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Do's and Don'ts of IT Outsourcing (Part 3)


This is the third part of a three-part series of articles that discuss some general rules around how to outsource successfully, broken down into the following areas:
Part 1 - Strategy - Deciding What, When and How to Outsource
Part 2 - Sourcing - Executing The Sourcing Strategy
Part 3 - Governance - Service Integration, Performance Management and Supplier Relationships

Do Maintain Strong Relationships With The Sales and Operational Managers At Your Outsourcer While we generally look to minimise the number of "points of contact" that we manage at our outsourcer, there is a very strong case for maintaining relatively independent relationships with both the sales and the operations manager assigned to your account. The sales manager (a.k.a. relationship manager, account manager, etc.) is tasked with keeping you happy and generating additional sales - this is generally the primary point of contact. The operations manager (a.k.a. project manager, engagement manager, etc.) is in charge of doing so at the lowest possible cost. It is imperative that you maintain contact with both sides in order to effectively execute changes and improvements to your service.

Don't Just 'Throw It Over The Fence' After months of defining precise requirements, agreeing upon service levels and negotiating price, it is natural to want to step back and 'let the outsourcer do their job'. This is understandable - if you host your servers at an ISP, for example, you don't expect to be responsible for patching or backups... Likewise, why should you be responsible for helping your outsourcer do their job? The reality is that clients can have a great deal of positive (and negative) impact on their outsourced services. Strong involvement is necessary to maintain the governance required to catch performance flaws early, maintain consistent quality and to improve the process over time.

Do Plan For Change A corollary to the above "don't". Nearly every application or IT service will change a great deal over time. Unfortunately, this inevitability is often neglected in statements of work or outsourcing contracts. Develop a culture of exchanging (rather than adding) features or services as the need arises. If you share the effort required to shift service offerings so that they meet your current needs, your service provider should be able to accommodate your needs at little or no extra cost.

Don't Forget Governance It was recently noted in a couple of industry surveys that roughly 50% of outsourcing contracts were not even being measured! Don't be intimidated by the word 'governance', or the bureaucratic structures and litany of metrics and processes it sometimes implies. Take a reasonable approach towards putting meaningful measures and remediation plans in place, and stick to it.

Do Empower Your Entire Organisation The managers, subject matter experts and contributors who work with the outsourcer on a day-to-day basis in delivering IT applications and services are your single greatest weapon in managing performance. These people will be the first to notice if a process is beginning to derail, and they are the most capable people to resolve issues before they escalate.

Don't Be Afraid To Fail Outsourcing contracts must have a well-thought exit strategy. There are a number of reasons why engagements do no work out - from cultural differences, divergent expectations, changing market conditions and evolving needs. While we would hope that day never comes, it is essential that you are prepared to look at alternatives or ending an initiative altogether.

One final thought is that you want to ensure that everyone in your organisation to view outsourcing as an opportunity. Its an opportunity for individual contributors to take a larger management role and its an opportunity to develop staff involved in the core functions of your business. In situations where people move from your business to the outsourcer, they move from a supporting role to a core role, which generally provides greater opportunity for growth. Outsourcing is about as fundamental a business decision as they come, and so your entire organisation needs to fully embrace it.  
 

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