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Deriving Value from Contracting and Outsourcing |
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"We have a
most interesting chess game here. All the important moves are the
opening ones" - Admiral Lutjens, Commanding Bismark Battle
Group, May 1941. |
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The Need: |
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Outsourcing (the use of
third parties to provide some or all aspects of IT services) offers many
attractive opportunities to a business. In considering the Outsourcing
option, many businesses become infatuated with the prospect of significant
cost savings. Experience has shown such savings to be elusive, declines in
service levels to be significant, the organizational impact to be more
severe than expected, and management of the Outsourcer and the contract to
require skills and experience not present in the residual IT organization.
These challenges can be met and the benefits realized, but upfront
consideration of what, when, how and to whom to outsource is required to
avoid costly and unpleasant experiences. |
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The
Objective: |
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The objective of
entering into an outsourcing arrangement (or in a broader context, the
objective of changing existing IT sourcing arrangements) is to increase the
value being received from the company’s investment in technology.
Realization of the objective requires a broad-based, strategic approach to
assessing, developing and implementing sourcing solutions that support the
organization’s information technology strategy and address the following
questions: |
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What IT services should
be outsourced – which should be kept in-house? |
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What are the projected
life-cycle costs and benefits – best and worse case? |
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What are the technical,
business and cultural risk to outsourcing? |
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What do we need to do to
manage the vendor during and after the transition? |
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How often should the
sourcing solution be re-visited? |
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Will a decision to
outsource increase or decrease the business’ ability to achieve its goals
and objectives? |
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Approach: |
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Our approach to
assisting you to achieve the objectives of outsourcing are depicted in the
figure above and consists of five phases: |
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Assess:
We begin by assessing which services should be considered for a sourcing
solution change. (Examples of services are computer infrastructure,
networks, development, help desk, process management.) This phase also
identifies potential sources for services and estimates transition costs and
schedules. |
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Design:
During the design phase, expected service levels are specified and the
goals, expected benefits, and on-going costs estimated. A preliminary
migration plan is architected including designing the process for acquiring
services and transitioning to the new arrangement. |
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Develop:
The RFP is developed and distributed to potential vendors. Needed processes
and procedures are developed including how service level agreements will be
measured, reported and penalties assessed; how issues are identified,
tracked and resolved; and how costs and invoices will be reviewed and
administered. |
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Implement:
Negotiations with responsive vendors are conducted and the sourcing contract
signed. Assets including hardware, software and people are transferred or
acquired. |
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Manage and monitor:
Implementation of the new sourcing arrangement is monitored and transition
issues identified, tracked and resolved. Transition status reports are
prepared and distributed, and Re-Sourcing program status review meetings
established and facilitated. |
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Benefits: |
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Successful Outsourcing
(Re-Sourcing) of IT Services can produce dramatic cost savings; improve
service delivery, reliability and quality; and enable the business to focus
management’s attention on core competencies. Use of The Winchester Group’s
services to assist in the transition ensures that the IT Outsourcing
make-or-buy decision is comprehensive in approach, magnitude and scale; is
aligned with business objectives; considers the total cost of operations;
has an appropriate IT governance structure; and provides the flexibility
necessary to meet tomorrow’s business requirements. |
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To see an example of this service in
action, click on the button below to view Success Stories: |
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High Tech Manufacturer |
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Nonprofit
Association |
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