|
Companies and organizations are outsourcing because it makes sound financial sense for the firm. They need to keep that focus in front of them at all times. They want access to the right talent at the right time at the right price. The most important factors in a successful outsourcing contract are finding a firm that understands the technology, the business, and the communications.
Outsourcing is about the relationship. 50% of all outsourcing relationships fail because the outsourcer understands the technology, but not the business. Communication is a two way street and is the most critical factor in making a relationship work. In managing the relationship, 60 percent of problems are due to communication. Communication gaps can arise from a lack of understanding of the customer's business.
The outsourced contractor’s skills will be pretty solid in most cases but what's usually missing is a sense of the mission of the company and that's not something that people can learn when they're remotely located. The right outsource solution needs to have a passion for the project to be successful.
81 percent of companies outsource at least one IT activity, and these organizations are devoting a larger share of their IT budgets to these services than they did in 2006. Most IT executives feel they are successful at outsourcing, so few bring all IT activities in-house. Also, the most frequently outsourced IT activities are systems development and integration
The Group Members International number one priority is to understand your technology, your business, and how to communicate.
Why Outsource
According to a recent survey the four main reasons attributed to IT outsourcing were the following.
• To free up personnel to focus on other activities.
• To reduce costs and investment
• To do work which could not be accomplished in-house due to expertise.
• To increase speed, flexibility and innovation.
Domestic outsourcing does not always save money. That means most large companies and many small companies, are often disappointed when they aim to save money by outsourcing. When IT executives do consider their companies to be successful at outsourcing, it's usually because they are achieving other important benefits, such as freeing up management time and company resources such as staffing problems, system moves, acquisitions or platform changes. Since most hardware, software and services vendors do not have a world-class data center, they partner with someone who specializes in this service. Leave the specialties to the specialists.
So, when a company does outsource, cost is not the only key business driver. It’s a needed skill set that they can't replicate internally, and, due to timeliness, they need to have an outsource vendor assist them. The outsource vendor could take many different forms; a direct outsource agreement, a professional services engagement, or something else. But when they do deal with outsourcing arrangements, they focus on not just the costs as a business driver but what would it cost to replicate those systems internally, as well as what type of business continuity they would have to add on to any systems deployed that will be less expensive and easier to manage externally.
One fear of outsourcing is that it eliminates in house technical and IT jobs. This may not be the case for the SMB that neither has nor wants to invest in an in-house IT department to work on a single, one time only development project. If the company never had an IT department, outsourcing is a reliable and economic way to fulfill the company’s technical and developmental demands.
Outsourcing allows for more specialized technical and business areas than the current in house department may have. For instance, to develop and manage a social media and community application internally, instead of building up a large development and management staff, they can work with an outsource vendor (Group Members International) who has the expertise externally and bring then in on a consulting or contract basis. This allows companies to get a project completed in a very timely manner versus having somebody who will be on staff who does not have all of the required skill sets. So outsourcing is a better way of managing resources because the company can develop applications beyond the department’s personnel’s skill sets.
Companies are outsourcing the following areas of IT and related functions
|
| • Application and Web Development |
48% |
| • Applications and Systems Integration |
36% |
| • Help desk and end user support |
32% |
| • Application web Hosting (includes email) |
31% |
| • Training and Education |
24% |
| • Network Management |
24% |
| • Data Center management |
22% |
| • Infrastructure Design and Build Out |
18% |
| • Project Management |
15% |
| • Security |
13% |
| • Storage management |
12% |
| • Other |
10% |
Outsource vendors are expected to provide products and services that meet the following goals and expectations.
• Be flexible and responsive to a companies needs
• Meeting time and budget commitments
• Meeting quality expectations
• Meeting the companies ROI (business value) expectations.
• Meeting the need of or solving the business problem the outsource vendor was engaged
10 Tips for Outsourcing Your Development Projects
1. Define your outsourcing expectations.
View outsourcing your development to Group Members International as a business solution to augment your current operations and create efficiencies. Don’t just measure you success in dollars, but in the freeing up of management time and company resources.
