Outsourcing
Mistakes: Lack of Accountability, Inaccurate Metrics, and Poor Visibility
Most research on why Outsourcing fails points to the customer as the reason
-- problems arise because outsourcing decisions are made on an emotional
basis rather than one based on hard facts. Too many companies simply do not
know their real I.T. spend. Poor visibility into the I.T. cost and performance baseline
is a critical blind spot that often contributes to the failure of outsourcing.
When they do outsource they frequently use the wrong metrics — metrics focused on processes, not outcomes; or metrics that are used to “beat a vendor up,” instead of improving the overall result. Unfortunately, many executives view I.T. outsourcing as a way of “exporting a problem”, and too often the problem they are trying to export is their own ineffective management of I.T. companies that commit to outsourcing without a strong governance capability do not have any means of controlling partner performance.
In a great number of cases, I.T. outsourcing fails because management:
Assume erroneously that the outsourced I.T. services are the vendor’s responsibility — a responsibility that executives assume can be tactically managed through the constraints, benchmarks, and penalties for poor compliance typically prescribed in service level agreements.
Critically underestimates the level of control required to both implement and sustain a successful outsourcing initiative over time.
Understands the level of oversight required but do not have the resources and necessary visibility into I.T. costs and spend performance.
The strategic importance of management
One of the most important and misunderstood facts about I.T. outsourcing is
that it does not eliminate the need within the company for highly competent
and capable I.T. leaders, managers and business knowledge experts.
To learn more or to have a confidential discussion of any current or future requirements, please e-mail us at info@osft.com.
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