The jury is still out on outsourcing IT, says specialist Rob Aalders, but if you decide to take that route, do it properly and give it a good chance to work.
IT outsourcing is “a long, hard slog”, he says, and in New Zealand it is a harder slog than most. Even finding service providers in the phone book is no easy matter, he says. There is no entry for outsourcing in the Yellow Pages.
NSW-based Aalders, the author of The IT Outsourcing Guide, was in the country to talk to IT executives at a conference held by CIO magazine, a sister publication of Computerworld.
His presentation homed in on seven of the 15 outsourcing steps outlined in his book, concentrating on nailing down with the outsourcer details of objectives, performance expectations and responsibilities.
As to the question of how many service providers an organisation should have, Aalders says three is “a comfortable max”, and any more “you’d have to ask yourself why”.
A Telstra, Aalders says, could have more than three, but an enterprise with fewer than 250 people probably wouldn’t benefit from multiple outsourcers.
Several issues arise, he says. The first is making sure the responsibilities of each can be separated, and coverage of hardware and the like don't overlap. Another is the added management overhead of co-ordinating multiple organisations. A third issue is the politics between supplier organisations, what Aalders calls “the ping pong effect”, wherein problems are always another supplier’s fault.
ASPs won’t cover 100% of the business process, he says, though they are a “very seductive” solution to portions of it. Beware of the “barnacles”, he says; the unique requirements of processes.
Aalders says the transformation of service providers into “super-outsourcers” offering a one-stop shop including ASP and full-service, will happen, though not quickly. The reason for this is the helpdesk. Until it “settles down” near to the reliability level of, for instance, midrange hardware, he says, it will be the “undoing” of the super-outsourcer. This is because the helpdesk affects all parts of the organisation, and often the people employed on helpdesks are not the most qualified staff within the outsourcer.
Aalders suggests checking out the staff of outsourcers, and their customers, before signing. Check out their five-year plan and their financial affairs, he says.
Among the “must-dos” of an outsourcing deal, Aalders notes:
- Detail your corporate goals and align them with the goals of the outsourcing project
- Discover the provider’s goals and exactly how they will service you
- Map your domain; Gartner says organisations’ estimates of their IT systems are usually out by about 20%
- Establish concrete evaluation criteria such as proven TCO at price per seat, uptime and ratio of experienced network staff per seat
- Define levels of importance for project elements (“Make it hard for them to bullshit”).
- Get HR, legal, IT specialists, performance specialists, finance and the negotiation team involved in contract formation and plan for its end. For the provider the contract is usually considered the final piece of the sales process.