Pieces of eight - managing IT outsourcing projects - Industry Trend or Event

Communications News, Nov, 1999 by Ralf Leszinski

Make your IT outsourcing efforts pay off with these golden project-management techniques.

Outsourcing your IT is a daunting challenge for even the most savvy network manager. All it takes is faulty hardware, incompatible equipment, or pieces of software interfering with each other to cause a systems meltdown. And regardless of who's really to blame--whether it's a vendor, programmer, or whoever--you're the one who takes the heat.

Unfortunately, many IT outsourcing projects result in significant downtime, interoperability problems, and other time-and money-consuming difficulties. Why? Here are three common pitfalls:

Poor scope definition. You've defined all the hardware you' re going to outsource, for example, but haven't specified how to handle system upgrades. So, the next time Oracle or another applications company comes out with a new upgrade, whose responsibility is it to put that upgrade in--yours or the vendor's? If you don't define those things on the front end, the situation can get ugly.

Insufficient documentation. You fall into this trap when you rush the outsourcing initiative according to the original schedule, deciding to create documentation for business processes, service-level agreements (SLAs), software and hardware licenses, and so forth as you go along. What's the problem with this approach? It's tough enough to write down everything that you do, how you do it, and what the service-level metrics are when you're not already engaged in an outsourcing effort--but it's nearly impossible after the project ball has started rolling. If your specs aren't written down, they won't get into the contract. And, if the initiatives don't make the contract, they won't get done, at least for the price quoted in the contract.

Insufficient management of the transition. In this instance, many network managers fail to ask such questions as: What are the training needs of the individuals once the new software and hardware is in place? How do we ensure personnel retention throughout the transition? What actions are necessary to make the transition transparent to the users? As a result, while they may have purchased the right products, the business units suffer due to lack of training and other issues.

USING PROJECT MANAGEMENT TECHNIQUES

How do you avoid costly IT outsourcing mistakes to ensure product reliability and maintain uptime? The key is to apply effective project management techniques to select vendors, clarify expectations, and make sure that the final product is what you expect. Here are eight steps to help you make your next IT outsourcing effort a success:

PLANNING PHASE

1. Identify the need (the business case). What business objectives do you want your IT to meet? What do you need--in way of hardware, software, and intellectual capital--to fulfill those goals?

2. Design the outsourcing strategy. Once you've determined what you want your IT to accomplish, the next step is to address the following issues:

* What parts of your IT do you plan to outsource and to whom?

* What is a common definition of the success criteria (e.g., service-levels, response times, implementation timing, and cost of service)?

* How are leases, hardware and software maintenance, and service contracts going to be transferred from one holder to the outsourcer?

* How are change orders to a project's scope going to be handled?

* How are business-unit representatives brought into the process?

3. Develop the cost model Integrate the following information into your cost and budgeting model:

* What costs are you going to save internally? How are you going to ensure that these savings are really achieved?

* What costs are associated with the vendor? How are you going to monitor those costs? What are the costs of the monitoring process?

4. Compose the request for proposal (RFP). Fully explain, demonstrate, and document your requirements for equipment, material, and supplies in the RFP. What should you include in your description of needs to attract the quality IT vendors you're looking for?

* Delivery mandates. These specs clarify when the products must be delivered and where for the contract to be fulfilled, as well as the service levels that must be achieved.

* Acceptance clauses. This means that products that don't meet agreed-upon standards will be returned and replaced at no cost to you.

* Success definition. This definition serves as the acceptance criteria.

* Resource requirements. This defines the ongoing support to be provided to the outsourcing company.

* References. Where has the vendor completed a similar effort before?

5. Select the winning proposaL Compare the relative performance of the individual bidders against your definitions of project success. Base your selection not only on the steady-state solution (i.e., how will the operations work after the successful outsourcing) but also on the transition plan to the steady-state solution. Look for a vendor company that truly demonstrates its ability to master the details of the transaction.

6. Identify the risks. What are the risks associated with the vendor? What are the risks associated with the particular pieces you decided to outsource? What are the business risks? Once you've anticipated what could go wrong in the outsourcing effort, determine how you're going to mitigate the risks--before you sign a vendor agreement. This way you're not blindsided by crises you could have prevented on the front end.