Keys to Developing a Successful IT Outsourcing Relationship
By Chris McKeachie

Outsourcing projects with significant information technology (IT) components allows you to focus your energies and resources on your core competencies and strategic business goals. It can also enable you to gain access to technology and technical staff that your association might not be able to attract or afford on its own, and reduce the costs and risks associated with keeping up with the latest technological advances.

As with all outsourcing, you need to perform due diligence on potential partners and check references. In addition, gaining a thorough understanding of what you are purchasing, and obtaining as much detail as possible in writing before you sign a contract, are also key to a successful outsourcing partnership.

Beyond these general due diligence efforts, there are actions specific to IT outsourcing that you can take to further ensure the success of your project.

SIX GUIDELINES TO IT OUTSOURCING

1. Expect relevant experience. Choose an outsource partner with staff that has successful and relevant experience to your project. Make sure the partner allows you to meet those individuals and you have assurances they will be heavily involved in designing and providing the services you receive. Technology people are usually good problem solvers; but technology people with experience in your outsource area will know how to steer clear of problems.
2. Know the impact on other systems. Understand how a technology-related outsource will impact other systems and staff and plan for any ramifications. For example, outsourcing hardcopy membership directory update and production is common; coordination of address changes between the group managing the directory update and the membership department requires thoughtful coordination.
3. Determine if customization is required. You need to know if significant customization of any software used or supplied by the partner will be required; then find out how much the customizations are likely to preclude upgrading of that software over time. Software solutions are developed on constantly evolving platforms provided by Microsoft, Oracle, IBM, etc. or, your particular implementation may be a modified version of a commercially available or off-the-shelf application software package.

The above guideline is of particular interest if you expect the relationship with the partner to be long term. Over the long run, the partner may not be able to provide upgrade benefits of the underlying platform or application without significant additional expenditures by your organization, or may have trouble making further modifications as your organizational needs grow.

4. Evaluate where the technology platform is in its life cycle. It’s important to evaluate the technology platform that underlies the solution being provided: is it potentially too near the beginning or the end of its life cycle? For example, a solid product heavily relying upon client/server technology tools developed in the 1990’s might not be as adaptable to producing web browser-based applications.
5. Leave time to test the solution. Make sure the partner has a plan for testing your solution and that they follow the plan before the “go live” date or before formal acceptance by your organization. Testing and documentation are always the casualties of a slipping project schedule, but they have a big impact on the long-term success or failure of the project.
6. Begin with a clear requirements document. Manage your implementation risk by beginning with a clear requirements document. Don’t surprise your potential partner with “requirements creep” as the relationship develops. Providing a partner with as much information as possible about the details of the work will allow them to right-size the outsource and avoid either asking for funds due to scope creep or shortchanging other areas in order to stretch the budget to cover previously unidentified requirements.

Two ways to get a clear requirements document are to hire an outside consultant or to pay your existing partner to produce one.

An outside consultant is best used to develop a requirements document or request for proposal, and assist you with contract development. This is especially important when you don’t have the staff resources to spare or you don’t have a technical expert on staff. Consider it ‘success insurance’ for the project and consider the organizational budget ramifications if the project should fail. You should also be prepared to keep that consultant involved as a liaison and your project manager if the scope of the project is large.

If you have a partner you are comfortable with, and the internal staff resources to devote to the project, you can use the partner to develop a phased approach that produces a project plan, including extensive process and solution prototypes that can be tied to the contract. This will lead to more accurate delivery dates as well as identification of opportunities and problems that would otherwise have been difficult to foresee. If you structure your agreement properly, your organization will be at risk for only a portion of the overall contract value if during this preliminary process you determine the partner’s solution will not effectively address your goals.

SUMMARY
The benefits of IT outsourcing, which include an improved focus on core competencies, access to better technology and expertise, and reduced long-term costs, will be fully realized when careful due diligence of the partner and a solid understanding of what you are purchasing are obtained before you sign a contract. Then, the six guidelines for forming an IT outsourcing partnership can be considered to help you select the most experienced partner and make sure the technical solution you select is the most appropriate to your organization and its needs.

Chris McKeachie is the Vice President and Chief Information Officer of Bostrom Corporation