Intelligent outsourcing: Money is not (that) important
The first driving force for outsourcing is the cost aspect. However, the cost aspect should not be the only decisive factor. Both: monetary and non-monetary factors should be taken in consideration.
Aug 25, 2009
The first driving force for outsourcing is the cost aspect. However, the cost aspect should not be the only decisive factor. Both: monetary and non-monetary factors should be taken in consideration. It becomes especially clear while talking about Business Transformational Outsourcing (BTO)
In today’s business, buyers expect more and more from the vendors. While outsourcing processes, they want to focus on their core competencies, to reduce costs, to optimize the assets structure and to improve the equity ration – but not only. They also want to learn from the vendor, to use their know-how to improve processes, to implement best practice solutions.
That is the essence of Business Transformational Outsourcing (BTO), a concept which connects the benefits from business consulting and outsourcing. The outsourced business part or process should be reorganized following the best in class methods to realize the potential of optimization.
The need for BTO is especially clear in the IT industry and for small and medium-sized companies: Outsourcing is here the solution helping them to improve their competitiveness, to reduce development and processing times. However, this group of companies is usually very sceptical about IT outsourcing: they have security concerns and express doubts about the benefits. They raise the issue of possible failures in outsourcing initiatives and the fact that many outsourcing project take more time (and consume more budget) than has been originally planned.
But, especially regarding the small and medium-sized companies: their internal IT department is usually not able to follow and implement innovations. They are in concern of daily business and innovations need suitable time capacities. In this area an experienced third party can contribute to successful gap identification and implementation of innovations.
The experience collected during the outsourcing projects lets identify key success factors which should be taken in consideration at outsourcing initiatives:
This article was originally posted by OutsourcePortfolio.com and is the property of Outsource Portfolio.
In today’s business, buyers expect more and more from the vendors. While outsourcing processes, they want to focus on their core competencies, to reduce costs, to optimize the assets structure and to improve the equity ration – but not only. They also want to learn from the vendor, to use their know-how to improve processes, to implement best practice solutions.
That is the essence of Business Transformational Outsourcing (BTO), a concept which connects the benefits from business consulting and outsourcing. The outsourced business part or process should be reorganized following the best in class methods to realize the potential of optimization.
The need for BTO is especially clear in the IT industry and for small and medium-sized companies: Outsourcing is here the solution helping them to improve their competitiveness, to reduce development and processing times. However, this group of companies is usually very sceptical about IT outsourcing: they have security concerns and express doubts about the benefits. They raise the issue of possible failures in outsourcing initiatives and the fact that many outsourcing project take more time (and consume more budget) than has been originally planned.
But, especially regarding the small and medium-sized companies: their internal IT department is usually not able to follow and implement innovations. They are in concern of daily business and innovations need suitable time capacities. In this area an experienced third party can contribute to successful gap identification and implementation of innovations.
The experience collected during the outsourcing projects lets identify key success factors which should be taken in consideration at outsourcing initiatives:
- Documentation. It is crucial to document all existing IT structures. It is recommended to involve external experts in this process in order to make sure that no IT modules have been missed.
- Clear goals and objectives. All parties: IT department, board of directors and outsourcing partner should define the goals and objectives of the project.
- Time-table ("roadmap"). The roadmap of the project should contain all phases and milestones of the migration. The time needed for the project to be completed should be realistic as well.
- Measures. Such factors as availability, service level agreements (SLAs) and times to restore should be documented.
- Cost transparency. The outsourcing agreement should cover costs due to standard scenarios.
- Investment security. The possibility to have a look at the financial position of the vendor should be given to the buyer.
- Possibility to exit the project. The buyer should have the option to reverse the migration or to choose another vendor if they are not satisfied with the service delivered.
This article was originally posted by OutsourcePortfolio.com and is the property of Outsource Portfolio.