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How to get IT Outsourcing right

Conclusion: At IBRS, we often find that the performance of IT Managers is weighed too heavily on short-term criteria. In such environments when outsourcing is being considered, the pressure to minimise current costs and to be seen to take quick, decisive action can result in on-going problems and higher than anticipated costs. There are, however a number of strategies that organisations can adopt which will lead to significantly better outsourcing outcomes.

Benchmarking: Worth the effort?

Conclusion:An often reported issue with our clients is that they find the process of benchmarking costly and time consuming, while rarely does it provide them with worthwhile information. After discussions with those involved we have found that this dissatisfaction is often due to a small number of issues which could have been resolved prior to undertaking the benchmarking process.

Outsourcing service providers: How to pick the right one

Conclusion: The phase of the outsourcing lifecycle that involves the selection of the service provider is where the buying organisation has the opportunity to make a decision that can make or break the outsourcing initiative. A considered approach that includes an analysis of both the buying organisation requirements and potential service providers' capabilities is the most likely way to achieve a successful outsourcing outcome.

Contract termination: Beware it's not the end of the road

Conclusion:All contracts eventually terminate, however the reasons for the termination and the way the termination is handled can lead to different outcomes. To minimise the risks associated with contract termination it is essential that the buying organisation gives due consideration to this event while in the early stages of the procurement cycle. Unless the procurement contract is drafted to cover the issues that can arise as a result of termination, the buying organisation can be faced with significant business disruption, financial penalties and potentially even legal action.

Performance Management: Getting the most from your suppliers

Conclusion: One of the key activities in Contract Management is the governance and performance management process that is used to ensure that suppliers meet their contracted deliverables.1 Despite the importance of this process to the achievement of the goals surrounding the contract, in many situations contract managers report that the performance targets and related governance processes have not worked, and in some cases, actually hindered contract performance.

My procurement contract: Leave it to the lawyers?

Conclusion:Despite the importance of the contract in the procurement process some IT organisations continue to delegate full responsibility for contract preparation to their legal group or to external legal advisors. This can result in an overly legalistic document which may also fail to adequately address the non legal requirements that a buying organisation also needs in the contract.

Last word: IT outsourcing: Short term gain, long term pain

Particularly during the tough economic times, we find that the performance of CIOs can often be weighed too heavily on short-term criteria at the expense of strategic long term goals. In such environments when outsourcing is being considered, the pressure to minimise current costs and to be seen to take quick, decisive action can lead to significant longer-term problems.

Contract management part 2: What has risk got to do with it?

Conclusion: Many organisations have found that as the level of risk increases in their contracts, the potential benefits that can be achieved from enhanced contract management also increases. A process that involves risk identification and the quantification of the probability of these risks occurring can help guide organisations in determining the approach that they should take to the management of their contracts.

Contract management Part 1: How much do we need?

Conclusion: Contract management is the longest activity in the procurement lifecycle. As an example, this activity may run for well over five years with an outsourcing contract. The potential for this activity to have a major impact on contract outcomes means that buying organisations must ensure that they apply an optimum mix of resources and executive overview to this activity.

The Outsourcing lifecycle: An IBRS master research paper

Conclusion: Outsourcing IT can involve significant ongoing expenditure for buying organisations. A systematic approach to this activity with the right level of senior management involvement is the best way to achieve your outsourcing goals.

Tendering: A critical part of the procurement cycle

Conclusion: All organisations are involved, at one time or another, in procurement. This is either through the sourcing of goods and services, or the supply of their products and/or services to buying organisations. Despite the importance of procurement many managers in IT do not fully understand the process and as a result do not take advantage of the opportunities that a well- planned procurement project can deliver.

Outsourcing transitions: A risky business

Conclusion:The transitioning of work being outsourced from client to service provider is the highest risk part of any outsourcing deal. If problems arise in the transition there can be serious consequences to the client organisation's business activities, especially in situations where the availability of IT systems is critical to business operations.

Despite this many clients organisations take a "hands off" approach to the transition, as in their view it is a service provider responsibility. The client executive must not abdicate responsibility and instead must take an active role in overseeing the transition.

