By Mark Gluckman MD Regal IT
Regal IT prides itself on the quality of the managed services, consulting and procurement services it offers, and in the web pages preceding this page we have done our best in extolling our unique features.
However, it’s not that easy, every project is different, a whether a full managed service, a hybrid version, consulting or outsourced procurement no simple “cut and paste” response from a supplier can possibly suffice. The success or otherwise of a project rests firstly on the quality of the request for a proposal from you the end user, and of the ability of the provider in understanding it fully, and replying with a quality solution.
Rather than giving purely my own take on this, I have assembled information below from published articles by CIO’s and local analyst firm IBRS to answer two questions; “what should I outsource?” and “how should I select the right partner?”
According to Niel Nickolaisen, the CIO at Western Governors University in Salt Lake City, writing in SearchCIO magazine, the answer to the question “what to outsource?” is; “it depends.” First he says “never outsource IT activity that supports mission critical differentiating business processes. By this he is talking about activities that a company uses to gain market share, win customers and beat the competition. This is innovation and must be kept in-house to stop IT becoming just a tactical role. Of course he is really talking about a full managed service scenario here, consulting and procurement services would be fine, as indeed might a hybrid approach.
Next he describes parity applications that are mission critical BUT not differentiating, like processing orders or invoicing. These need to be simplified and streamlined, not over-invested in. By all means outsource but don’t over complicate. He puts an ERP implementation into this category.
Highly differentiating BUT not mission critical activities should be partnered out, as should be the activities he calls “Who Cares”.
Niel also makes the point that outsourcing should not be made on price decisions alone, a point taken up by IBRS analysts later in this paper. “I will support outsourcing parity activities, but only to someone who can promise me process excellence. I also require the provider participate in all my IT process such as meetings planning, changes etc.” I concur strongly with Niel on this; we must be an integral part of the team.
Leading outsourcing analyst at Australian consultancy IBRS (see www.ibrs.com.au) Mr Alan Hansell has written several papers on what he calls “Smart Outsourcing” and the correct selection processes a company must undertake when selecting a suitable provider. These papers are available from Regal-IT on request. I will summarise a few of the more important points below.
Alan strongly advises that your RFP be well researched and written, at least up to public service standards, and complex tables be created weighing answers from all vendors. His papers cover many aspects of Smart Outsourcing, and I list a few of them here that in my experience are crucial:
1. Phrase as many questions in the RFP as open ended to elicit an intelligent response. You learn nothing from yes and no answers. Make sure the response is accurately tailored to your needs, not a cut and paste job.
2. Both Alan and Niel stress the importance of a provider deeply understanding your unique business culture, technology and processes. No requirement will ever be the same. Sure get references and independent advice, but test their knowledge of your industry and issues yourself before signing.
3. Make sure the potential provider gives you a value proposition statement that shows how they intend to deliver value to your organisation.
4. As Niel says above, you must bring the provider into your IT processes and manage them as you would your own staff. Look for a happy personality fit into your own IT culture.
5. While providers methodology is important, it’s not as important as getting access to clearly nominated skilled IT professionals who you know will deliver a quality outcome. Tie up the right individuals or select another provider.
6. Alan writes: “Remember, at the completion of the project what your senior management will review is not whether the project’s expense was under budget or was delivered on time, but rather whether quality was delivered. In your selection process focus on who can deliver the best quality.”
Lastly look out for the danger signs as the contract progresses. Stephanie Overby, writing in CIO magazine in the USA lists seven signs that your outsourcing may be in trouble, I’ll list the headlines here but please as above ask me for the article.
1. When you have to bring the provider to all your CXO reviews
2. When you are drowning in change orders
3. When the transaction cost outweighs the benefits
4. When your internal team are morphing into contract jockeys
5. When you have run out of meeting space to house all vendor managers at reviews
6. When you cannot answer fundamental technical questions
7. When the CXO are no longer paying attention to the project, or to you!
This pretty much means you have outsourced too much and are in deep trouble.
In summary I hope you find this paper interesting and helpful and that you give Regal IT an opportunity to discuss these points in detail with you. Our experience and reputation in providing outsourcing solutions in managed services, consulting and procurement gives us a strong insight into many of these points. Our goal of being a trusted advisor allows us to discuss and solve many of these issues. By Regal IT recognising the potential roadblocks in your outsourcing journey, we believe we can be of great value to you.
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