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Outsourcing needs "corporate glue", cautions Gartner

OUT-LAW News, 03/10/2003

Poorly managed outsourcing relationships are costing businesses over €6 billion a year, because there is no "corporate glue" holding the business and its outsourced services together. You need new staff and new skills to succeed, reckons Gartner.

The message from the research analyst is that, if outsourcing, your company needs to increase its staff and training to ensure the project's success. Companies that do not change their management structure or invest properly in relationship management skills risk the failure of the outsourcing project.

Speaking at a Sourcing Roundtable in London earlier this week, Gartner recommended that companies should invest at least five to ten percent of the value of an outsourcing deal in building and 'skilling' an internal team to manage the outsourced relationship effectively.

Ian Marriott, VP of IT Services and Sourcing at Gartner, said:

"While there is a lot of focus on reduced headcount as result of outsourcing, contrary to popular belief, enterprises must gain staff and add new skills to make outsourcing work.

"It is now a matter of priority for business leaders to identify where they lack the skills, and invest appropriately in building a relationship architecture. We have not come across any company in Europe that has a formal architecture in place yet. Those that exist are highly dependent on a few good people doing the right thing for now. This is both fragile and unsustainable, and a lot of money is being wasted as a result."

To date, traditional information systems departments have had no need for staff capable of managing service providers. Steve Prentice, GVP at Gartner warned that this must change.

"The majority of companies will most likely need to look outside their business to find the right skills. This new organisational architecture will act as the 'Corporate Glue' that binds the organisation's network of business units, business partners and service providers together effectively."

 

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