You were just assigned a new IT project. Do you have the resources — in
terms of manpower and expertise —to get it done within the required time
frame and allotted budget?
If you’re unable to meet any of these
requirements, the project may be a prime
candidate for outsourcing. Now, will you
outsource the entire project or just parts?
“Many decision-makers agonize over
whether or not to outsource. But if we view
it as one of several options, it makes the
process easier,” says Eileen D. Heveron,
Ph.D., vice president, information technology, National University, San Diego.
Smart Business asked Heveron, who has
successfully outsourced numerous projects of her own, how executives and chief
information officers can spend more time
focusing on requirements upfront when
considering outsourcing arrangements.
How can a company determine whether to
outsource part of a project or the entire
process?
Analyze your core competencies. Ask
yourself why you are considering outsourcing — and then ask again. Get down
to the real nuts and bolts of the project, and
consider carefully what parts of the project
or process that you have the core competencies to handle.
If you have the capabilities within your
staff to handle the entire process, within
the timeline expected, to provide the deliverables under the budget provided, then
don’t outsource.
If you can handle some — but not all —
aspects, break the project or process down
into discrete segments and ask yourself if
another organization could do particular
parts or segments cleanly or if you should
build that capability internally.
For example, say you have an upcoming
technology project. You’ve determined that
you don’t have all the right players on
board to make it happen and that it would
take nearly a year to recruit, hire and get
the right people with the right expertise
and experience up and running and
merged with your staff. You only have six
months to finish the project. Outsourcing to an organization that does this type of
work for a living makes sense.
What are some perceived negatives about
outsourcing? Are they valid?
As with any business partnership, agreement or arrangement, there are pluses and
minuses with outsourcing. Some of the
negatives include:
- This is a contract, with contractual
obligations for both parties. If the arrangement goes awry, it is sometimes difficult to
fix without legal intervention. - These are not your employees, so you
will interact differently with them than
with your own employees. - Outsourcing does not necessarily save
an organization money. - Poor quality is often a perception, but
in reality, you can have poor quality with
your own staff as well as in an outsourced
situation.
All of these can be realities, but they can
all be overcome if the CIO and other executives go into outsourcing with the proper
partnership attitude.
How should the company monitor the
arrangement?
There are several considerations:
- If you’ve decided to outsource and
have selected a vendor, check its references thoroughly with other organizations
that have used its services in a similar way
or for similar projects. - Examine the contract length and understand what the ‘bail out’ language
requires, especially in the way of timing. - Vendors will provide you a service
level agreement (SLA). This agreement
indicates what they will do, such as provide you with 99.99 percent up-time of a
network or a hosted application arrangement, with agreed upon maintenance windows, etc. If you want five or six ‘9s,’ meaning 99.999 percent or 99.9999 percent up-time, you will probably have to pay more. - Vendors should meet with you, in person or by phone, almost daily while the
service or project is getting under way —
then weekly, then biweekly, then monthly,
as everything moves along. Updates should
include everything that is in your SLA.
What about end-user/customer satisfaction?
You can internally monitor specific items
within the SLA, such as up-time, the time it
takes from first report to final solution of a
problem and similar metrics. You can also
perform spot checks with your end users
to gauge their satisfaction. You can take
what you learn and provide feedback to
the vendor and, together, you can make
changes to the arrangement with the staff
if necessary.
If the arrangement is no longer working,
consider any contractual issues that may
be involved with ending it. Always have
your own end-of-agreement plan in place
before you enter into an arrangement in
the first place. This will help prepare you
for either bringing the services back in-house or seeking another vendor.
EILEEN D. HEVERON, Ph.D., is vice president, information
technology, National University, San Diego, Calif. Reach her at
(858) 642-8145 or [email protected].
