You’ll invest a significant amount of time and resources defining your needs, seeking out promising candidates, and evaluating options. You’ll need to clearly communicate what the organization needs, and what level of performance you will expect.
Then, if you start working together and feel like it’s not a good match, the relationship could turn sour. And if you can’t turn it around, getting out of an outsourcing commitment is not easy—especially once the resource has amassed an in-depth knowledge of your processes and systems.
Quantitatively, 50% of companies feel their outsourced suppliers are reactive, not proactive; 40% experience a lack of innovation and underqualified resources; and 30% suffer high attrition and costs. (Source: Deloitte)
To mitigate risk, I recommend the following systematic approach to ensure you pick the best outsourcing vendors for your organization. I have used this process on many occasions with great success.
IT departments have been outsourcing for decades. At the same time, there are many organizations who still perform most of their IT services with internal resources. Whether you’re a first timer or have years of experience outsourcing, you should constantly review and update your sourcing approach as part of your IT strategy to ensure you are positioned to support your company’s objectives.
Innovation is an imperative for all organizations, and particularly IT. With that imperative comes the need to fail fast.
In Fail Fast or Win Big, Bernard Schroeder writes that it is not just leadership, culture, and technology that make for a successful startup, but also speed and timing. It has become easier to launch prototypes and get instant feedback via such tools that range from free online tools, social media, crowdfunding, and crowdsourcing. Startups can learn faster and pivot to new options, thus reducing the risk of outright failure.
Entrepreneurs have reached an extraordinarily high maturity level of innovation and failing fast. Startup methodologies have been honed in the US and globally, making small innovators big threats to established enterprises. As a result, larger companies are adopting startup methodologies—including fail fast—for themselves. Unfortunately, many IT organizations are laggards in this regard.
IT should be leading the way. If we don’t, we will be asked to get out of the way!
We believe the only way for an IT governance function to affect the execution of a strategy is to cascade the governance function. When middle management from IT and the business participate in governance, great things happen.
The benefits of “failing fast” have been well documented and embraced in startup circles. Yet in IT, project cancellations are rare. Organizations exert tremendous energy on making the best of IT initiatives that are bound to fail. When failure is not an option, failing fast is a foreign concept.
There are many factors contributing to the fear of failure in IT: culture, governance, strategic alignment, budgeting practices, contract structures, and more. That said, IT leaders need to learn from others.
Sorry to break it to you this way. It’s a fact of life: IT cannot complete its work faster than the business can think of it.
The dependence on IT is growing exponentially, priorities shift constantly, and new opportunities come up daily. The gap between expectations of IT and its capacity is often widened by those executives who claim they are not technologically well-versed, yet assume IT can waive a magic wand and technology will just work.
That IT cannot please everyone is not a problem – it is a reality. Frankly, a hypothetical IT department that satisfies everybody 100% would be so expensive it would defeat the purpose. The key is finding the balance between responsible spending and internal customer satisfaction.
The traditional vendor engagement model is flawed.
Technology initiatives are only getting more and more complex, time consuming and costly. Consequently, the risks associated with technology investments continue to pile up.
Complexity increases the number of weak links, prolonged timelines introduce changes to landscape and priorities, and budgets are inevitably blown by vendors that offer unrealistically low costs that they cannot later sustain. While some organizations may feel that the problem is the result of selecting the wrong vendor, the challenge may in fact be the typical vendor contract.
You’ve heard the phrase, “If it ain’t broke, don’t fix it.”
There are many areas in business where that advice may hold true, but your IT assets are not one of them.
IT assets—including hardware, software and data—start deteriorating the day they are acquired. Yet the tendency today is to purchase, install, and then promptly forget about a technology. Few people or companies realize that when it comes to IT assets, maintaining status quo carries great risks.