2. Be realistic and listen to your outsource vendor
Interfaces may not work as smooth or have customization options as plentiful as those of desktop applications. Figure out your workflow requirements and the work within the limits of the current state of technology. Try not to reinvent the wheel.
3. Assess yourself.
Quantify your baseline bandwidth, storage, and reliability requirements and usage for your social media and community platform. A hosted service can offset the costs of underutilized resources. Although you need to start with certain baseline requirements, the application platform needs to be designed for ease of scalability so the hosting solution for bandwidth, storage, and reliability, can grow with the success of your development efforts.
4. Identify your strengths and weaknesses.
Work within your department’s skill sets for in house work; outsource to vendors the projects that are beyond your personnel’s current skill sets. A six month training course in a programming language is no match for ten years of experience.
5. Follow the money.
Know before hand that the outsource vendor is in the project to make money. Know the costs associated with the different aspects of your project to protect yourself. Get your finance gurus to come up with valuation metrics and fiscal models that will quantify your vendor’s payment model compared with that of other solutions. Take into account your current infrastructure, maintenance, administration, and upgrade costs.
6. Do your due diligence.
Consider a third-party audit, which should include security of transactions and data. Evaluate the vendor's experience, technical expertise, and scalability options.
7. Plan migration paths.
Have a path for data migration and integration with other systems from the start and a plan for termination. This will help avoid locking into a single vendor or having to start all over if the vendor cancels before the project is completed.
8. Involve your legal team.
Make sure a lawyer is on board to review the licensing issues and intellectual property rights. Legal representation will also be of value during contract negotiations. Bear in mind the protection is a two way necessity, you want to treat your vendor as you would like to be treated.
9. Control your services.
Assign yearly budgets and resources. Establish ongoing ROI and performance metrics to determine whether the vendor achieves your objectives.
10. Maintain open communication.
Keep everyone apprised of goals and listen to their concerns. In this way, you will build trust. Keep in mind that your provider and its representatives are now an integral part of your business, so treat them as members of your team.
The Cost of Outsourcing and Platform Development Alliances
Can Your Company Devote All The Resources Necessary To Obtain A Total Solution?
Consider the following creative solution offered by a vendor aligned with a managed operations provider. The company wanted to implement a new software package, but due to high development costs, the software vendor required full payment up front. The client didn’t have the cash flow to pay in full for the software, much less the hardware and additional staff resources required to implement the new software.
The outsource vendor solved this problem by offering a solution that contained the new software, hardware and data center service for a monthly free. In this case, the managed operations provider pays the software vendor for the package and converts the cost of software, hardware, facilities and operational resources into a monthly fee that is less than the client could have paid for up front.
There are many different types of vendor alliances that are being formed, from very loosely structured, informal ones to complex, multi-partner ventures. The key is to assemble alliances that capitalize on each partner's strengths and minimize weaknesses. By combining forces, the end result can be synergism at its best with the ultimate winner being the client who receives a quality solution at a lower cost than could be done internally.
Footnotes
March 2007 Research: I.T. Outsourcing
I.T. Outsourcing: Expect the Unexpected
http://www.cioinsight.com/article2/0,1540,2104843,00.asp
Outsourcing Success Is All About the Relationship -- By Stan Gibson
http://www.eweek.com/article2/0,1759,2033227,00.asp
The Art of Selective Outsourcing -- a discussion with
eWEEK technology editor Peter Coffee
eWEEK Executive Editor Stan Gibson
http://www.eweek.com/article2/0,1759,2010541,00.asp
10 Tips for Outsourcing Apps -- By Sahil Gambhir
http://www.pcmag.com/article2/0,1759,1651048,00.asp
Outsourcing Managed Operations or Data Center Needs Paul Harwood
http://www.businesssolutionsmag.com/index.php?option=com_jambozine&layout=article&view=page&aid=2149&Itemid=5
|
|
White Papers 
DebateOurFuture.com Using multi-media tools, the community debates on issues of
Argolinx.comA Community for followers of the principles of the Law of Attraction 
Angel Employees.com Building Businesses With Community Angel Assistance 
GrownUps Online.comLearn, Share and help others experience life as a responsible
Rightcosm.comSharing and growing as a christian in a community of like minds.