Irene Pimentel is an IBRS analyst who focuses on news and information on the global IT Outsourcing market. Irene provides IBRS clients with up to date information on all outsourcing deals that are taking place helping our clients understand who is winning business in what markets. With over 10 years experience as a management consultant, Irene has worked with some of Australia's largest blue chip companies and public sector organisations. Irene has also worked as a research manager for an IT sourcing consultancy, providing clients with targeted intelligence and advice for their specific IT sourcing transactions.
Part 1 of this article, published in IBRS July 2003, discussed different approaches taken by Public Sector agencies when sourcing IT. Part 2 outlines the management challenges faced by Public Sector Agencies when sourcing IT, focusing on the initial planning and assessment phases of an outsourcing initiative.
The sourcing model selected (See Part 1: “Public Sector Sourcing Models” IBRS, July 2003) and internal processes established to manage this model should focus on achieving the business benefits sought and specific requirements of the agency as identified when defining the current IT status.
Conclusion: Without experience and knowledge of the local outsourcing market, public sector agencies risk inefficiencies when developing outsourcing practices that are sufficiently flexible to change as the agency’s circumstances change.
When outsourcing public sector agencies require solid governance, accountability processes and regular reviews to ensure the approach taken will suit their internal structures, policies and IT needs.
Ongoing information support is also critical so the agency has a thorough understanding of the changing environment, local outsourcing market and lessons learned from other public sector agencies that have adopted different outsourcing strategies.
Much can happen during the course of an IT services agreement, causing parties to re-evaluate an arrangement, and seek change or termination. A prudent approach to IT outsourcing arrangements recognises the long-term likelihood of changed circumstances and provides both parties the option of re-assessing and if necessary changing the services agreement. The agreement should have a shared vision, coupled with a precise legal framework and processes to allow for parties to affect the most desirable solution: review of the current arrangement, followed by renegotiation or termination.
The ANAO has recently highlighted the ineffectiveness of the contract performance monitoring and management activities in the last five years of government agencies which have engaged external suppliers of IT services. The Federal Government’s experience in this area is salutary and provides a timely warning to organisations considering outsourcing IT functions.