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Why a partnership approach for outsourcing IT is always better

by Charlie Trumpess

 29th March 2016 1:57 pm

By James Tizzard

The National Outsourcing Association (NOA) recently published a report which analysed the many conversations they’d had with enterprises and analysts – all of which morph into trends they predicted we’d see in 2015/6. Outsourcing trends that effect the IT function are of interest to us at Modern Networks, as we partner with numerous organisations who trust us to manage some, or all of their IT. By outsourcing non-core activities to us they’re able to focus on company or industry specific challenges, or those concerning CIOs on a global basis – such as finding talent to help IT meet business needs, or stepping up to lead digital transformation and innovation.

When asked to summarise the key trends for 2015, what’s changed and what he is seeing more/less of Ian Puddy, Vice President, at Gartner said [In the context of digital opportunities and threats] ‘Current enterprise IT is not set up to easily deliver on digital dreams. In the Gartner global CIO survey*, we tested respondents’ agreement with a very strong statement. “My business and IT organization are being engulfed by a torrent of digital opportunities. We cannot respond in a timely fashion. This threatens the success of the business and the credibility of the IT organisation.” Fifty-one percent – the majority of the CIOs – agreed.
Beyond not being ready now, 42% of CIOs believe that their IT organisations do not have the right skills and capabilities in place to get ready for the future’

This is an interesting observation. IT management is a multi-disciplined activity and employing all of the skills necessary to effectively manage your IT systems is a large undertaking. Outsourcing non-core IT functions not only frees up the managements time to undertake technology projects that leverage the data available to them, and to use new technology advances to differentiate themselves, but it also means that they can access a huge array of skills, some very specialised, that they could not cost effectively resource in their own IT teams.
What’s also interesting is that in NOA’s Predictions report Gartner highlights that buyers should choose the right providers who will work with them to deliver the IT services and capability that the enterprise needs. To me this is about creating a ‘partnership’ relationship, that we aim to have as the basis of all of our customer engagements at Modern Networks. Experience tells us that the best arrangements are likely to be those where the customer and the service provider approach the business objectives in partnership, mapping out common goals and being realistic about expectations.

Research around this topic, and advocating this partnership approach has been published by The University of Tennessee’s Center for Executive Education, which has developed an entire outsourcing model using what it calls ‘a game-changing approach’ that ‘leverages “win-win” thinking associated with game theory/behavioural economics.’

The model is based on achieving results rather than fulfilling tasks or activities and uses incentives to achieve ‘trade-ups’ instead of traditional cost-service trade-offs.

The decision on who you chose to outsource your IT to, or which components of your services could be best managed elsewhere, shouldn’t be based on which supplier is offering the cheapest service. The relationship with your supplier has to be of benefit to both parties – with the value you gain from leveraging technical and IT management expertise – which can only be delivered through ongoing investment. You rightly expect the very best service and skills– and identifying the right financial model with your service provider is critical. There is an old saying of ‘you get what you pay for’!

When asked about the biggest outsourcing development Clive Longbottom, Service Director at QuoCirca said. “Building of greater trust relationships between the outsource company and the customer is a two-way thing, and QuoCirca is seeing that more companies are realising that seeing the outsource company as a supplier is not helpful and for the outsource company to see the customer as just a client is also sub-optimal. Making both parties work as if part of the same company means that both sides have skin in the game: SLAs are increasingly being based on closely watching trends and sitting down and talking about them, rather than waving a stick when previously agreed”

To read the full report from NOA click here:

*Gartner 2016 Building the Digital Platform: Insights From the 2016 Gartner CIO Agenda Report