Outsourcing: friend or foe to IT managers

IT managers are operating in an environment columnists are calling the "2002 recession" and are perplexed by the question of whether their department will "survive these budget-slashing, outsource-everything days," according to Computerworld US senior news columnist Frank Hayes.

Meta Group research predicts that by 2005, nearly every IT organisation will have outsourced at least one strategic IT operation.

Analysts like Meta Group vice president of service management strategies, Dean Davison argue that outsourcing, to a certain extent, is a constant threat hanging over the IT manager.

However, it is only a genuine threat to those who grow complacent, to those who become "lethargic" if they get too comfortable with the arrangement, he says.

According to Davison, smart managers will view outsourcing as an opportunity to improve the quality and efficiency of internal services.

"Most IT managers live in constant fear of outsourcing, but many embrace it as a tool to improve internal operations," he says, adding: "We observe many IT organisations evaluating outsourcing options, comparing cost, quality, and capability rather than waiting for such mandates to be imposed from executives."

And while outsourcing may sometimes be driven from senior executive level, Davison says contract negotiation requires technical and operational expertise, so management still relies on IT managers to "make it happen".

Curtis Williams, IT manager of Cussons Australia, supports Meta's overall position. He says outsourcing is clearly an opportunity for the IT manager to focus on the main thrust of the business.

However, Williams claims IT managers themselves can become their own main threat when dealing with outsourcing agreements. That is, when they simply "let things go" after the arrangement is in place. "Over time, agreed service levels can fall, letting things slip through and the quality of service diminishes," he says.

To avoid becoming a risk to yourself, Williams says conscientiousness goes a long way. This can be exercised by "retaining control" - monitoring SLAs in contracts regularly (at least on an annual basis) and developing flexible management strategies to meet short and long-term business goals, he explains.

Rating the competition for outsourcing these days as high, Williams says it is an opportune time for the IT manager to "pull the strings" both internally and externally to get the most out of their provider.

"If you have very little control over setting up the [relationship], it can quickly get out of hand. The manager needs to know the intricacies of how the arrangement will work for the business which ultimately provides an attractive ROI," he says.

According to Peter Steggles, senior analyst for systems with Ideas International, outsourcing is both a threat and an opportunity to the IT manager, depending on the level of involvement the manager has before, during and after any decisions are made.

He says: "It is reasonable now for the IT manager to expect to have input into issues like SLAs, staff transfers and asset transfers. He or she will obviously feel threatened if the decision has been taken by the CFO with limited consultation, or is based largely on financial decisions."

So when negotiating an outsourcing agreement, the onus is on the organisation to perform this in conjunction with legal representatives, he says.

Therefore, the manager may feel comfortable with a "partial" outsourcing proposal, where only certain functions like operations or storage services are manned by a third party, according to Steggles.

The bottom line, Meta Group's Davison says, is that IT managers indeed view outsourcing as a threat, but one which they have fully embraced as an opportunity to help deliver better services to lines of business.

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