InformationWeek

September 14, 1998

Executive Report: The New Outsourcer

By Rusty Weston

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he pervasive use of IT outsourcing is the best evidence of its success. Yet many outsourcing relationships aren't mutually gratifying exercises in teamwork or cooperation. The secrets to establishing and managing successful outsourcing relationships elude many otherwise competent IT managers.

Only 57% of IT managers say their outsourcing vendors are consistently meeting IT service guarantees, according to a recent InformationWeek Research survey of 150 IT managers engaged in outsourcing. But IT managers must shoulder some of the responsibility when technology projects don't go as planned.

chart The IT managers polled by InformationWeek Research concede they're unsure the hard work is paying off. Let's look at the various projects surveyed (all were rated on a scale of a 1 to 10, where 10 is "extremely satisfied" and 1 is "not at all satisfied").

Network infrastructure: On average, IT managers rate their success with these projects a 6.7.

Systems management: This scored a 6.6-not as high as would be expected, considering the maturity of products in this area.

Year 2000 remediation projects: These rated a6.5 from IT managers who are probably still engaged in the outsourcing relationships. It's likely the score is indicative of the complicated testing regimens that are contributing to project delays and cost overruns.

Web and E-commerce hosting: These areas are among the fastest-growing outsourcing markets, but the 6.4 satisfaction rating may be due to the constant challenge of rushing new product features.

Application development: A shortage of skilled coders or management issues may contribute to the 6.3 rating in this field.

Enterprise resource planning and supply chain: Rated 5.6 and 6.0, respectively, these projects may be tainted by problems. These are difficult projects to implement because the applications span multiple departments, divisions, or companies.

Satisfaction with outsourcing projects will continue to bump along until senior executives realize one of the probable causes: undertrained IT managers. CIOs and CFOs must initiate training for IT managers. Consultants and advisers who have managed IT outsourcing relationships can share their experiences, and third parties can offer advice on requests for proposals and outsourcing deals.

Rusty Weston is managing editor of InformationWeek Research.

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