PA observes that, despite the relative maturity of the IT
outsourcing market, the success rate has remained static. So it
surveyed 315 organisations across the world, including clients and
their suppliers, to find out what is going wrong.
Sixty-six percent of clients said they wished they had focused
more on the suppliers' ability to deliver on their promises. Scott
Hamilton, a member of PA's management group and sourcing executive
board, acknowledged that due diligence can be challenging: "A
supplier is only ever going to name a reference client from a
successful project," he said. But he was still surprised to find
that 58% of clients in the survey had not undertaken any form of
due diligence at all.
Expectations can differ widely. Most clients do want to save
costs by outsourcing their IT functions, but money is not a driver
for 24% of clients. In contrast, Hamilton notes that "suppliers are
obsessed with costs": all supplier respondents thought clients
wanted to save costs. And for 67% of clients, access to IT skills
is a motivator; yet only 14% of suppliers appear to recognise
this.
Again, poor communication is blamed. Almost 80% of suppliers
said that clients failed to communicate their objectives clearly at
the outset. And 62% of suppliers reported that clients have
unrealistic expectations.
Hamilton also points to "a real disconnect in the area of
business transformation": suppliers think it's what they are
selling more often than clients think they are buying it. "Clients
aren't so interested," he observes. Only 32% of clients tried using
IT outsourcing as a means to deliver business transformation, most
preferring to maintain control in-house. Of those that tried, most
reported failure.
Clients also expect innovation – it is often pitched in the
sales process – but they don't budget for it, according to
Hamilton. He describes 'innovation boards,' which suppliers will
offer as a means of brokering debate on thought leadership. But
while clients often complain about a lack of innovation in the
supplier's delivery, Hamilton says they fail to understand that it
takes time and effort and effective and transparent commercial
management.
Respondents also expressed frustrations about personnel changes.
The team that is involved at the point of procurement usually
disappears at the point of delivery. "The simple answer is to make
sure the delivery team is there as early as possible – on both
sides," said Hamilton.
PA described its own survey results as both a revelation and a
disappointment. "The revelations show a number of areas where
suppliers and clients appear completely aligned and work 'as one'
to deliver tangible benefits," notes the report. But at the same
time, suppliers and their clients "still make basic but
far-reaching errors that put their sourcing arrangements at risk
virtually from the start."
"To the outsourcing professional, these findings may not be a
surprise," concludes PA's report. "The question that remains is why
these problems persist in an industry that is becoming increasingly
mature."
For a copy of the report, email: bobby.ngai@paconsulting.com
