Keeping it short, sharp and simple

Recent studies by the likes of Deloitte Consulting and the Everest Group show a high level of dissatisfaction among customers when it comes to mega outsourcing deals.

More than 70 percent of the companies surveyed cited negatives experiences, with a quarter of the respondents saying they are bringing their IT back in-house.

We all know the first wave of outsourcing deals were all about achieving cost savings, but many providers just didn't deliver.

Every week in Computerworld there is another example of a large company carving up its outsourcing pacts to try and get a more flexible, cost-effective deal in place.

As a result, organizations are now jumping on the selective sourcing bandwagon.

There is no shortage of providers keen to win their business. Every week a new IT services company is setting up shop in Australia, mostly from India, trying to exploit this new trend.

Market analyst and researcher Len Rust claims as many as 25 new IT services companies have recently set up shop in Australia. Is the market saturated? Not according to AMR Research, which says about 50 percent of Australian IT organizations will utilize some form of outsourcing by 2006.

Australia is just keeping pace with the rest of the world with organizations expected to spend $50 billion on IT services in 2007.

In spite of the failures of so many deals, this trend isn't likely to slow down in the near future. The deals aren't slowing, they're just getting smaller.

The Everest Group study found the average size of an outsourcing deal fell 18 percent in the first quarter of 2005 compared to a year ago. But the number of deals being inked has increased by 5 percent.

So why do so many large-scale outsourcing deals fail? The most common problems cited include an inaccurate assessment of a company's performance levels, unrealistic expectations of the benefits of outsourcing and inflexible arrangements that do not have proper reporting procedures in place.

So basically, the best deals are low risk and flexible with high levels of accountability. It's little wonder the pay-as-you-go subscription model is winning so many hearts and minds.

Who wants to labour under some long and arduous contract that doesn't keep pace with the changing needs of your business?

But this wasn't the only research released this week that's creating a stir. Ohio State University in the US says IT has an image problem. It identifies the contemporary enterprise as an assembly of tribes - you know, marketing, finance, operations and IT. These tribes aren't integrated, instead they all have their own language, belief system and set of rituals. Integrating these tribes is apparently the key to success.

But those surveyed new little about IT; this was one department that went completely unnoticed with many employees unable to identify their CIO.

Invisible IT? Does this mean IT is doing such a great job, chugging along in the background without being noticed or does it mean they are irrelevant? What do you think? Send e-mails to sandra_rossi@idg.com.au

Join the newsletter!

Error: Please check your email address.

More about AMR ResearchDeloitte ConsultingDeloitte ConsultingDeloitte ConsultingSharp

Show Comments

Market Place