Maintaining Credibility in a Sea of Outsourcing
November 12th, 2008Companies initiate outsourcing exercises for many reasons, with cost reduction at the heart of most, if not all, of them. Despite the fact that cost reduction is central to many initiatives, the catalyst for outsourcing varies from company to company. In some cases, outsourcing initiatives begin as a “top down” mandate from corporate executives. When this happens, it often is the result of a “credibility crisis” that exists between the CIO (for example) and the rest of the “C-level” suite. Ironically enough, a crisis such as this might have been avoided if only the IT organization had undertaken a proper investigation of outsourcing as part of their annual planning and budgeting process.
We find that the more successful CIOs, and other service delivery executives, proactively evaluate outsourcing options on a regular basis. When senior business leadership asks about outsourcing, these CIOs typically have already conducted a detailed evaluation and are prepared to address very specific questions about the relative merits of various options. Rarely do these CIOs have to “defend themselves” against claims of significant cost reductions when (and if) the outsourcing mandate comes down from above.
All senior executives, including CIOs, should proactively evaluate outsourcing alternatives on a regular basis using a suite of tools prepared specifically for this purpose. These tool-kits aid in the preparation of critical analyses including a detailed baseline of current IT expenditures, a market pricing evaluation or ‘benchmark’ showing what services would cost from third party providers, and an unbiased evaluation of critical services, identifying those which have the highest potential for value or suitability to be sourced to a third party. These evaluations should be done despite pre-existing beliefs about the advantages or disadvantages of ou Read the rest of this entry »
