MARCH 13, 2006 (COMPUTERWORLD) - Is your outsourcer out of control? Mine is, and the failure is my fault. Guilty, guilty, guilty! Last year, my wife and I outsourced our yard care to a local gardener. We agreed that he would mow the lawn, kill weeds, sweep walkways and rake leaves. We agreed on pricing and felt confident that our yard would be well tended.
Unfortunately, the gardener outsourced most of the work to a subcontractor, who in turn outsourced cutting the grass to various independent mowers. Apparently, some of the yard care information didn't get communicated to the subcontractor. The details certainly never got to the mowers, who were unaware of the property lines and neglected to mow part of the yard.
We had a dilemma: If we wanted something done differently, who should we contact? No approach worked well. Agreements with the gardener rarely made it intact to the mower. It often took several weeks to speak to the mower directly, since he followed an erratic schedule that rarely overlapped with ours. Moreover, he took direction only from the middleman, whom we never met.
By summer, the grass was high, dandelions were rampant, and the sidewalks remained unswept. We later received an unexpected surcharge for leaf-raking.
Does this outsourcing nightmare sound familiar? Today's IT organizations buy more products and services than they build. Everyone agrees that outsourcing is important, but do we manage it well? Here are some ways to avoid similar problems:
Create a clear contract. You may not want to prohibit an outsourcer from using outside resources, but your contract should clearly describe deliverables, schedules, service levels and cost. Your outsourcer can easily pass this information (and corresponding accountability) to any subcontractors involved. Realize that anything agreed to with a handshake may be overlooked by subsequent -- and often invisible -- subcontractor agreements.
Retain sufficient management control. Some executives believe they can outsource a major chunk of IT and get rid of all the associated staff. Experience shows that an additional 10% to 20% of the contract's value (less for infrastructure, more for applications development and maintenance) is required to monitor and manage the outsourcer. This is not a background task.
Meet regularly with your outsourcer. Successful outsourcing efforts require periodic meetings to review progress, discuss problems and plan corrective actions. Also, use these meetings to celebrate successes and communicate what is working well. We didn't, and we paid the price.
Define specific metrics. Establish clear outsourcing goals, translate them into effective metrics, and incorporate them into the contract. Review them regularly; unmonitored metrics are useless.
Build multilevel relationships. Your outsourcer's top management has decision-making authority but limited (and possibly incorrect) day-to-day information. People in the trenches have lots of pertinent information but lack the power to authorize changes. Middle management has varying levels of data and authority. Build working relationships with your outsourcer at several levels for an optimal outcome. Our gardener was too far removed from the work, the mowers had little autonomy, and the middleman was invisible.
Define clear roles. Each person involved with the outsourcer needs specific responsibilities. Who can authorize changes? Who is responsible for communications? My wife and I juggled responsibilities and painfully relearned that without clear roles, a lot of information can get lost or confused. Take measures to avoid conflicting communications across departmental lines.
Emotionally, outsourcing often equals "out of sight, out of mind." Although yard care is a trivial example, we mismanaged our gardener in the same ways many customers mismanage their outsourcers: fuzzy requirements, poor communication and insufficient management attention. It's easy to overlook outsourcer management. After all, gardening isn't rocket science, and there are more important issues. (Organizations rarely outsource the critical stuff.) Outsourcing frees your time for more pressing and complex matters. Until you begin to notice the weeds.
Leverage your outsourcing investment by allotting the time and resources necessary to manage your outsourcer effectively. Have clear requirements, establish effective metrics, monitor progress regularly, and communicate effectively. Many executives feel they can't afford these efforts, and they cut corners. But anything that warrants outsourcing also warrants management attention. Insufficient outsourcer management will result in a backyard full of weeds.
By the way, our new gardener starts this spring. And we vow to do better this time. How's the backyard in your IT department? Got weeds?
Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. He was previously CIO at Tricon Global Restaurants Inc. and Dole Food Co. Contact him at BartPerkins@ LeveragePartners.com.
