Don't let IT staff manage outsourcing deals, warns Gartner

Outsourcing deals managed by IT staff are more likely to fail, according to research from analyst firm Gartner.

Outsourcing deals managed by IT staff are more likely to fail, according to research from analyst firm Gartner.

Gartner believes that IT staff lack the necessary training and commercial skills to manage outsourcing suppliers and has recommended that companies should consider using external consultants instead.

The claim is based on a study of 20 European outsourcing deals, which found that half fell short of expectations. It also showed that organisations with a predominately technical team in charge of managing suppliers had poor outsourcing deals.

“The more IT people who work on the team [managing outsourcing suppliers] the worse the performance of the overall outsourcing deal,” said Roger Cox, managing vice-president at Gartner.

“You need IT people, but they need the right blend of competencies, such as behavioural and organisational skills, and there is no career path in IT to develop this.”

The leader of an internal supplier-management team would need to have the characteristics of a “good management consultant”, said Cox.

As a long-term measure, companies should train their IT staff in the necessary business skills to scrutinise suppliers, he added.

Gartner suggests companies should invest 3% to 4% of the total IS budget in the critical skills required to build high-performance relationships. "This is not optional, it is business critical,” said Cox.

Philip Virgo, strategic adviser to the Institute for the Management of Information Systems (IMIS), agreed that IT staff need more training to outsourcing contracts.

“The critical thing is relationship management but the courses for this are not easy to find,” he said. “It’s about understanding what your users want and their priorities and what the suppliers are really delivering.”

Robert Morgan, chief executive of outsourcing advisory firm Morgan Chambers, said IT staff had a tendency to micro-manage the delivery of technology in outsourcing deals, which could be counter-productive.

“The technologists always find it difficult not to empathise with IT problems [on the part of the supplier] which lead to targets being missed,” he added.

However, a spokesman for Barclays Bank, which has several large outsourcing contracts with different suppliers, said it preferred to train internal IT staff to manage outsourcing deals where appropriate.

“IT staff can understand both the business and the IT stuff,” he said. “If we have to bring in third parties to manage technologies we want to know that we have a talented team to manage the consultants and the suppliers they are managing.”

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