Outsourcing IT allows a company's IT department to focus on supporting the core strategic areas of their business, rather than "fire-fighting" day-to-day operational IT problems. But could companies be getting even more value from their outsourcing relationships? Are those that don't outsource aware of what modern outsourcers can offer?



Traditionally outsourcing companies have tended to focus on managing the contracts and their performance against SLAs, rather than managing their actual relationships with the client.



However as outsourcing is becoming a more mature business service, savvy outsourcers are beginning to realise that by understanding their clients' businesses they can bring much more value to the relationship. Today, the best outsourcers work alongside, rather than for their customers. As a partner they can bring real value to the relationship - constantly bringing innovative new ideas and solutions to the table that will help companies achieve their ambitious service improvement and cost reduction goals.

Outsourcing IT allows a company’s IT department to focus on supporting the core strategic areas of their business, rather than “fire-fighting” day-to-day operational IT problems. But could companies be getting even more value from their outsourcing relationships? And, are those that don’t outsource aware of what modern outsourcers can offer?

Evolution of outsourcing
The traditional pros of outsourcing IT are widely known. Broadly it enables companies to continue “business as usual” and gain access to a wider pool of IT resources and unlocks the expertise that is already within the business to work on the development of the new systems.

While this still holds fast, today’s outsourcer has evolved beyond simply providing access to skilled labour. Using their up-to-date knowledge, new technologies, new ways of working and economies of scale – outsourcers can now provide high quality, low cost IT services, particularly for the "business as usual" aspects of IT service provision.

Nowadays outsourcers often work alongside their clients at a business level and help solve their business problems. Using their knowledge of the particular industry and their IT expertise, outsourcers can help companies tackle the pressures of regulation, legislation and customer service as well as helping them to manage their IT.

Outsourcers are adding value too - working alongside companies to help them to innovate, design and deploy new and more efficient ways of doing business and contributing to the overall strategy of the company.

Getting IT right
However, this outsourcing relationship doesn’t always work. A Gartner survey revealed that one in six IT outsourcing contracts is terminated early because of poor performance. Like all relationships, getting it right requires effort from both sides. Not all outsourcers are alike and not all outsourcing contracts allow companies to get the best value from the arrangement. How can companies maximise the value they gain from an outsourcing arrangement?

Manage the relationship
Outsourcing contracts can contain a myriad of complex KPIs and SLAs that govern the performance measurement of the service. While these metrics measure performance, they do not necessarily measure value. Much of the value that comes from an outsourcing company, like experience, knowledge, collaboration and most importantly, contribution to your business goals can’t be measured this way. When choosing an outsourcing partner a fundamental question to ask is this: Will they manage the relationship or the contract? Once upon a time an outsourcer would focus its efforts on meeting the terms laid out in a SLA (Service Level Agreement). But today’s modern outsourcer pays far more attention to helping to achieve business goals.

To help manage the relationship (rather than a contract) a good outsourcer will offer initiatives such as a strategic review process, where a wide range of experts from both sides of the fence work together towards a common goal. For outsourcing to work it must involve a mutual partnership, with both parties investing time to make it work and allowing both sides to plan towards the same goals. It also needs the company to be completely open with the outsourcing company regarding its aims and objectives and even its budgets!

In fact, Gartner believes that to ensure the success of an outsourcing partnership, companies should be spending at least 5% of the value of the outsourcing deal on managing the relationship. Experience shows that with the relationship working well, considerably less time is spent on managing the contract than with an acrimonious relationship.

Experience
Knowledge of the industry is also important, so that the business context and challenges are understood. This is necessary at a strategic level, so that the outsourcer can understand and contribute to the direction of the business. It is also important at a managerial level, so that the impact of changes to the way services are run can be assessed. However, in everyday service delivery, say for facilities management or desktop support, business knowledge is far less important than costs and service. So, it is equally important that an outsourcer is experienced in delivering both IT services and in delivering them in your industry.

Pragmatism
It is vital that a prospective outsourcer is aware of the issues that a company brings with it. Businesses today are fast moving organisations where changes can be frequent and dramatic. Understanding of past, present and future business issues is vital if the relationship between a company and its outsourcing partner is to be a successful one. Also important is the flexibility to adjust to those business changes with the company and the ability to scale up quickly to provide the assistance needed to do so.

Culture match
A company that is seeking an outsourcing provider should look for a partner with a similar internal culture. The two companies will be working with each other very closely and often over a long period. Best value outsourcing partnerships create a relationship of collaboration where both parties are focused on the same goals.

The outsourcing recipe for success
In the past outsourcing has tended to focus on hard-nosed costs and KPIs but modern companies who are looking for true value from the relationship should be thinking differently. They should look for an outsourcer that knows their industry, so that it can contribute strategically to business aims, has access to resources and reacts quickly, works with not for its client, has a similar business culture and perhaps most importantly, manages relationships not contracts.

Companies that keep all of this in mind will find that IT outsourcing has the ability to carry them over the hurdles they face. As well as helping them to successfully manage their ICT needs, they will bring new, innovative ideas and solutions to the table and work towards the joint goals of service improvement and cost reduction that are so crucial for the companies of today that want to prosper in the future.