should be appointed to manage all aspects of the arrangement, be involved as early as possible in the outsourcing life cycle, and be appropriately trained, empowered and briefed in regards to their obligations.
It may well be that this role is, in a particular organisation, carried out by the IT director, or someone called the contract manager. The point here is that the capability to fulfil these responsibilities should exist whatever job title is used.
Our experience over the last decade has indicated that IT outsourcing management is an area that can be significantly under-budgeted for.
Generally, the budget for managing an IT outsourcing contract can represent over 10% of the annual value of the contract, but according to our most recent survey is more commonly 3% or less of the proportion spent. These figures do not take into any account whether the contract is being managed effectively, however. One also finds that phenomena such as multi-sourcing and offshore outsourcing can push up these costs significantly.
The changing nature of contracting means that the contract management role transcends the traditional, more administrative role. To manage today's contracts, a direct role must be played at strategic and operational levels to ensure value for money is achieved and risks are minimised.
l This is an extract from the book Intelligent IT Outsourcing: Eight Building Blocks to Success, by Sara Cullen and Leslie Willcocks, which is published in the Computer Weekly Professional Series
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