After more than 20 years of modern outsourcing, articles and studies still proclaim a failure rate ranging from 25 – 50%. Skeptical? Just talk to a sampling of those who have reasonable experience at managing an IT outsourcing relationship, or just do a little online searching.
It’s no secret that managing an outsourcing relationship is not easy. Unfortunately, for a number of reasons, the industry has latched onto the nebulous concept of governance as the means to do it. Do a little more searching and you’ll find a plethora of opinion regarding its meaning and applicability – reminiscent of the Saturday Night Live skit where a new product named Shimmer was both a floor wax and a dessert topping.
While there are no silver bullets, we believe there are some fundamentals that can be put in place to help avoid outsourcing failure: it begins with how the relationship was initially formed (way back when the sourcing strategy and RFP were developed), how the customer set up its retained operation, and, obviously, how the relationship is actually being managed.
Doug Parker and John Nicholson have written more about the problem and some thoughts on the solution in a new white paper, Avoiding Outsourcing Failure by Understanding the Retained Solution.