Main concerns for IS/IT management when outsourcing

This post discusses main concerns for IS/IT management when outsourcing. Outsourcing some or all of a firm’s computer operations, network operations or IT function results in a number of concerns for IT management.  Four aspects that need to be managed well include:

  • Organisational Structure
  • Governance
  • Day-to-day working
  • Supplier Development

Some challenges with outsourcing include becoming dependent on an outsourcing provider which could lead to a loss of strategic advantage or agility.  Control is a key challenge which is mitigated by the governance.  The following points highlight some of the main challenges with outsourcing.

Organisational Structure: In order to manage to outsource a number of levels of teams need to be created.  The top level team consists of a couple of top level executives that deal with conflict resolution.  The operational team look after the everyday functioning of the partnership.  On occasion, a joint special purpose team could be created to solve some issues.  Some companies also have standing committees who oversee change management.

Governance: Service level agreements (SLAs) are a major governance item as they are used to gauge supplier performance.  The SLA highlights the responsibilities, performance requirements and penalties should items not be completed.  An SLA needs to be measurable so that improvements can be demonstrated.

From a management and HR point of view ,the day-to-day working of a provider’s relationship with the organisation is of primary concern. The Sourcing Interests Group provides advice on carrying out daily interactions with providers.  These include managing expectations, not supplier’s staff.  Problems should be tackled together.  Realising that formality may occur as outcomes need to be measured is important to ensure relations are maintained.  This movement to a more formal way of working can add quality to work.  Integration of staff does not happen naturally and policies are required.  Cross-teams should be included in team activities such as social events and meetings.  Finally, frequent communications are essential for managing relationships.  By being conscious about how staff are working and interacting and proactively making steps to ensure good working relationships, managers can reduce the amount of issues that could be associated with outsourcing.

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