My Desktop RFP: Getting the most out of it

Conclusion: Many organisations overcomplicate their desktop RFPs with technical jargon while underplaying some of the key operational and commercial considerations associated with their desktop procurement process. The end result can be a contract that while providing a desktop that meets the organisations technical needs, falls down in commercial areas such as competitive pricing over the contract life.

Desktop RFPs: What is there to plan?

Conclusion: Organisations that allocate insufficient effort to planning for their desktop RFPs run the risk of achieving a sub-optimal outcome from their RFP. Less than competitive pricing over the contract life and a mismatch in buyer and vendor expectations are just two examples of the negative outcomes that can result from inadequate planning.

Change management: Making sure you control the change

Conclusion: Project managers often find management of the change process one of the hardest aspects to deal with in their projects. While they have been trained to deal with facts and figures using templates and other project management aids, rarely do they have the necessary skills and experience to successfully manage the workplace change associated with their projects.

Offshore Outsourcing: What's all the fuss about?

Conclusion: Most decisions to outsource IT projects or functions offshore are based around the potential to make significant cost savings. There are however a number of other considerations that should be addressed before any final decision is made. If your organisation takes a measured approach to the activity, uses outside experts where necessary, and develops rigorous plans to address issues identified in the planning and successive stages of the project, then there is a high probability that your offshore outsourcing initiative will be successful.

Outsourcing agreement negotiations: Part 2 - developing your negotiation strategy

Conclusion: A carefully thought through negotiating strategy building on the concepts needed for a Win – Win result will provide the basis for a successful outcome to your outsourcing agreement negotiations. It will also provide for the opportunity to think through what will need to be done if a successful outcome cannot be negotiated.

Program Management: The Foundations for a Successful Outcome

Conclusion: The ability of organisations to implement major strategic business initiatives is to a large degree dependent on their ability to successfully execute the program of projects on which these strategies are reliant. Despite the importance of such programs most organisations, while accustomed to the demands of managing individual projects, often lack the skills and experience required to manage the complexity of such programs. The recruitment of an experienced program manager to lead the program and an integrated approach to program governance and planning can go a long way to ensuring a successful outcome.

Vendor Relationships - Building the Right Mix

Conclusion: To get the most from their IT vendors, buying organisations must understand the underlying importance of each of their vendors to the organisation, and their potential to work with the organisation to help achieve business goals. A structured approach to building a vendor portfolio will allow key vendors to be identified and for the process of building strategic, partnership type relationships to be initiated.

Stakeholder Management – Critical to Your Project Outcomes

Conclusion: Stakeholder management is a critical, but often overlooked aspect of project management. Insufficient attention to the needs and attitudes of project stakeholders can lead to project failure even when the more well known components of project management have been addressed.

Last Word: Planning to Outsource? You may need some help.

Your organisation is planning to outsource some of its IT functions. You have a competent purchasing group, a long standing arrangement with a firm of legal advisors and an experienced IT management team ready to go. So your expectation is that you should be able to handle the selection and transition to a service provider without resorting to external advisors.

Your outsourcing initiative: Why it’s not working

Conclusion: When outsourcing deals are not working, buying organisations often look at contractual remedies as a way of resolving their problems. This can have unintended consequences, such as a breakdown in the buyer/ service provider relationship or added costs due to contract termination.

Effective Outsourcing: It's all in the relationship

Conclusion: Organisations considering outsourcing are increasingly focusing on the ability of service providers to implement effective relationship management in their outsourcing arrangements. A systematic approach to the evaluation of service provider relationship management capabilities is more likely to lead to the selection of a service provider who will be able to work with the buying organisation to help it achieve its outsourcing goals.

Outsourcing Agreement Negotiations: Part 3 - Getting the process right

Conclusion: Success in negotiating an outsourcing agreement requires a well thought-through negotiating strategy supported by an appropriately structured negotiation process. To achieve this the buying organisation must develop an understanding of the negotiating style likely to be adopted by the service provider, as well as any other characteristics that are likely to influence their approach to the negotiations.

