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IT Outsourcing

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by ice-tech 1 view

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We are currently discussing outsouring our entire IT infrastructure to EDS. I am to make take an objective standpoint as an IT Manager and help drive us to a logical decision.

Has anyone out there been in a similar situation and what are you experiences?

8 replies

by generalist

One thing you might want to do is find out what software packages EDS is using for the applications you want to outsource.

You might find that you are paying more for the same quality of software and have less flexibility to boot.

by ice-tech

Actually what happened was they tried to get in at the corporate level to outsource our entire North America IT group (67 managers and admins) but could not come to an agreement on the SOW. Our comp decided a pilot might be a good idea so now they are looking at our division. Of course they will buy ALL of our equipment and consolidate most to an offsite facility. Comp likes idea of "making money" on our used goods. All techs and tech mgrs will be outsourced most likely including myself. Iam supposed to have an objective view through this process and do what's best for the comp. Main reason the SOW wasn't agreed upon at the corp level was admins screaming bloody murder about service level vs cost with outsourcing. The edslawsuits.com site has been mentioned often but is ignored as frivolous by upper mgmt.

by james r linn

is only a short term win.

What you will find is that as the natural lifecycle of the equipment ends, that the acquisition costs of getting new equipment will be higher. If you are lucky it will be easy to predict from the contract. What you needto do is some objective analysis that looks at what your turnover rate is on that equipment and what the ongoing replacement costs will be.

A good service level agreement is key - and it must contain penalties for non-performance, and an abitration method for disputes.

Not all outsourcing deals are bad, nor are all outsourcers evil money grubbers. But you have to negotiate and protect yourself as if the one you are dealing with is one of the worst.

James

by ferocious

The last company I was at that tried that approach fired their internal IT professionals to save money by hiring outside contract support.

by ice-tech

What can you tell me about how the deal went down? Were you involved in any of the negotiations? Was there a transition period or did they just walk everyone to the door?

by p53815

It has been my experience that outsourcing is a It has been my experience that outsourcing is a topic when upper management is not satisfied with the innovative and cost effective approaches provide by its in-house organization. When you consider turning over the very sensitive nerve center of your company to a profit incentive, capitalistic company you must have some large internal issues that are not aggressively addressed. Like poor internal processes, integrity, leadership, organization, achieving results.

by muscobyb

Unfortunately, this situation places you in an awkward position. I have seen movements to IT outsourcing, Accounting outsourcing, and Engineering outsourcing. I know of success stories and I know of disaster stories.

Most of the disaster stories I can recall could have been predicted to be disastrous given the timing and adoption of outsourcing. Generally, outsourcing is sought at a time when financials are in a weekened state and short-term solutions dominate the thinking process. Adoption of an outsourcing strategy MUST also incorporate a change in how the company as a whole operates and conducts business. It is a business change and a process change, afterall.

Your company cannot continue to function "business-as-usual except outsourcing IT." It will have to change. Having your division as a pilot project for the entire company may prove to be difficult if this concept has not been addressed. Factors other than cost are also timing issues (how long to get or deliver the information), exchange of information (how, where, when, what), and required ownership (audits, reports, ownership).

I don't envy your position. I also think you have been given an assignment that requires a lot more involvement than those giving you the assignment realize.

by ice-tech

There are a number of politics involved that I have to deal with on top of trying to decide which parts of the sales pitch are reality and which are fabrications to get their foot in the door. They are already talking a long term committment but they have said they would help us write up the opt-out clauses (haha).

I am trying to involve myself in every aspect of the project (that they don't slam the door in my face on) beginning with the financials. We are already operating (and successfully) on very limited resources. I haven't put all the numbers in yet but we appear to be spending just short of 1% of revenue on IT. That is very low from everything I have seen. And that number includes our phone bills (not a direct IT cost), video conferencing equipment/lines and salaries. I can't imagine how anyone could claim they could run it leaner without a direct impact on service deliverables.

If you have any hints or suggestions I am open to anything you can share. Thanks

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