Outsourcing: Out of sight, out of mind?
- 22 March, 2006 09:22
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Is your outsourcer out of control? Mine is, and the failure is my fault. Guilty, guilty, guilty!
Last year, my wife and I outsourced our yard care to a local gardener. We agreed that he would mow the lawn, kill weeds, sweep walkways and rake leaves. We agreed on pricing and felt confident that our yard would be well tended.
Unfortunately, the gardener outsourced most of the work to a subcontractor, who in turn outsourced cutting the grass to various independent mowers. Apparently, some of the yard care information didn't get communicated to the subcontractor. The details certainly never got to the mowers, who were unaware of the property lines and neglected to mow part of the yard.
We had a dilemma: if we wanted something done differently, who should we contact? No approach worked well. Agreements with the gardener rarely made it intact to the mower. It often took several weeks to speak to the mower directly, since he followed an erratic schedule that rarely overlapped with ours. Moreover, he took direction only from the middleman, whom we never met.
By summer, the grass was high, dandelions were rampant, and the paths remained unswept. We later received an unexpected surcharge for leaf-raking.
Does this outsourcing nightmare sound familiar? Today's IT organizations buy more products and services than they build. Everyone agrees that outsourcing is important, but do we manage it well? Here are some ways to avoid similar problems:
Create a clear contract. You may not want to prohibit an outsourcer from using outside resources, but your contract should clearly describe deliverables, schedules, service levels and cost. Your outsourcer can easily pass this information (and corresponding accountability) to any subcontractors involved. Realize that anything agreed to with a handshake may be overlooked by subsequent -- and often invisible -- subcontractor agreements.
Retain sufficient management control. Some executives believe they can outsource a major chunk of IT and get rid of all the associated staff. Experience shows that an additional 10 to 20 percent of the contract's value (less for infrastructure, more for applications development and maintenance) is required to monitor and manage the outsourcer. This is not a background task.
Meet regularly with your outsourcer. Successful outsourcing efforts require periodic meetings to review progress, discuss problems and plan corrective actions. Also, use these meetings to celebrate successes and communicate what is working well. We didn't, and we paid the price.
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