Outsourcing-Making the right choice: Page 3

Posted September 1, 1999

David Burkett

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Senior management support

The support and commitment of senior management is another key element to making a strategic outsourcing partnership successful. According to the 1999 Compass IT census, CEOs who report their senior IT executive plays a prominent role in strategy development are much more likely to view IT as a significant contributor to business value.

Senior executives who consider IT a poor relation or a burdensome cost center are more likely to view outsourcing solely as a cost-cutting tool or to neglect the relationship altogether. Conversely, CEOs who see potential value and competitive advantage in IT are more willing to take ownership of the outsourcing relationship and to dedicate the resources needed to identify opportunities for enhancing IT value.

Staffing for strategy

The challenges of managing outsourcing relationships raise a variety of staffing issues for both vendors and clients. When a company decides to outsource its IT operations, the role of remaining IT staff (the "retained function") changes dramatically. Rather than "doing IT"-developing applications, maintaining and upgrading systems, and troubleshooting-the retained function's primary responsibility becomes to manage the outsourcer.

Unfortunately, pure technical expertise doesn't necessarily translate into business or managerial acumen. Put more bluntly, the guy running your data center may not necessarily have the skills to manage your outsourcer. This lack of management skills and experience often leads to general outsourcing problems and is especially toxic to deals aiming to achieve strategic value.

If retained IT staff are unprepared to tackle the new, challenging management and business-oriented tasks the outsourcing relationship demands, they'll often revert to their "comfort zone" by performing traditional IT duties. This results in duplicated effort and a poorly managed relationship.

You can solve this problem by making sure IT staff members in retained function have the necessary management and administrative skills. Don't assume that skilled technical staff members will be good managers. You may have to recruit new employees or train your existing employees to perform these new tasks.

Client organizations, meanwhile, should recognize that an effective retained function brings two distinct perspectives to outsourcing management. First, technology management ensures that links are established between IT and business objectives. In most organizations, applications development commands the in-house business expertise this role requires. Typically, this group understands business issues and can identify and define relevant performance indicators.

Second, the retained function must possess the relationship management skills to implement and execute the strategic initiatives defined by aligning IT to business objectives. This job requires administrative, contractual, and people skills-qualities rarely attributed to the techie types in most IT shops. As mentioned above, the existing IT staff may have to be trained or outside talent may have to be recruited to fulfill the relationship and management requirements of a strategic outsourcing deal.

Strategically outsourcing parts of your company's IT group can yield significant business benefits. It's not a silver bullet, nor do the benefits magically and effortlessly appear. For outsourcing to be effective, you must plan carefully, define your goals, and establish objective measures to gauge success.//

David Burkett is president of Compass America Inc., a Reston, VA-based consulting firm specializing in IT and business performance improvement.


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