Is IT Outsourcing Dead?

Outsourcing Is Dead

A very common complaint that I hear from outsourcing customers is that previously, IT suppliers had lacked innovation. As a vendor, it’s a harsh complaint to hear when you have met the cost reduction targets that were set out as the key driver for outsourcing in the first place.

So what is innovation? And who is to blame when innovation seems to be lacking in many outsourcing arrangements? In my view, innovation is all about changing the game, challenging the rules, knocking down the walls, exploding the conventional in pursuit of the best.

So … It’s important to start with the end in mind rather than the means. Quite often IT suppliers get mired in continuous development and improvement of existing systems, methods and services. Do that and you miss out on great “eureka moments” that starting with a clear end goal, a blank sheet and no preconceptions can give you.

Dick Fosbury was an innovator and it’s right that he seems to be on every TV advert now. Before his Fosbury Flop, all high jumpers vaulted forwards over the bar, nowadays everyone does it Dick’s way. Previously athletes had tinkered with the run up, the angle, the speed, the length of the approach, they’d tried straddle, rolls, scissor jumps – they were into continuous development and improvement.

Dick changed the game, his diagonal sprint which curved and culminated in a backward leap revolutionised the sport, created a wow factor and excitement for all its stake-holders spectators, athletes and the millions watching the 1968 Olympics at home. That’s what outsourcing customers want. That wow factor that benefits all of the stakeholders within an organisation.

But since the recession the majority of customers haven’t said that. They’ve entered outsourcing arrangements and measured their ongoing success on cost metrics alone and then at the end of the outsourcing lifecycle expressed disappointment that they are pretty much where they started – just paying less for it.

The vendors are naturally disappointed too, having delivered what they thought their customer wanted. Having delivered what their customer said that they wanted!

Communication Is Key

Cost saving should be seen almost as a given benefit of outsourcing rather than a stated business driver. An initial meeting between vendor and client to agree objectives should start with “Save money” and then everyone should burst into raucous, spontaneous laughter at the mention of something so obvious, like someone suggesting “buy coffee” at a brainstorm meeting of stuff to do ahead of the opening of a coffee shop.

Then, when the peals of laughter have died down and everyone has wiped away their tears and adjusted their mascara, you should talk about what you really want to achieve.

Innovation in outsourcing comes through robust foundations in contracts, transparent process and governance – these are the things that make innovation real, tangible, measurable and yes … above all else, genuinely worth getting excited about. It’s why some IT outsourcing contracts fail to deliver.

Businesses and public sector organisations alike are under constant pressure to make savings, run more efficiently and they face unprecedented scrutiny.

Too much focus on cost in ICT outsourcing often leaves you with uninspiring thought processes, mundane shared service solutions that have a “one size fits all” stench about them or drilling right down to make existing sourcing arrangements work harder, output more for less reward. How much fun does that sound?

And it’s seriously myopic. The long term view dictates that to stay competitive and to be agile and flexible enough to adapt to future change you and your outsourcing partners need to innovate.

To Not Innovate Is To Stagnate

Your outsourcing project should be tailored to fit the unique character of your organisation or business and should line up with your strategic business goals. Align outsourced products and services with your key business drivers and you ignite a spark of innovation.

  • Be clear about what you want to achieve. Be explicit.
  • If your key objective is to improve your end customer’s experience – state it!
  • If your main goal is to speed up the supply chain – communicate that!
  • If you want your new products and services to get to market quicker – say it!
  • Communicate the goal of your outsourcing adventure with all your internal stakeholders and your supplier.
  • It’s amazing how clarity breeds innovation.
  • And don’t get mired in that bog of managing continuous development and improvement.
  • Innovation is all about thought leadership.

Managers and those into continuous development and improvement tend to be specialists. Leaders and innovators tend to be more multi-disciplined, non-specialists who question the very rules of the game. They have the vision to transcend speciality boundaries.

As Dr Steven R Covey points out in his bestselling “7 Habits of Highly Effective People”, management oversees those hacking through the dense undergrowth far below the jungle canopy, leadership is about climbing the to the top of the highest tree and shouting, “Wrong Jungle!!”.

Could it be that by merely outsourcing you have hacked YOUR way through the wrong jungle? Multisourcing offers a thought-lead, “blank sheet and no preconceptions” approach that is focussed on achieving your business end goals and objectives though innovation. Climb the tree…

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David Cotgreave

David Cotgreave MBA, BSc (hons), PRINCE II, is Professional Services Director at Stoneseed, with over 20 years’ experience in IT Consulting. David has worked with organisations such as BT Engage IT and KPMG, before founding Stoneseed in 2009 and has gained considerable business experience whilst working with a wide range of organisations across the UK and Europe carrying out a range of strategy, review and implementation projects. David is currently responsible for leading the Professional Services and IT Advisory business within Stoneseed. The IT Advisory team work with clients to realise value and efficiency from their IT investments through a range of services including requirements definition and IT Strategic Planning.