CIO spoke to many sharp people for this article; people who have been there, done that. Their collective and unmistakable message is that business is essentially about people. The irony is that this is the first thing people forget.
“All organisations say people are their most important asset, but when it comes to the crunch they get too involved in the technology and the numbers,” says Joyner. “Outsourcers provide a service, just like any other business. But no matter what the agreement involves, you must have people you can trust. There is an inclination to think about outsourcing as just software and servers. It’s not. It is about people, no matter how much technology is involved.”
CIOs know that many outsourcing firms have a team that sells the service, and a different team that delivers the service.
“We often find frustrations when these charming, go-getting, intelligent, perceptive people do the deal with our client, never to be seen again,” says Joyner. “You must find out who exactly will be doing your work. Don’t get too interested in who is selling, because you won’t see them again.”
Joyner says it is now common for outsourcing contracts to include provisions that give clients some control over the senior people assigned to them. Some contracts even retain the right for clients to be involved in bonus discussions with people in the outsourcing team.
Planning is another issue. Everybody says planning is important, but in the rush and tumble of doing the deal and making a start, organisations often go into an outsourcing arrangement underdone.
“You really need to know exactly what you want,” says Joyner. “If you don’t know what you want, you will end up buying what the outsourcer wants to sell. A critical issue is that many organisations don’t know what they don’t know.” The reality is that outsourcing companies do outsourcing all the time. So CIOs need somebody on their team who knows outsourcing. Joyner suggests a genuine, smart, outsourcing consultant.
Win-win thinking wasn't part of the first generation of outsourcing
Joyner hastens to add that most outsourcing organisations are “perfectly nice people who try to do the right thing”. But he warns that the natural inclination for any service provider is to do as much as they can and to sell you as much as they’ve got. They’re in business too.
“You must take control,” Joyner says. “Make sure you trust the individuals you are dealing with; work out what you want internally before you get too involved with vendors; and have hard-core expertise on your side.”
Robert Liong, managing partner for consulting and systems integration at Infosys, says win-win thinking wasn’t part of the first generation of outsourcing — both sides were too focused on getting as much as possible for themselves. “I was working on an early outsourcing engagement,” says Liong. “The vendor had no problem coming up with a solution that met our technical specs. But meeting our expectations to deliver a great customer experience was much harder. The vendor was not keen to admit they didn’t really know what we were talking about, and we probably weren’t as good at articulating our requirements as we should have been.
“In that first generation of outsourcing — say, 2000-2005 — we saw a lot of missed opportunities. Clients were naive about the capabilities of the outsourcing partners and keen to outsource ill-defined challenges they themselves were struggling to deliver internally. And in a bid to build their businesses, some outsourcing companies were overly aggressive in their promises. There were some bad marriages.
“In the second generation, we began seeing some serious pre-nuptial agreements — which at least offered better escape clauses if the marriagwe wasn’t working.
“In the third generation, I am starting to see a greater maturity and transparency between clients and outsourcing companies. Outsourcers will expect that technology and business stakeholders on the client side are on the same page — and step up to help broker that shared vision even with competing vendors. Clients will expect outsourcers to be more transparent about their capabilities and business models — so that the final solution works financially and plays to the strengths of both parties.
“Both sides are now asking more questions up front. This takes longer, but it is much less messy and less expensive than divorce.”
Read more in the CIO Australia outsourcing series