Businesses across the country continue to see IT outsourcing as the only way to cut costs, ensure projects are successfully managed and remove the hassle of everyday user support.

But for every outsourcing success, there is at least one complete failure, causing costs to spiral out of control and project deadlines to be missed.

It seems almost every day that you open a newspaper and discover that another outsourcing project has reached a disastrous conclusion.

Recently, for example, Capita was held responsible for failing to deliver a new Criminal Records Bureau system while the EDS/Child Support Agency saga continues. Yet outsourcing is still big business even if the positive projects do not achieve the same number of column inches.

More often than not, the relationship between the customer and the service provider is highlighted as the key reason for project failure and escalating costs. Yet, I would argue that flaws lie in the decision-making process on the customer side, well before any outsourcing project is undertaken.

My own experience suggests that the decision to outsource is often taken without due consideration of the pros and cons of the project, with the traditional emphasis only on reducing overall costs. I suggest that the key to making the right decision is to identify a benchmark against which a company can compare itself, to find out whether it should be increasing or decreasing IT spend in order to improve service delivery.

Most companies say that they benchmark but admit that this is a somewhat crude comparison of actual against budgeted spend, which is a very inward way of thinking. What it fails to show is the proportion that is spent on each aspect of IT - whether it is hardware, software, support, maintenance, training, staff or other related costs - to find out whether the company is investing in IT according to industry best practice and advice from analysts. Only this type of analysis can help companies decide whether or not to outsource one or more of the IT functions.

Outsourcing the helpdesk is a popular decision, for example, but support and maintenance costs can often be reduced by investing more in training individual users. The sheer number of support calls can even be reduced by implementing policies and procedures that do not allow staff to download or install new software, because then the risk of things going wrong is reduced.

Businesses need to have clear visibility of their total spend on IT in order to negotiate effective contract pricing. In order to establish effective and meaningful SLAs, robust policies and procedures for IT asset management must be in place. I am neither for nor against outsourcing per se, but I do wonder whether companies are looking at the right figures before undertaking an outsourcing project?

BIOS, Mar 08, 06 | Print | Send | Comments (0) | Posted In Miscellaneous