4 Keys to Successful Outsourcing

4 keys

Any organisation looking to outsource their IT should factor these key considerations into their outsourcing thinking.

Outsourcing your IT can be fraught with problems. Too many organisations focus solely on the IT – this is usually where the problems start. By incorporating the following considerations into your planning you will greatly improve your changes of success.

 

1 – Are you clear about your requirements?

The biggest reason that projects fail is because the requirements were not properly understood. IT Outsourcing is no different. It’s no good asking a service provider to manage your services for you if you don’t know what “good” looks like.

If you don’t know where to start with this, most service providers will be able to help you – they know the questions they need answering to help them construct their solution, but the drawback is that it puts you at their mercy and (whatever they may say) their objective will be to construct a service model that is most beneficial for them.

If you can’t do it yourself, it is wise to bring in independent consultants to produce a clear statement of requirements on your behalf. Good consultants will engage with IT and (crucially) the business to capture and articulate requirements so that the following are crystal clear:

- The services provided to the business, the processes or outputs they support and their criticality

- The availability targets and Service Levels Agreements for resolving outages or responding to requests

- The current and future capacity requirements (data, users, etc.)

- The business continuity needs in recovery point (data loss) and recovery time (time to recover) terms

- Financial models – do you need commoditised pricing, Capex, Opex, etc?

One way or another, it’s vital these requirements are understood and agreed by the key stakeholders or you are really setting yourself up for failure.

 

2 – Is your business ready for outsourcing?

Outsourcing your IT may seem an attractive option…

- “We want to relieve the headache of managing our own IT.”

- “We want to stop making big capital investments and would prefer a fixed monthly charge.”

- “We want to focus on our own value-creating activities rather than the distraction of IT.”

We’ve heard all of the above and more, and they are all good reasons to consider outsourcing. But you also need to think through the advantages of having your own IT and make sure that you don’t lose these benefits as part of your outsourcing deal.

We often get involved with customers who have had bad previous experiences having chosen outsourcing partners who operated a rigid service whereby every little change that the customer wanted to make cost more money and took too long to implement.

Many businesses rely on the flexibility and agility of their internal IT department to quickly meet demands their customers have or to get new products to market quickly – if these things are important to you too, it’s vital that you make the right choice of partner and are clear about the level of service you require.

 

3 – Who is the right partner?

There are numerous considerations to determining who the most appropriate partner for your business is, the obvious one being that they must be able to meet all of your stated requirements.

Hard and fast requirements aside (as many service providers should be able to deliver them) the next most important is how good a fit that provider is for your business.

Size is important but so is sector experience.

You want to find a partner who will give you the attention you deserve but without you being too big for their business. This means understanding where you’d fit into their account structure – would you be in their top 5 or 10 accounts or are you going to be too small to get noticed? If you are going to be their biggest customer, by how much so? Does that place too much strain on their business?

As well as finding a partner of the right size, you want a company who understand your business sector. A service provider whose customers are mainly central and local government will really struggle to meet the needs of a customer in the media sector, and visa-versa.

If you run an RFP process, or some other less formal process, make sure that there are questions asked that identifies the size of potential partners, how you would fit into that organisation and what work of a similar nature they’ve done (and with whom) in your industry.

 

4 – What new capabilities will we need?

It’s obvious that you are going to have less staff when you’ve outsourced if you are currently managing your own IT – otherwise it just wouldn’t make any sense. What’s less obvious to some organisations is that they need to develop new capabilities to be able to successfully manage the outsourced operation.

If you don’t already have them, you are likely to need capabilities in the following:

- Commercial/ Contract Management

- Project Management

- Service Management

- Technical/ Security Assurance

If you are a fairly small organisation, this doesn’t mean you need to go out and employ one of each of the above – but someone needs to take responsibility, and have the skills to do so, for those areas. If you don’t, you’ve got no-one to perform the necessary checks and balances to make sure you are getting the service you need and are paying for.

If you factor these four considerations into your thinking early in the process, your chance of a success in outsourcing are greatly improved. The technical challenges are important, but they can and should be dealt with in collaboration with your chosen partner when you have put in place a solid foundation upon which informed decisions can be taken.

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