Last word: The importance of change management in your IT projects


Project managers often find management of the change process one of the hardest aspects to deal with in their projects. While they have been trained to deal with facts and figures using templates and other project management aids, rarely do they have the necessary skills and experience to successfully manage the workplace change associated with their projects.

Your Outsourcing Agreement: Is it in need of a Restructure?


Conclusion: Re-negotiation is often the preferred option when restructuring of an outsourcing agreement is being considered. If well managed, the benefits of such an exercise can be positive for both the client organisation and the service provider. However, considerable preparatory planning needs to be done and suitably experienced client resources must be assigned to the exercise if the client organisation is to achieve its objectives.

Outsourcing Agreement Negotiations: Part 1 - Your negotiating building blocks

Conclusion: In order to maximise the likelihood of a successful outsourcing initiative, your negotiations to finalise the outsourcing agreement should be based on processes that will lead to a Win – Win outcome. To be successful in such negotiations the buying organisation needs to understand a number of key concepts which can be used to establish the criteria needed for the development of the negotiation strategy.

Project Portfolio Management: A how to for SME's

Conclusion: Project Portfolio Management (PPM) is now viewed as a necessary pre-condition for maximising the contribution of an organisation’s IT projects to the achievement of corporate goals. Unfortunately many Small to Medium Size Enterprises (SMEs) have made the decision not to implement the process due to its cost. The guidelines provided in this paper have been found to be effective in allowing a scaled down version of PPM to be implemented in a cost effective fashion within SMEs.

Outsourcing: Getting the most out of it

Conclusion: As a result of dissatisfaction with their initial outsourcing arrangement, some organisations have decided to move their IT services back in-house or to adopt a selective sourcing approach. Others have rethought their approach to outsourcing and have moved to an outsourcing model that is more flexible and more closely aligned to business goals and strategies. This has necessitated a different approach to the outsourcing relationship, an even greater emphasis on governance, and a more open approach to the relationship between the client organisation and the service provider.

Project Governance: Are you Steering in the right direction?

Conclusion: A frequently reported cause of IT project failure is a lack of senior management ownership and leadership.1 This often first manifests itself in problems in the deliberations of the project’s steering committee. Measures that can reduce the likelihood of such problems occurring include the selection of committee members who meet the criteria given in this paper and the use of a Kick Off session to gain agreement on roles and expectations of both the committee members and the project manager.

Planning for Project Success

Conclusion: Despite considerable advances in the discipline of project management many organisations continue to report unacceptably high rates of failure for their IT projects. There are, however, a number of initiatives that organisations can take, particularly in the planning phase of IT projects, which can significantly reduce the likelihood of project failure.

The use of the RFP when Outsourcing

Conclusion: An often heard complaint from organisations, is that despite issuing an RFP, the process selecting an Outsourcing Service Provider took considerably more time than they had expected and consumed considerably more resources than were planned.

Developing the Service Level Agreement in your Outsourcing Contract

Conclusion: The Service Level Agreement (SLA) is a key part of any outsourcing contract. Done well it can play an important role in improving service performance and can also provide the foundation to a successful partnership between the client and the service provider. Done poorly it can sour the relationship and lead to a bureaucratic exercise of SLA monitoring and review.

IT Outsourcing in the SME

Conclusion: IT Outsourcing in the SME (Small to Medium Size Enterprise) sector can be an initiative which can bring real benefits to many SME’s. There are, however, a number of considerations that need to be taken into account to ensure that the exercise achieves its objectives and provides a positive outcome for the IT staff.

Multisourcing: Achieving the right Balance

Conclusion: Multisourcing can provide a number of significant benefits to client organisations however the full potential will only be achieved if the issues of governance and system management tools and processes are satisfactorily resolved prior to multisourcing.

Last Word: The Project Management Office

Once again some recent high profile failures of IT projects have raised the issue of good project management and its impact on project outcomes. Those organisations that have yet to establish an effective Project Management Office (PMO) should consider the benefits that can accrue in IT projects through the correct application of a PMO.

Does your Organisation need a Project Management Office?

Conclusion: Providing it has strong management support and is resourced with the right mix of personnel, a project management office can produce major benefits around:

  1. management of your organisations IT project portfolio; and

  2. the outcomes from these projects.

