Outsourcing: from end to end

Performing an in-depth analysis of the ICT area makes it possible to correctly identify a good outsourcing strategy

Outsourcing priorities have traditionally focused on internal resource shortages, managing problems through the use of outsourcers, optimizing contracts, and increasingly formalized service level agreements (SLAs).

However, the current situation of finding efficiencies and reducing costs has resulted in major changes to ICT structures, which in many cases involve significantly modifying the outsourcing strategy in order to work towards some of the following objectives:

• Reducing costs

• New financing formulas

• Improved performance

• Simplification

• Promoting changes

• Acquiring knowledge

Nae’s methodological approach for managing outsourcing, adapted to new challenges, is based on differentiating the phases that comprise the process life cycle:

• Defining an appropriate strategy for the special aspects of each organization is the basis for minimizing the risks associated with the entire change process.

• Establishing alliances and contractual agreements should focus on the current and future needs of both parties.

• The transition between models is critical for reaching the objectives that have been set and for the relationship between the client and the provider.

• The only way for a business to evolve according to its needs is through a good relationship model and tracking.

First phase: Defining the outsourcing strategy

Performing an in-depth analysis of the ICT area makes it possible to correctly identify a good outsourcing strategy. Therefore, it is advisable to perform an impact analysis and due diligence of the ICT services in the organization in order to identify the elements that can be outsourced. Depending on how expenses and investments are arranged in ICT entries, it is possible to determine where it makes the most sense to make outsourcing changes. Usually, maintenance expenses and highly-structured projects can be outsourced with greater success.

The strategy is combined with a mature management model that includes a clear definition of the processes, duties, and responsibilities, thereby joining the ICT model with the strategic framework.

Second phase: Designing alliances

Establishing an agreement that includes all the aspects of the alliance builds the foundation for a fair and lasting relationship. The client’s objectives must be clearly stated in order to avoid veering attention to lower-priority aspects. Scope, cost, duration, flexibility, and service model are key criteria for this, along with a selection of the providers that best fit the needs and objectives that have been set. These will then be evaluated in accordance with the price model and certain assessment criteria that include technical, operational, economic, and strategic aspects, as specified in the technical specifications document or the contract.

Third phase: Transition towards a new model

The transition is the critical point for the success of an outsourcing process, so the necessary mechanisms must be available in order to supervise its execution:

• Management model

• Change management plan

• Schedule of activities

• Relationship model between the parties

• Risk and mitigation plan

• Reporting model

When the new provider assumes control, it should be done in such a way so any overlap with the former provider is minimized, ensuring the correct transfer of assets and knowledge so the service is not affected, and taking into consideration that a multi-provider collaboration will be needed in many cases.

The continuous management of the contract and the service must be established in a structured manner so points of conflict are identified quickly

Fourth phase: Tracking and monitoring

In order to track and monitor outsourced services, a methodology that includes the following main activities should be implemented:

• Tracking the contract: Ensures that the SLAs and the terms between the parties are met.

• Risk management: Includes the necessary mitigating and corrective actions.

• Reporting: Provides the required executive reports.

• Document management: Guarantees that the documents for the service are properly encoded, structured, updated, and accessible.

• Billing tracking: Makes sure that services are billed correctly, along with any modifications and agreements that involve additional expenses.

The continuous management of the contract and the service must be established in a structured manner so points of conflict are identified quickly. This makes it possible to anticipate solutions and the corresponding mitigation plans by providing the client and the provider with a homogeneous view of the situation.

Lastly, it is important to promote continuous improvement in the management of outsourcing through the use of proposals that benefit the organization as well as the provider. Outsourcing involves exchanging knowledge and processes between multiple agents, and the stronger the commitment and the relationship between the two, the better the results.