Maintaining Credibility In A Sea Of Outsourcing-xingbayounichunnuanhuakai

Outsourcing .panies 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 .pany to .pany. 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 .es 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 outsourcing. They also serve as constructive assessments that routinely identify gaps in an organization’s cost and service .petitiveness as .pared to the market or industry best practices. This proactive stance on outsourcing can mean the difference between a credible response by the CIO based on knowledge and detail, or a credibility crisis for the IT organization. A Major Source of Outsourcing Ideas As previously stated, a very .mon trigger for outsourcing is potential cost savings. Vendors know this and use it to their advantage by regularly promoting significant cost reductions, service level improvements and mysterious economies of scale with very little detailed knowledge about an organization’s current operating environment or future requirements. These statements are often generalizations based on untested assumptions about the client’s environment, leaving executives to determine whether the assumptions apply to their organization’s specific business circumstances or not. Unfortunately vendors don’t often make savings claims directly to a CIO or others in the IT organization; instead, they are made to business executives, including CEOs, CFOs, and at times, to specific board members. Regardless of how well versed these executives might be in IT, many may not fully understand or appreciate the nuances of specific vendor claims as they relate to their specific information technology environment, direction or future requirements. Consequently, it is possible that one or more members of the leadership team will give too much credibility to unsubstantiated vendor claims or too little credibility to their own IT organization’s analysis. Unfortunately this can lead to a CIO having to prove unsubstantiated claims wrong or succumb to the pressure to outsource because they did not have the right information to support their position. In .panies where a credibility crisis with leadership exists, CIOs are typically faced with a real dilemma. In some .panies, the IT organization may not be seen as a partner in solving business problems; in others, it may be viewed as an obstacle to achieving the .pany’s business goals. Regardless, an outside vendor’s claims of cost savings could be used to further question the credibility of the CIO or IT organization and drive leadership closer to a top-down mandate to outsource. Fortunately, a market price benchmarking exercise, coupled with a detailed financial baseline evaluation, can quickly answer any cursory claims of savings initiated by a vendor. If these are well understood beforehand, not only does this provide a timely and relevant answer, but it also improves the standing of the entire IT organization, most notably the CIO. While IT outsourcing is just one example, the problem is .mon to a number of other functional areas of a business that may represent potential opportunities for outsourcing including finance, HR, and other business processes ranging from retail support to manufacturing. Proactive sourcing evaluations should be conducted regularly, perhaps as part of the annual business planning or budgeting process. Sincere efforts to make build vs. buy decisions about each technology silo or service tower support an unbiased approach and will make it easier to engage senior C-level executives early in the strategy formulation and decision making process. In the end, it is all about doing what is right for the business. This we believe is best done by evaluating outsourcing on a regular basis, in detail and using proven benchmarking and financial toolsets designed specifically for that purpose. The Devil is in the Details In addition to understanding all of the financial details; executives need to consider the economics of outsourcing. Any benchmarking exercise or evaluation should include the costs associated with procuring and negotiating an agreement (anywhere from 2% to 8% of the total contract value) as well as the added costs of ongoing contract governance and administration (typically 3% to 5% of the annual contract value) in addition to the sourced costs for each scope of work that could be sourced to a third party. Uncovering and understanding these costs is not a trivial exercise. Benchmarks must include detailed market pricing to ensure an apples to apples .parison often to the smallest levels of detail including infrastructure assets, application inventories, and current service level metrics by technology or service tower. Of equal importance is the use of benchmarking and detailed financial analyses early in the strategy development process, prior to the creation of savings expectations within an organization. Waiting until a mandate .es from above or after third party vendors have created expectations for savings with key executives is a mistake that can be avoided. Another proactive step .panies should take is to fully evaluate the risks associated with outsourcing versus internal service delivery options, even when a sourcing initiative is not actively underway. Contracting with any third party to provide core IT or business process services introduces new risks including flexibility, responsiveness, and adaptability of the selected provider. Identifying the potential services with the highest/lowest risk is a strategic exercise which should be done in conjunction with the benchmarking exercise and updated regularly. Finally, while some organizations may be capable of conducting internal benchmarking and financial assessments of IT infrastructure and service delivery towers, most are not. Relying on an outside third party with expertise in these areas not only ensures that a .pany is guided through the benchmarking process it brings much needed objectivity to what can be a highly politicized and emotionally charged strategy development or decision making process. CIOs and other C-level executives would be well served to seek out advisory services firms that routinely conduct strategic sourcing analyses, are intimately familiar with benchmarking processes and toolsets with deep experience in the delivery, strategic tradeoffs, and current market landscape for outsourcing pricing and packaging. In summary, CIOs can better manage expectations around outsourcing by proactively conducting regular benchmarking exercises as part of the annual business planning and budgeting process. Armed with credible, detailed information about how current infrastructure and service .ponents .pare to the marketplace or industry best practices CIOs will be better positioned to deflect unwarranted criticism and do what is right for the business. Finally, using proven processes, purpose-built benchmarking tools and relying on an experienced advisory services firm not only provides needed direction and guidance through a .plicated process, it also prepares the IT .anization to objectively answer strategic questions of critical importance to the .anizationbefore senior leadership asks. About the Author: 相关的主题文章: