None of the IT managers at the Gartner Outsourcing Summit held earlier this month seemed to bat an eye when they were warned that a lack of discipline in managing multisourcing relationships could result in “large-scale business disruption”.
Gartner analyst Linda Cohen raised the spectre of such business disruption after telling attendees they need to develop methodical approaches to outsourcing, not ad hoc ones — especially as their companies adopt multisourcing strategies and sign contracts with multiple IT services providers.
“You are heading for a much more complex operating environment, where you have more services delivered externally,” Cohen told the audience.
The key to successfully managing multiple outsourcing vendors, according to IT executives from DuPont and ABN Amro who attended the conference, is retaining strategic planning and architecture design responsibilities in-house.
“[By doing so], you’re responsible for your own destiny in defining how the systems work together,” says Bruce Jacobs, CIO for ABN Amro’s North American operations.
Amsterdam-based ABN Amro is outsourcing its IT infrastructure management, application development and telecommunications services. For example, the banking company finalised application development deals in September with Accenture, IBM, Infosys, Patni and Tata.
The five vendors compete for individual application services contracts, but must work as a team in a “peer-to-peer relationship”, Jacobs says, adding that ABN Amro has, in effect, created an “internal market” for contracting application development work globally.
To manage the different service providers, ABN Amro kept overall IT management and strategic planning internal, and assembled IT teams with people who have strong business knowledge, he noted.
The bank has also established subject-matter experts, staffers who are highly experienced, for example, in how payment or trading systems function. They work with ABN Amro’s IT architects and relationship management staffers to help ensure that the bank’s systems meet business needs.
In addition, ABN Amro has created a requirements analyst job function, with responsibility for turning business requirements into technical specifications for the outsourcing vendors. And, just to be safe, it has retained some in-house coding capabilities “as insurance”, Jacobs says.
DuPont signed an outsourcing contract with CSC in 1997 and also has deals with Accenture and other vendors.
Maryann Holloway, director of alliance management and operations at the multinational chemical company, says it’s important “that both sides understand what their roles are and what they are going to deliver” as part of an outsourcing relationship.
To help ensure that the outsourcing vendors it works with meet its services delivery requirements, DuPont has retained all of its top internal IT management positions. It tries to fill those jobs with experienced managers who are in the middle of their careers, Holloway says.
“We really look for IT leadership skills.”