The Role of the Project Management Office

Conclusion: A Project Management Office (PMO) built to a model that is in sync with the organisation’s culture can, over time, have a major impact on project outcomes. To achieve this, the role and responsibilities of the PMO must be defined so that it addresses priority project related issues within the organisation. The office must then be resourced with personnel who have the skills and experience capable of undertaking the role allocated to the PMO.

Project Portfolio Management - a Better way to Manage your Investment in IT

Conclusion: An ongoing process of Project Portfolio Management, managed by a Project Management Office (PMO), can lead to significant improvements in the returns achieved on funds being invested in your IT projects.

Benefit Management - Realising the Benefits from your Projects

Conclusion: Benefit management should be an integral part of every organisation’s project management methodology. Its application provides organisations with a clear view of the benefits being realised by their IT projects. It also ensures there is a continuing focus on benefit realisation during the project lifecycle and issues that arise are highlighted and addressed.

Managing Suppliers within your IT Projects

Conclusion: A number of recent high profile IT project failures have involved issues with external suppliers of services. Despite this, the increasing complexity of IT projects and the need to minimise on-going costs of in-house IT resources will necessitate the continued use of external suppliers. The effective management of such suppliers requires project management staff with skills that cover not just project management but also a high level of commercial, contractual, leadership and interpersonal skills.

Communications - a Key Component of Successful projects

Conclusion: An often reported reason behind failures in complex IT projects has been poor communications between the project team, the decision makers and other parties who were impacted by the project.

To address this project sponsors and project managers should ensure that communication strategies and associated communications plans are developed for all projects that are seen to be complex or have long lifecycles.

Last Word: Health Checks for Troubled Projects

Why do many IT projects that are obviously in serious trouble go well past the point where they should have been shutdown? We can all give examples of where money and resources have continued to be invested in such projects, but do we understand the factors that can impact on decision makers and unduly influence what would appear to be the rational decision to close down a troubled project?

Change Management: A key Component of your IT Projects

Conclusion: For a project to be judged a success it must not only provide its deliverables on-time and within budget, it must also deliver the benefits that were outlined in its Business Case. These benefits will normally not be achieved unless there is a successful outcome to the process of change. The change may impact the organisation in a variety of ways, for example through changes to business processes, procedures, products or technology.

Segmenting Your Portfolio of IT Projects

Conclusion: Portfolio Management is a process that allows management to prioritise and manage its portfolio of projects. The more progressive organisations within IT are finding that this approach needs to be modified in order to manage the different project types that are associated with competitive edge and strategic advantage business initiatives.

Exit Management: an often overlooked Component of Outsourcing Strategies

Conclusion: Discussions with IBRS clients have found that a large proportion of outsourcing contracts are re-negotiated or terminated early. The circumstances in which the exit occurs can affect the willingness of both parties to co-operate and for them to agree on the timing and cost to exit. If termination issues have not been negotiated as part of the original contract, then they will need to be finalised prior to the exit. In this situation an organisation is placed at a significant disadvantage, and there is a risk that lawyers will need to be called in. This is unlikely to lead to a smooth and non-disruptive exit.

Achieving Successful outcomes when Outsourcing

Conclusion: Successful outsourcing initiatives usually have a number of common characteristics. Using these as a check list in new, or even existing, outsourcing deals can have a positive impact on the success of your outsourcing initiative.

Troubled Projects - When to "Pull the Plug"

Conclusion: One of the more difficult aspects of the management of projects is the decision making process associated with shutting down troubled projects. There are a range of factors that can influence decision makers and prevent them from making a rational decision to close down a troubled project. These include project related influences, psychological and social factors as well as organisational pressures.

Last Word: Backsourcing: Bringing it back in-house

One of the more difficult IT related decisions that an organisation may have to face, is whether to bring outsourced IT functions back in-house. There are a wide variety of reasons why such a course of action might be contemplated.

Risk Management - More than just Tools and Process

Conclusion: Weaknesses in the approach to risk management, when applied to IT projects, can lead to poor project outcomes. A holistic approach that encompasses people, structure and organisational culture, as well as tools and process, is needed for the successful management of project risk.

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