There has been a lot of publicity about users taking outsourced operations back in-house, but if you ensure you have the right ingredients for an outsourcing arrangement at the outset there is no reason for the relationship to founder.
First, think carefully through the scope and terms of reference for the contract, and take specialist advice on drafting it. Service level agreements should be clear and unambiguous. While the SLAs should be defined to meet the organisation's needs, they should not force the supplier to layer on excessive costs.
It can be useful to get tendering suppliers to indicate where they can improve on defined service targets at little or no cost, and where they can reduce cost significantly for a minor adjustment in service targets.
More talk, more benefit
Allow plenty of time for negotiations. An extra month or two at this stage can be worth millions in saved costs or improved service over the contract lifetime.
Think about what you're prepared to let the supplier do, and what you need - or want - to keep in-house.
Consider outsourcing the routine, measurable activities that need generic knowledge but are not specialisms specific to your business - for example, helpdesk and support. Outsourcing can also help overcome temporary overloads on in-house skills.
Don't hand over strategy - that belongs to your business, not the supplier. And keep control of contract management - if you give this away you've sold your soul.
Keep in-house those activities where you have a good value for money skills base and a stable, ongoing workload. A fully occupied in-house team of skilled project managers may cost you half what your supplier will charge.
And hold on to any areas where only you really have the specialist knowledge and experience to deliver.
Screw them at your peril
When it comes to value for money, remember that if you screw a supplier's price down so hard they can't make an honest profit, then as soon as the service is in place they'll be looking to cut costs - at your expense.
The success or failure of an outsourcing relationship depends principally on people. If the supplier's staff see themselves as an integral part of the host organisation, understand its aims, are seen to be part of the delivery, are dealt with inclusively and given recognition for their successes, then they will consistently perform better.
Among the ways to make them feel involved are keeping them in the loop on relevant briefings, service level achievements and user satisfaction surveys
Aim for a good, open relationship with your supplier team. If you can give credit where it's due, you are then entitled to give criticism where it's due - without falling out.
Every contract and relationship needs a little bit of good fortune to work well. But as golfer Seve Ballesteros used to say, "The more I practise, the luckier I get."
Things don't go right by accident.
- Mike McElwee is ICT director of English Heritage
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