Outsourcing is traditionally associated with getting help to do things you might not normally associate with your core business. Andrew Kershaw describes a different approach to outsourcing that can establish IT excellence and create significant commercial advantages as a result.

Over the last 15 years, I have observed a number of different IT teams and experienced a wide variety of situations where outsourcing has been involved. But what distinguishes a really good IT team from an also-ran?

Let’s first look at the role of business technology. Experience has shown me that IT has two very different roles; as a ‘utility’ providing technology on tap; and as an ‘enabler’ that improves the bottom line.

The ‘utility’ perspective of IT is well-disposed to successful outsourcing. However, as a successful operator in the field, we know that outsourcing can be far broader in its scope and potential. To really make a difference to your organisation, its clear priority must be enabling and delivering technology-based innovation. This is where competitive advantage can be gained and goals materialised. It is vitally important that IT contributes more than just running infrastructure effectively and inexpensively.

Outsourcing doesn’t mean having to move all of your IT functions out to a supplier. Ideally, the first thing you should do is identify the strengths and weaknesses of your business in its ability to deliver quality business technology. Once this is established and you have a better idea of what you want (and what you don’t need), you’re in a position to choose the right supplier to add value.

A good outsource partner provides complementary skills, knowledge, ideas and creativity to help their client achieve competitive advantage; meaning effective providers are viewed as strategic partners rather than suppliers.

Good relationships and communications are crucial Successful IT outsource partnerships are built on strong relationships. If the customer is to extract maximum performance from his outsourced partner, he must approach the relationship with similar vigour. Communicating at the right level leads to productive and profitable relationships; a business leader, such as the CIO or IT Director, should act as the key point of contact for the outsource provider helping to keep IT in line with the business strategy.

Efficient execution of the ‘utility’ side of IT is an absolute priority. If it isn’t, then system availability, reliability and support issues will start to impact on the relationship with senior people. This will distract the IT leader, whose time will be spent in fire-fighting and damage control. Both credibility and relationships are almost guaranteed to go downhill as a result.

Must add value Outsourcing can be associated with cost benefits, although this is not as simple as it at first seems. To achieve cost reductions, an outsourced provider needs to find ways to deliver services for less, which may not be feasible where client IT functions are already fairly lean. In this case value can be added in the form of expert capabilities and service quality. An internal IT department must deliver a considerable number of capabilities; this is only possible with smaller IT functions by drawing on specialist expertise. Outsourced providers can offer flexibility as well as continuity with such capabilities. If you need a particular expertise every now and again, it can be hugely advantageous to draw on the same team you’ve invested in by building relationships and domain knowledge. A good outsourced provider will deliver this sort of flexibility as an implicit part of their contract.

Service quality can vary between providers; but the inevitable competition between the best helps to ensure constant focus on service quality. As an outsourced service provider, delivering consistently high standards of service is critical to survival: otherwise we risk losing clients who always have the option to change providers. We deliberately structure our contracts so it’s straightforward for our clients to do this without penalty; it keeps us on our toes!

Far from being a tedious necessity, IT Outsourcing can be a revelatory and transformative addition to your operation. In an unpredictable world and uncertain times, change is all. And achieving the correct changes to survive and prosper, your business should look to those who understand, and often create, these disruptions.