Georgia Is On The Right Track
03/28/2008
Transforming IT for the state of
We believe that outsourcing—properly planned and managed—is the right solution for
A recent report released by Deloitte Consulting affirms our approach. The study, Why Settle for Less? 2008 Outsourcing Report, found that a lack of strategic planning leads many outsourcing arrangements to fall far short of their potential, even as they deliver on financial objectives and return on investment. According to the report, a “procurement-oriented view” causes companies to miss out on a chance to “transform their operations and drive dramatic improvements in efficiency, productivity and reliability.”
The survey of more than 300 business and IT executives, including outsourcing buyers, vendors and legal firms, found that while the majority of companies were pleased with the financial results of their outsourcing arrangements, they also believed they could be achieving more. That belief, according to the report, may underlie the problems and escalations that more than half of the respondents reported experiencing during the first year of a contract. More than a third of the executives wished they had devoted more time to vendor selection and evaluation, and almost half wished they had defined service levels that better aligned with their business goals.
For their part, most service providers polled said that clients were unprepared for outsourcing. Companies had neither a plan nor the necessary operational data for making smart outsourcing decisions, and they did not understand how the new organization would work.
The report outlines key factors essential to maximizing the benefits of an outsourcing arrangement:
- Rightsizing the deal — Cost savings should not be the primary driver. The report notes that “companies can reap substantial benefits…when they explicitly establish transformation as the basis of their outsourcing strategies.”
- Build a solid foundation — A sound business case supports decision-making beyond the outsourcing process, through implementation and ongoing operations.
- Vendor selection — Start with an RFP that states strategic requirements, including service levels.
- Striking the deal — Ensure that the contracting process is mutual and flexible.
- After the deal is signed — Get what you pay for. Effective performance management is critical to success.
Our process for GAIT 2010 addresses all of the issues raised in the Deloitte study:
- We spent six months conducting a professional assessment and gathering data to build a business case grounded in operational efficiency and risk reduction, not cost savings.
- We are dedicating a significant amount of time and resources to vendor evaluation and selection.
- We are developing an organization within GTA to manage service providers, which will be in place before contracts are signed.
For more information or to read the full report, visit Deloitte’s website.