Critical.
Authoritative.
Strategic.
Subscribe to CIO Magazine »

9 Ways to Avoid Outsourcing Failure

A three-part approach to maximizing the value of an IT outsourcing deal
Page:

How often do IT oursourcing deals fail? The numbers vary depending on which study is cited and what definition of failure is used. But executives initiating or tending to an IT outsourcing relationship must be constantly sobered by the fact that, from a purely statistical viewpoint, their deal stands about as much chance of failing as of succeeding.

Millions of dollars are often in play in an IT outsourcing deal, along with the hopes of management and investors in the business transformation that outsourcing can deliver. So it is to everyone's benefit to have the means in place to deal with the problems which, perhaps inevitably, will occur.

However, what IT decision makers really need is not just better triage but better preventive medicine along the entire lifecycle of their outsourcing deals. Issues and challenges can appear quite different depending on where they occur in the course of a relationship. What might be a catastrophic problem in year two or three of a deal might have been only a small issue when the seeds of the problem were sown at the contract or transition stage.

Based on our experience and research, we recommend that IT outsourcing buyers take a three-part approach to maximizing the value of their IT outsourcing deal.

  • Prevention. Focus on the risk mitigation capabilities and governance structures that anticipate problems before they occur and that keep an outsourcing relationship on track.
  • Quick response. Develop the diagnostics and "early warning systems" that identify problems quickly and then address them before they mushroom into deal-killing catastrophes.
  • Retooling. If things go badly wrong, have the mechanisms at the ready to bring the parties together, re-examine the original deal intent and retool or refresh the relationship where possible.

Page:

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: Billion, Burton Group, Finish Line, IBM, JP Morgan, Logical, Milestone, Morgan, Unisys, Viewpoint

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
Users posting comments agree to the CIO comments policy.
Login or register to link comments to your user profile, or you may also post a comment without being logged in.
Related Whitepapers
Latest Stories
Community Comments
Latest Blog Posts
Whitepapers
  • Case Study: HJ Heinz
    Heinz has trusted Sophos to protect its desktop users and email systems from malware and spam for many years. As part of its multi-tier approach to IT security, the company needed more robust protection against web-based threats and the use of unauthorised applications.
    Learn more »
  • Keeping up With Ever-Expanding Enterprise Data - 2010 IOUG Database Growth Survey
    A majority of respondents report having performance and budget issues due to exponential data growth. Those companies with the highest rates of data growth, in fact, are eight times more likely than slow-growth sites to be seeing significant increases in their storage budgets. New processes and tools are needed to help organizations take control of the massive volumes of information now moving through their systems. The IOUG survey looked at approaches being taken by organizations to manage their growing data stores, and what still needs to be done.
    Learn more »
  • Optimizing Storage and Protecting Data with Oracle Database 11g
    This paper focuses on key Oracle Database 11g capabilities that help IT departments better optimise their storage infrastructure, enabling administrators to deliver a cost-effective, scalable data management platform that is easy to manage, reduces costs, and protects data while continuing to deliver the performance and availability that today’s businesses require.
    Learn more »
All whitepapers
rhs_login_lockGet exclusive access to Invitation only events CIO, reports & analysis.
Recent comments