Outsourcing vendors' "dirty little secret"

One of the "dirty little secrets" of outsourcing vendors is how much of their work is "repurposed" from other clients. If a consultancy comes up with a solid, viable network architecture for one client company, you can bet it will re-use elements of that in its work for other clients. Similarly, if a systems integrator finds a workable technology or process for integrating multiple enterprise resource planning systems, it will re-use those technologies and strategies in other clients' application environments.

As purchasers of outsourcing services, many readers might be surprised, even angered, by this sort of repackaging. After all, they paid for customized services designed specifically for their own needs, right? Why should they pay for work that was done for another company?

Angry questions such as these are the main reason why most outsourcing vendors don't like to talk about their re-use of technology architectures and strategies. They fear that if they tell customers that they have used a particular approach before, the customer will regard it as "used goods" and will give their business to an outsourcing vendor that promises more "customized" services. And they might be right.

If outsourcing buyers gave it some thought, however, they might realize that the "repurposing" of outsourcing vendors' knowledge actually works to their advantage, not to their detriment. By using strategies and technologies that have already been carefully planned, designed and tested, the outsourcing customer can get better value than if it purchased untried services invented from the ground up.

Let's look at the network architecture example. In developing an architecture, a network design company or consultancy might take advantage of lessons learned from other client companies about what works and what doesn't. Its end product might look an awful lot like the architectures of other clients it has served. Some consultancies view this approach as "leveraging previous work" to simplify a job and make it easier to accomplish. This attitude is what makes some network design customers bristle.

But essentially, the outsourcing customer is gaining value from the consultancy by avoiding mistakes that were made previously by other companies. In many cases, the proposed architecture has been battle-tested, making it more reliable than an architecture developed from a clean slate. And because the primary components of the architecture have already been well considered and tested, they take less time to develop and implement, lowering the overall cost and deployment time of the project.

The ERP integration example works much the same way. After working with a number of clients, a systems integrator may find a set of tools and an integration process that works well. This is half the battle in the world of integration, where there are so many emerging choices of integration tools and standards. If it works well, does it really matter that the core of the solution was originally developed for another client? In fact, using such a solution is advantageous, because it has been previously tested and the integrator already has a template to work from.

Of course, there are instances where a previously developed solution might be a detriment to an outsourcing client. If a company is seeking to create a competitive advantage with its technology, for example, it should be sure that the outsourcing vendor has not already delivered that technology to a competitor. In some cases, there may also be intellectual property issues that legally prevent an outsourcing company from sharing certain types of custom-developed technology with other clients. These are issues that should be thoroughly researched before signing a deal with an outsourcing vendor.

But for many IT projects that are geared around infrastructure and don't provide any competitive advantage, IT managers shouldn't shun outsourcing vendors that seek to repurpose their previously developed solutions. In fact, they should seek out such outsourcing vendors. Because in many cases, there is no substitute for real experience.

Tim Wilson is a senior analyst with Enterprise Management Associates, an analyst and market research firm focusing exclusively on all aspects of enterprise management. Wilson has over 10 years of experience in covering e-business and enterprise management issues, most recently with InternetWeek, where he was chief of reporters. He can be reached at mailto:twilson@enterprisemanagement.com.

Join the newsletter!

Error: Please check your email address.

More about Enterprise Management Associates

Show Comments

Market Place