1st February 2017
These days outsourcing has become a normal way for most businesses to operate and it has certainly worked well for many companies, whether providing a specialist skill, a round the clock presence, eliciting a cost saving for your business or all three, it can help you to gain a competitive edge in the market. However, putting important business activity outside the confines of your own network and security is a big risk and can lead to business disaster. Understanding the potential pitfalls before you jump into outsourcing is a great way to reduce your risk.
You and your IT provider have different business priorities, if these are not aligned you could find that your provider does not understand or care about your business and become a hindrance to your strategic goals.
Sometimes, in an effort to achieve an objective, for instance to save money with cost effective offshore resource you can find you have sacrificed other necessities, such as quality or response times.
Working with global and remote resources has its own challenges as well as advantages and occasionally this can include language barriers or the inability of tools to function correctly when being accessed remotely.
Your provider might not enforce the security and compliance measures you would like or expect, leaving your data and confidentially in jeopardy and your business at risk of claims and damaged reputation.
Your provider may come with a wealth of expertise, but what about your legacy systems, internal quirks and historic knowledge? They don’t have your history, culture and business context which can lead to slower response times or complications.
First you need to be clear on what your business will accomplish though your outsourcing. Understand what you want to outsource and why. This will help you identify the best provider to suit this need, for example, if you wish to outsource in response to a regulatory requirement then you need a third party with that expertise.
Establish clear objectives, based not only on the reason for outsourcing but also keeping in mind the current in-house success that you do not want to see decline.
Make sure you involve the pertinent stakeholders and decision-makers in establishing these objectives to avoid core objectives being missed and additional requirements arising at a later date.
Cost-saving is a frequent and valid reason for outsourcing. But don’t let this be your sole focus. You are outsourcing a core business function and it has value to deliver as well as a cost.
It’s easy to get lost in the deal itself concentrating on documenting the cost benefits and fees, terms and conditions and side-line the need to get a good delivery.
Expect to get what you pay for, cutting costs too significantly may also decrease the skill level of the resource you are provided or quality of service. Explore the providers’ standard offering of services to avoid expensive customisation where possible and remember it doesn’t have to be all or nothing.
Don’t just aim to divest the functions you don’t want, understand what makes sense to outsource strategically, i.e. if your aim is to save money, then outsource the tasks that are most expensive and will elicit the biggest saving. Consider your functions separately as a hybrid of outsourcing and in-house functions may be your most effective option.
You and your outsourcer are different companies so will have different visions and aims but that doesn’t mean you can’t be in tune with each other. You have a common goal in wanting the partnership to work smoothly and efficiently and this can be effected by working together with clear communication of requirements and abilities.
To make outsourcing truly effective find a provider well-suited with your culture and business aims, you need your provider to be an extension of your team, not just a cost saver or expert skillset. Look for providers who understand your industry and care about what’s important to you and your end users.
Letting go of control on vital operations of your business is a worry for many and it should not be undertaken lightly – it is a risk. You remain responsible for your business and you can retain your control, through adequate diligence and questioning when selecting a provider and through strong governance and reporting throughout your relationship.
It is common practice to look at the provider’s certifications and references, but undertake a more thorough DD, question the processes, policies and tools used to ensure the privacy, security and integrity of the outsourced systems, applications and data. Ask about your provider’s access controls, encryption, DR plans and staff background checks as a minimum.
Make sure your data will be well-protected with adequate access control, network security measures and physical security precautions; robust governance programs are a part of every successful IT outsourcing strategy.
With clear objectives and DD complete on your provider it is then vital to make your contract and SLA as precise as possible. Ensure that you get absolute clarity on what systems are covered in your contract and what services you can expect to receive to prevent any ambiguities, disagreements or tasks being missed.
To get the most productive outsourcing set up is crucial. Coordinate a carefully managed knowledge transfer capturing any internal processes, quirks and history. This will enhance the provider’s ability to manage your IT smoothly and allow you to concentrate on your core business.
Measure your provider’s performance using your own criteria based on your objectives which you have already communicated to your provider. If you leave your provider to set the measurements they will likely be reported in a careful way to demonstrate their strengths.
Always combine SLA achievement with customer satisfaction and make sure you continue to measure, not just at the outset of your relationship. A successful outsourcing arrangement requires active management and monitoring, not just internally but also comparing to the market, especially in a long term contract to ensure that you are receiving a good service at a competitive price.
If you follow these tips there is every chance that outsourced IT can be a great tool to help you achieve your business goals.