Around this time last year, the cloud computing contract signings were coming fast and furious -- not just for commodity work like IT management or email, but for software and infrastructure closer to the core of corporate value. Not long after that, the calls started to come in to Greg Bell, principal and the Americas service leader for information protection at KPMG.
Are you prepared as global IT outsourcers shrink onshore staff? These tips will help you keep projects moving as offshore IT service provides cut back on the on-site staff that used to work as liaisons between customer and provider.
IT service providers are big on talk of innovation these daysÂexcept when it comes to their own sales practices. It seems as if many vendor sales teams have been pulling from the same bag of frustrating and ineffective tricks to try to win deals since the dawn of IT outsourcing.
The IT outsourcing market saw its first substantial decline in twelve months during the third quarter of this year. Transaction volumes fell for both the IT and business process outsourcing (BPO) markets, by seven percent and 12 percent respectively, according to the outsourcing consultancy Everest Group's quarterly report on the global services industry. The average contract value of BPO transactions plummeted by 50 percent, while the average contract value for IT contracts increased by 14 percent, thanks largely to three billion-dollar plus deals signed during the quarter.
Even as CIOs continue to pursue the multi-provider model for outsourcing IT, the question remains as to how to do it successfully: amassing the necessary vendor management skills needed, avoiding vendor finger pointing, and achieving intended results.
There may be no two groups more opposed to each other than IT and marketing. One traditionally focuses on back-end support and long-term strategy. The other values creativity and quick wins. Their leaders form the ultimate odd couple: CIO and CMO. In the best cases, the two coexisted, but rarely collaborated. In the worst, the relationship was downright acrimonious.
Does offshore outsourcing make an IT organisation more vulnerable to data loss or attack? Or are offshore providers actually improving network security for their customers?
While midsize companies came later to the IT outsourcing party than their big company counterparts, recent research shows that they may get more out of their IT services deals.
Traditional IT outsourcing customers are struggling with cloud computing, according to IT service providers and outsourcing advisors surveyed by KPMG Sourcing Advisory.
IT outsourcing deals aren't what they used to be.
IT service providers are touting the benefits of outsourcing's increasingly higher-value and more complex IT work to lower-cost locales. And IT customers still hyper-focused on cost cutting in today's economic doldrums are more than willing to consider the pitch. But Harvard Business School professors David Pisano and Willy Shih argue that "moving up the value chain" with offshoring can irreversibly damage a company's—and a country's—competitiveness and ability to innovate.
Every relationship has its ups and downs, and IT outsourcing partnerships are no different. Unfortunately, most IT services contracts aren't built to handle the day-to-day disagreements that will occur during the course of the deal. "They choose litigation or relatively complex forms of arbitration," says Robert Kriss, a partner at law firm Mayer Brown. "Both are slow and expensive for minor disputes."
Left unresolved, the small spats--whether over price, scope, performance, delays or requirements--mount. "These disputes don't tend to go away on their own," says Mayer Brown partner Brad Peterson. "Instead, they fester and hurt the relationship or grow until they are major disputes."
If there were a relatively straightforward way for an IT leader to boost his company's bottom line by millions of dollars a year, chances are he wouldn't ignore it. But that's just what many CIOs are doing as a result of poor outsourcing management.
Business strategy is getting short shrift in outsourcing relationships while outsourcing customers and providers focus excessively on basic service level agreements (SLAs), according to a recent survey conducted by Accenture and the Shared Services and Outsourcing Network (SSON).
One of CIOs' biggest concerns about the infrastructure-as-a-service model has been the loss of control over assets and management that enterprises might experience upon moving into a multi-tenant environment. While analysts and early adopters of infrastructure-as-a-service offerings have argued that such apprehension is rooted more in fear than fact, Amazon's recent public data center debacle has given everyone good reason to question the reliability of the public cloud.