IT Outsourcing is an effective component of many businesses IT strategies. Done well, appropriate outsourcing of IT capabilities can drive down costs, increase operational control and enable the business to focus on core activities. However, establishing and running an effective IT outsource contract is challenging, and all too frequently large outsource agreements fail to deliver the desired benefits.
Many of Berkeley’s clients are approaching the end of first or second generation IT outsourcing arrangements; their IT executives raise a number of common concerns:
- Loss of control - we have lost the knowledge of our IT estate, which means that we are unable to manage risk and feel exposed in terms of governing our IT partners
- Feel held to ransom - it is cost prohibitive to switch vendors and the service continuity risk to transition looms large, particularly if the relationship with the incumbent has deteriorated
- Unable to respond to business change – our systems are structured to support today’s environment, but are not flexible to the future needs of the business in a rapidly changing market environment
As Berkeley work with clients to explore options to address these concerns, it is clear that new outsourcing agreements will look and feel very different to the monolithic, long term contracts of the past. Key industry trends which have changed the way in which IT services are sourced include:
- Shorter term contracts, often only 3-5 years
- IT services being sourced directly from multiple providers (compared to the previous single vendor or prime contractor models)
- Increased number of niche providers to meet specialist requirements (e.g. business intelligence)
- Emergence of ‘cloud’ and utility offerings, changing the way in which services are procured (e.g. infrastructure-as-a-service, software-as-a-service)
How can Berkeley help you?
The Berkeley Partnership is distinct from the big consulting players as Berkeley’s independence and role as trusted advisor means they work closely with clients to make a success of their outsourcing relationships; from the definition of sourcing strategy, through facilitating the supplier selection process, to managing the transition to new providers. Berkeley are also asked to step in and provide support when an arrangement is ‘in flight’ and gets into difficulty.
Based on our extensive experience of different outsourcing arrangements across our clients, Berkeley have developed a 10 minute ‘health check’ tool to assess the strength of your current outsource relationship – you can access the IT Outsourcing Health Check for free.
Berkeley have also developed a number of hints and tips to make IT outsourcing work for your business. If you would like to read a copy of Berkeley’s view on What does 'good' look like for IT Outsourcing? please contact us.
Read our unspun article on Supplier selection – the challenge of ‘picking winners’, or contact us to request a copy of our previous unspun article on ‘Offshoring IT – avoiding the hidden obstacles’
If you have an outsource arrangement that is giving you a headache, or would like to talk through any aspect of how to make IT Outsourcing work for your business, you can contact Berkeley at itoutsourcing@berkeleypartnership.com