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The Importance Of Project Management When Outsourcing

How often do you read about an outsourcing deal that has gone sour? One of the main culprits of these failures is poor project management. When the outsourcing deal was signed a few years back it was all song and dance at the leadership level. In other words, at the strategic level, all parties reach an agreement, the goals are set, SLA's written, and then a few months or a year later... BOOM! Having worked in the industry for the past decade and seen over 50 different types of outsourcing arrangements it is possible to state that the majority of the deals I have seen fail it was due to poor operational execution as a result of lack of strong project management capability both within the client and vendor.

As commented by Kristen Caretta on this topic in searchtechcio.com, "2010 might be the year of the middle manager. More specifically, we'll see the rise of the IT project manager, with organizations planning to hire more people for this position in the coming year. Changing technologies have blurred some of the lines between business and IT and carved out a larger spot for this role. The days of Dilbert-ish project management stereotypes may be numbered. According to a recent Global Knowledge survey, jobs in IT project management are the hottest positions in this field - coming out on top over network security and network administration. The business, turning to IT to maximize investment and enable innovation, is putting new importance on the IT project manager to make sure those investments truly pay off. Changes in the way technology is delivered, such as SaaS offerings and managed services, mean that being technologically savvy is not necessarily the most important requirement for IT success. Rather than getting under the hood to learn how the car works, CIOs need to understand service costs, risks, benefits, potential ROI and how to properly compare vendors, packages and contracts to ensure they are getting the best deal. In fact, the business is requesting more of a support role to bridge the gap between the technology and the needs of the organization and, in many cases, the CIO or IT manager is stepping up to fill that role".

In our own IT outsourcing deals within the SME market over the past 36 months, it is evident that the single biggest challenge facing SME's in achieving success with their outsourcing efforts is a lack of strong IT Project Management capability. The project manager in a smaller business has a much greater responsibility than in a large corporation where they have plenty of support staff and specific functions to help them succeed. In a SME environment, the project manager needs to ensure strong stakeholder management, take on some of the business analysis responsibility, build vendor relationships, recruit top talent from within the vendor, negotiate pricing, execute development and UAT efforts, communicate changes to IT and the end-user, and complete various administrative tasks. It is at the ground level that an outsourcing deal succeeds or fails; most arrangements stumble during operational execution, and not at the strategic level. Our advice is to hire top talent with a proven track record before going down any outsourcing route, or prepare/train internal teams to cope with the new added responsibilities of managing a third party to help delivery.  

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