|
Software outsourcing
though in huge demand & profitable proposition,
if not handled properly can become a pain also. But
professional organizations outsourcing software or hardware
functions are very cautious these days & do they
due diligence before selecting the right software outsourcing
partner. Given below are 5 modes of avoiding the common
pitfalls in outsourcing.
Even as the scope, speed and scale of outsourcing increase,
companies fail to take full advantage of the benefits
outsourcing has to offer. Instead, they're falling into
the booby traps along the way. To take one well-publicized
example, Dell's enterprise customers barraged the computer
maker with negative feedback after their experiences
with Dell's offshore customer support. That led to some
managerial backpedaling and questions about whether
offshoring had gone too far.
Getting it right is a challenge and some common pitfalls
can be outlined:
- Pursuing an outsourcing strategy to "remove
a headache" is a misdirected motive. More than
one executive has let the thought cross his or her
mind that "it really would be nice if my managers
didn't complain about system downtime and connectivity
problems every time they speak to me." Operational
headaches can be cured, and outsourcing is indeed
one of the ways of doing so, but that should not be
the primary motivation.
- Treating outsourcing as a monolithic, oversimplified
strategic concept can prevent managers from exploring
other, potentially more beneficial options. Outsourcing
is related to but is not the same as moving operations
offshore, relocating operations or functions within
a geography, and sharing and centralizing services.
In addition to the various "hows" of outsourcing,
there are many other questions: Do we outsource an
entire function, or just selected services? Do we
enter into a long-term agreement, or conduct a series
of short-term "experiments?" Do we multi-source
to several vendors at once, or find a single outsourcing
partner?
- Outsourcing poorly managed operations in the hopes
that someone else can manage them better. This is
a way of trading one headache for another. While it
is critical for value chain partners in an outsourcing
relationship to play to their relative strengths,
outsourcing something you don't know how to manage
or understand can lead to problems later on. For example,
it is difficult to develop sensible and realistic
service level agreements and long-term, mutually beneficial
contracts when one party doesn't understand the complexity
of the network infrastructure being serviced or the
reasons why employees call a soon-to-be-outsourced
help desk. It is also unlikely that the ongoing management
of the relationship with the vendor will be results-driven,
since the optimal results and performance indicators
won't be defined and managed systematically, let alone
understood.
- The failure to follow a sound approach to evaluating,
selecting and implementing an offshore
outsourcing strategy can lead to less than optimal
results. A simplistic approach to identifying what
is currently considered core and noncore to the business
may result in the loss of future capabilities, an
increase in operational risk or the loss of control
over critical business processes. When pursuing an
outsourcing strategy, success will depend on the depth
to which management can understand operational performance
and the degree to which the team follows a well-tested
process for evaluating the opportunity, selecting
the best way of optimizing the operation or function,
implementing the change program and regularly monitoring
the service going forward.
- Market developments can change the relative value
to be gained from outsourcing altogether. Many observers
of the pharmaceutical industry had high hopes for
a rapid increase in the use of small drug manufacturers
in emerging markets as outsourcing partners. But when
large pharmaceutical and biotech companies decided
to merge operations, there was a tendency to emphasize
improving the utilization of unused internal capacity
rather than looking to move functions and operations
outside. External factors can change the relative
pay-offs.
While the first two of these issues require a change
in mind-set, the last three demand a clear, systematic
and results-oriented approach to understanding and realizing
the opportunities from outsourcing. In other words,
overcoming the issues of poorly managed operations,
finding and following a sound approach to outsourcing,
and monitoring market developments are all very much
about implementation and execution.
Companies will be better off when the attention moves
from building hype to crafting practical, implementable
outsourcing solutions.
Source: http://www.darwinmag.com/read/040104/pitfalls.html
|
