There is significant pressure on companies to be flexible and adapt quickly to new business challenges. The business wants an IT organisation that is proactive, has a good understanding of the business and delivers value on strategic, tactical and operational level. IT is expected to be a proactive business partner and an active supporter and enabler of the business strategy.
As noted in 3gamma’s previous article on the demand for new IT capabilities, a key competence for IT organisations is business insight. In IT’s efforts to support the business – identifying and acquiring new solutions and services are key components. IT sourcing is a tool to actively support the business – not simply a way to reduce cost and standardise services. IT sourcing enables companies to focus on their core businesses, provides flexibility, gives access to expertise, and can also lower IT costs.
In the article Agile Outsourcing – Realising the value of IT outsourcing through a collaborative approach, we argue that agile thinking can be applied to ensure flexibility in an outsourced IT delivery. This approach can be leveraged to enable the business to rapidly respond to changes in the business environment in productive and cost-effective ways. A key finding is that it’s important to incorporate mechanisms to improve flexibility in all stages of the IT outsourcing life-cycle.
As highlighted in the whitepaper, relationships and collaborations are key aspects in successful outsourcing. The parties’ abilities to settle minor issues promptly is a prerequisite for dealing with more serious deal-breaking issues. In our own experience, companies need to focus on the proactive development and management of collaborative relationships. IT organisations need to think carefully about the relationships throughout the full IT services supply chain.
To improve flexibility in IT outsourcing and avoid some of the common pitfalls and lock-in effects companies should:
- Establish strong relationships with all of the vendors involved in service provision. This includes taking account of any geographical or cultural challenges that may exist.
- Build relationships within the IS/IT department itself. In particular ensuring that objectives, rewards and behaviours are well aligned so that clear incentives exist for different groups to work together under the motto “succeed together or fail together”.
- Develop good relationships with the customers of the IT services. Ensuring that customers understand what services are provided to what standard and what happens when they go wrong. Also, clear customer involvement in IT service management investment decisions with the full knowledge of the implications of decisions for the services affected.
All of these relationship components need to be aligned along the service supply chain to ensure full sight of the end to end delivery and clear linkages to overall business objectives. To achieve improved flexibility, companies need to incorporate this into each step of the IT sourcing life-cycle – from strategy to optimisation. Improved flexibility requires transformation of technology, processes and people, underpinned by a new mind-set and organisational culture.
Just because an IT activity is business-critical doesn’t mean that all its elements have to be kept in-house.