Organisations that have successfully used outsourcing consistently cite a spirit of partnership in working with their supplier as a key factor. But when undertaking outsourcing for the first time, what steps should an IT director take to ensure the partnership is a successful one?
The first problem for the IT director is that their own organisation must be as eager, and as able, as the supplier to work in a partnership. Here, the initial barrier is that outsourcing is often felt to be a threat to in-house IT jobs. Any reticence among staff should be tackled by selling to them the benefits of being involved in setting up an outsourcing deal.
Organisations almost always have to retain a significant ITfunction to manage the supplier during the life of an outsourcing deal. They are needed to implement change, monitor service, and represent the user organisation's interests in the context of a deep knowledge of the contract framework and operational processes. The ideal candidates for such roles often emerge from those that are involved in setting up the processes with the supplier, and in the wider market these skills of supplier management are highly sought after.
The primary requirement of both sides of an outsourcing partnership has to be commitment. For the user organisation, this needs to come from an executive sponsor who has hands-on involvement in ensuring success, via membership of a joint management team with the outsourcing supplier.
Here, the basis for the partnership's success is built by the sharing of information and agreement over decisions so that the parties become one team working towards common goals. This approach of pooling staff from user and supplier for IT projects can also be extended to other areas such as change management and planning.
The same approach can work well when dealing with an offshore service provider, although more effort might be required to overcome geographical separation and achieve the sense of true partnership.
For a programme of any complexity, it is wise for plans to include a fair amount of travel by a number of different people to a provider's offshore locations, not only to be assured of progress and capability but also to ensure that the understanding of business requirements overcomes distance.
A recurring problem users can experience with outsourcing is the high turnover of staff on the team provided by supplier. This causes discontinuity in terms of business relationships and shared knowledge.
To overcome this, one approach is for the user to negotiate for all, or part of a named team, to work throughout critical periods of change. For example, the user could stipulate to the supplier that a specialist team provided during a bid process, or working during the establishment of a programme, should stay with the programme for a period after implementation.
Overall, success depends on the cultural fit and combined knowledge of user and supplier, and both are best served by having something to gain from a service provider relationship. The IT director should look beyond the cost reduction benefits of outsourcing, towards enabling strategic gains for their organisation.
Most providers, onshore and offshore, are successfully offering services higher up the value chain (for example, consultancy and business transformation) and looking to deepen existing customer relationships to incorporate these.
Alan Rodger is a research analyst at Butler Group