Making IT Outsourcing Work
I’m a big fan of Outsourcing. I am a firm believer that if someone else can do it better than you, at a reasonable price, allowing you to spend your time in areas where your true talents lay then this benefits everyone.
This applies to all aspects of life, not just your company’s IT function – why spend your valuable time and energy labouring over something which you don’t really enjoy and won’t do a great job of, when there’s someone else out there who gets genuine enjoyment out of the task at hand and is ultimately capable.
I started Transputec’s IT Outsourcing operation based upon these beliefs…we get financially rewarded to bring our capabilities and experience to bear on our customers problems, enjoying the many challenges that IT presents, meanwhile freeing our customers to focus on their value creation activities. Perfect.
We’ve been doing this now for 30 years, so I’ve pretty much seen it all. In this series of Blog posts I thought I’d share some of those experiences…helping anyone who’s interested to understand some of the challenges and, most importantly, how to address them to make Outsourcing work.
In this first post I’m going to take a quick look at the changes that are necessary within the organisation that may not be immediately apparent when they undertake an Outsourcing initiative.
There are many levels at which IT Outsourcing can occur – especially in today’s “as-a-service” world where for instance I may “outsource” the provision and management of my server environment (IaaS) or my Disaster Recovery facilities (DRaaS) – in this post we’re considering the more traditional Outsourcing scenario where an organisation decides to bring in a specialist partner to take over all aspects of their IT Operation; from the provision of new devices and providing end-user support to managing the infrastructure and applications.
Some organisations take a purely financial view of outsourcing their IT Operation. To build the Business Case they look at the cost of their staff currently performing the duties and do some fairly simple maths to work out how much cheaper in the long-term it would be to get someone else to do it. This in my experience, is where their problems start.
The decision makers should really be looking at IT Outsourcing as a way of creating more value in their organisation. If (and this is a big IF) they choose the right outsourcing partner they’re acquiring new capabilities in IT, access to emerging technologies and relationships with vendors that they’ve been able to have before.
This capability is what they need to leverage to get the maximum benefits possible. At Executive-level they should take the “operational” day-to-day aspects of IT support as a given (although this needs a lot of work to get right – we’ll discuss this in a later article), and they should be focussed on how to get the most out of this valuable extension to their Business that they’ve created. But instead they’ve focussed on cost-reduction first and therefore haven’t set themselves up for success.
So what really needs to happen here?
In the earliest stage of the Outsourcing process…way before any major decisions have been taken…we advise our potential customers to start thinking about the new capabilities they’ll need when someone else is running their IT Operation for them.
Experience tells us that they’ve benefited over the years from having an internal team of “doers” that work hard to make things happen and keep everything running. Quite often a customer is unaware of how much work above and beyond the day-to-day support function the IT team is really doing – it comes as quite a shock later when they’ve outsourced and they can see the additional workloads.
Because of this, it’s important that (prior to Outsourcing) the Customer puts their own house in order. They need strong processes which formally capture emerging business demands and translate these into a portfolio of projects, across which the priorities are understood and agreed.
Having this level of visibility before Outsourcing occurs helps the Leadership Team understand the typical additional workloads and it also helps the incoming party to understand what the pipeline of projects looks like to make sure that the resources and capabilities needed for delivery are considered early on.
Most importantly it creates the foundation of the “Demand Management” function which will be critical when Outsourcing has occurred.
Going back to my earlier point, with the right Outsourcing partner the organisation has acquired a whole set of exciting new capabilities that should be leveraged. It is through the Demand Management function that this should be fulfilled. The Outsourcing partner brings a world of experience, exposure to emerging technology and vendor relationships that can utilised to develop and implement solutions to serve the Customer’s continuing business needs much quicker than ever before…but only if those needs are captured, understood and prioritised. Hence the importance of strong Demand Management.
Another important aspect we urge potential Customers to consider is the development of capabilities in Service and Supplier Management if they don’t already exist.
In the new world, the Service Provider (if they’re professional) will be delivering services in accordance with ITIL best practices and in line with their Service Contract. The Customer’s Service Manager is the main interface point and represents the needs of the business, making sure that the service provided continues to meet those business needs.
It is therefore important that they understand the language of professional service delivery and are able to challenge the Service Provider to find innovative ways to continually improve the service.
These changes are not difficult to implement but they are hugely important, and it’s better to tackle them before Outsourcing rather than later on for obvious reasons.
In our experience if strong Demand, Service and Supplier Management capabilities are developed and maintained with the Customer the Outsourcing initiative is seen as a resounding success.
Without these a level of success is not impossible…The day-to-day support needs and financial targets should be satisfied but the business is missing out on the opportunity to capitalise on the huge potential benefits that Outsourcing can bring.
Chief Executive Officer (CEO) at Transputec Ltd.