This morning I came across an article concerning the effects of IT outsourcing on business segments authored by Stephen Swoyer. This is a fascinating topic and one I am sure many decision makers don’t consider.
I can speak from experience on the effects of IT outsourcing on business segments. Stephen calls them business lines, but segment, line, whatever the term it’s the folks who generate the revenue that pays your salary.
Stephen relates a story of an IT outsourcing experience gone awry. Shadow IT support teams formed inside the business segments to meet their IT support needs. He relates a particularly frustrating experience that the business segment experienced:
“I was told the specific request was something that they had not paid for, something not explicitly covered in the contract, that I was not, under any circumstances, to do anything about it until they paid for it,” he reports. The result, he says, was that he didn’t receive instructions—through IGS channels—to fix the application until a week later. “It was kind of ridiculous, because this would have taken me thirty minutes at the most to do.”
Ouch.
Working in a large corporation requires the patience to understand the lines of processes and the methods of interacting with any support team. Some people beat their heads against the walls, but a well developed process shouldn’t be as painful as that example.
My teams are outsourced teams providing first through fourth level support for desktop PCs, servers and applications.
We’ve been able to effectively manage the outsourced part of our support processes and achieve amazing results due to our unique collaboration. There are three reasons why this has been possible for us:
- Negotiated Service Levels – This is key to establishing a functional outsourced environment. Many outsourcing companies will walk into a situation and commit to service level agreements (SLAs) without completing due diligence as to what is expected. This sets you up for failure.On the other side of the coin, many business segment managers aren’t expected to be active participants in SLA negotiations nor the ramifications of them. For instance, if the outsourcing customer needs to change funding they need to understand the impact on the SLAs.
- Commitment to Customer – As the outsourcing vendor you have to be committed to your customer’s bottom line and their business goals. If you place the emphasis on making money instead of your customer both will lose in the end.
- Team Approach – A culture should be created where the outsourced teams are treated with respect and comradery in terms of meeting business goals. Inclusion is the key here.
While our situation is unique in the industry, I have witnessed first hand dysfunctional IT outsourcing results. These happened due to three primary reasons:
- Lack of Communication – The outsourcing company had a complete lack of pro-active communication with the customer. If the customer doesn’t feel included they’ll be less supportive of your efforts.
- Commitment to Contract Not Customer – The outsourcing company cared about it’s profits more than the customer. There is flexibility in the service offering, but many outsourcing companies see the money first and the customer second. They lose both.
- Lack of Financial Stick – Amazingly, many outsourcing contracts don’t provide a real life financial stick to beat the outsourcing companies with. Many have standard SLA clauses, but that’s it. Be wary of any financial penalties that the outsourcing companies readily agree with.
IT outsourcing can work and it can have definitive, measurable benefits for your company, but only if it is done right and both the outsourcing company and the customer work together.
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