Get Your Outsourcing Act Together With These Seven Effective Habits

Ever wonder why so many outsourcing deals go sour? Gartner research shows that more than half of outsourcing engagements fail to satisfy the buyer organizations. Our research also shows that by far the most effective way of ensuring a happy outsourcing relationship lies in getting the terms of the relationship right up front.

With that goal in mind, Gartner Research Vice President Frances Karamouzis presented “Seven Habits of Highly Effective Outsourcing” at Symposium/ITxpo on Tuesday — a unique spin on Stephen R. Covey’s mammoth business best-seller “The Seven Habits of Highly Effective People.”

In her presentation, Karamouzis said the first habit of effective outsourcing is to develop a business-driven outsourcing strategy, followed by analysis of the available options and agreement among the participating stakeholders.

“I call this telling the truth to yourself,” she said.

This leads to the second habit, creating a sourcing action plan with clearly specified outcomes.

“The crucial first question should always be why,” she said. “Establish consensus on why you should outsource, what would change and the business outcomes expected.”

Third, she said, is to execute, prioritizing projects according to impact, budget and schedule.

Habit four is to align and collaborate, which corresponds with phases 2 and 3 — vendor evaluation and contract development — of the Gartner sourcing life cycle framework. This means knowing scope and scale. Karamouzis said she often gets calls from clients who just want to know which are top vendors in their area, but who don’t know the scope of their projects.

“If you don’t know what the scope is, you’re in big trouble,” she said.

The fifth habit is to empathize. This means creating a common understanding about the purposes and goals among the various stakeholders. It also means establishing the risks and responsibilities of both user and provider organizations.

The sixth habit involves establishing control. “You’re really in a balancing act between how much you trust a vendor and how much you want to control them,” she said.

Finally, she said, the seventh habit is to improve. This means managing, monitoring and evolving the sourcing relationship. She pointed out that even though there may be aspects of sourcing risks that are assigned to the provider, the ultimate responsibility always rests with the user organization.

“At the end of the day, outsourcing is about relationships, it’s not like hardware or software. You’re buying people — at the end of the day it’s about trust,” Karamouzis said.

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