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Why IT outsourcing deals fail

Posted by Anthony Lamoureux on 19-Feb-2015 13:34:00

Why_IT_outsourcing_deals_failA well constructed IT outsourcing agreement can provide businesses with additional resource and expertise that shines a light on tired or outdated processes, saving the business money, making the business more competitive and ultimately more successful. Nothing new there then - that’s why businesses choose to outsource services in the first place.

But when an IT outsourcing deal fails, the weight of that failure can lie heavy on the shoulders of the business. But if it’s such a tried and tested method of bringing success, why do IT outsourcing deals fail?

It is a simple question and no doubt you could reel off a number of reasons straight away…

“It wasn’t the right fit for our business”

“It was too expensive”

“It didn’t produce the results we wanted”

“The providers lost impetus”

Unfortunately it only takes one bad (expensive) experience to shift the value of IT outsourcing deals from business benefits to cost-only benefits. It’s understandable that organisations want to protect themselves against failures by putting safety measures in place when dealing with outsourced IT providers. The net result however is far from beneficial. Instead of using IT and new developments in technology to enthuse and empower an IT workforce, putting an emphasis on cost and limiting the IT provider’s ability to be creative becomes restrictive, dampening spirits and stifling innovation. 

Race to the bottom

One such measure is an antiquated use of the Request for Proposal (RFP) process. Straight off the bat businesses are placing restrictions on what IT outsourcers can provide and making them strip back what can be offered in order to fit square pegs in round holes and provide the best price against competitors. It seems like a bizarre method that climaxes in a simple race to the bottom, with suppliers slashing costs rather than focusing on services. After all, a Ferrari stops being a Ferrari when you strip it back too far, right? 

Expanding on that analogy, think of IT outsourcing another way – If you set out to buy a Ferrari, ask yourself whether would you go for the cheapest quote you can get that drives down the quality and support services you receive?  Is there any point in buying a Ferrari if it comes with wooden seats, a Vauxhall engine and then breaks down a mile from the forecourt because you restricted the dealer with what he could provide for a certain price?

That’s a simplified scenario admittedly, but the message rings true – focus too hard on cost savings and the quality of what you receive will suffer.

Transform your IT

5_Reasons_Outsourcing_Deals_FailThe truth is that when it’s done right, IT outsourcing can be transformative and there is a roadmap to follow that can reduce risk, whilst still leaving room for innovation. This is what we investigate in our eBook: Five reasons why outsourcing deals fail and what you can do to prevent them. 

In it we highlight the different levels of outsourcing relationship maturity, how to construct an effective RFP process that not only delivers a good price, but also delivers true value to the business by rewarding innovation and fostering a relationship between customer and supplier that engenders growth.

To download our eBook and understand the key reasons why outsourcing deals fail and how you can prevent failure, then click on the button below.

Download Now

 

Topics: IT Outsourcing

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