Articles Posted in Industry Trends

In a look forward, Aaron Oser was recently quoted in Stephanie Overby’s other recent CIO.com article, “9 IT Outsourcing Trends to Watch in 2013.”  One of the trends he suggests to look out for in 2013 is troubled transitions and their potential for disputes. He says, “Customers and suppliers will continue to close deals without fleshing out transition and transformation details and plans. Failed or delayed transitions and transformations will [become the] number one area of disputes between customers and suppliers.”

Check out Aaron’s other comments on what to look out for next year and the full article in CIO.com here.

Want to learn more about the insourcing trend and pointers for the proper process to follow for those tempted by that trend? Please check out our article in Computers & Law Online here.

As the Thanksgiving holiday approaches, we are all juggling a whole host of “to-dos”, such as working out family travel logistics, making sure the turkey is thawing, and shopping for all of the “fixins”. Many of us are also starting to contemplate our impending consumption of too much turkey, stuffing and pie. Yes, we know everyone tries to be strong and resist temptation, but we generally just give in. Fortunately, we can all take solace in the fact that calories consumed during a holiday don’t count as much as non-holiday calories – well, at least that is the wise advice I got from my Aunt Simone (which, by definition, makes it a “fact”).

Thanksgiving is also a time when you can sit back and think about those things you are thankful for. In this blog, we decided to reach out to our Pillsbury Global Sourcing group to find out what outsourcing industry trends they were thankful for. Here are a few responses mixing outsourcing trends with Thanksgiving themes – enjoy:

1. We are finally addressing the “messy middle”. You might be misinterpreting this item to be the state of your stomach following dinner. Actually, this refers to IT service integration that is required to align service delivery among multiple players typically found in an IT environment. We refer to the service integration layer as the “middle”, because it usually sits between leadership and service delivery execution. We also refer to it as “messy” because most IT operations are at very low maturity levels in optimizing their service integration capabilities. Implementing a successful service integration framework can be difficult, time consuming and challenging. That said, we are thankful that many of our clients recognize harmonizing the activities of internal IT and multiple of third party providers is critical if they want to be in a position to mitigate operational risk, promptly address incidents and maximize efficiencies in their environment.

Sitting in the Northeast, our news has been dominated by only two stories for the last week–Hurricane Sandy and the Presidential Election. Both events have far reaching impacts on this country and its citizens, and both have (or could have) significant impacts on our industry.

Sandy . . .

Hurricane Sandy tested disaster recovery (DR) plans and operations. With outages in power and internet, and flooding of operations creating multiple points of failure, redundancy plans were pushed to the brink. Transportation options significantly limited in the hardest hit areas even where technology was available and workers were often unable to get to a viable work site. While some companies were able to swing operations to backup locations seamlessly, some had primary and secondary outages that prevented such successful recovery operations.

There has been much brouhaha throughout the 2012 presidential debates about the loss of American jobs through outsourcing to lower-cost countries. China has been portrayed as the evil nation stealing jobs and intellectual property, and violating trade rules. However, outsourcing doesn’t necessarily mean the loss of jobs to other countries. It can simply be movement between US-based organizations.

There are numerous US-based outsourcers in all sectors of the industry: IBM, HP and Xerox are brands that the population recognizes as home grown IT providers; Aon Hewitt, Mercer and Fidelity are local entities that provide HR outsourcing; and Fiserv, Accenture, and Total System Services provide outsourcing services to the Financial industry, just to name a few.

In deciding to outsource a function or service, companies look at various considerations including cost reduction, service improvement and the ability to focus attention and resources on core lines of business. Using an offshore provider certainly provides a greater cost advantage, but the chances are that onshore service providers can also perform a function more cheaply than you are currently doing it in-house. Onshore service providers can generally provide service at a lower cost due to a number of factors:

London has just witnessed an amazing summer of sport, with the Olympics and Paralympics having come to a close. Yet the impact of the Games may be broader than simply having provided Londoners (and the world) with a brilliant injection of morale and amazing photo opportunities. There are many chances for businesses to learn valuable lessons from the Games, including in the areas of risk management and project management.

1. The Olympic Paradigm – Think Ahead

As expected, the Games brought certain challenges for businesses in London. Many challenges were clear and highlighted well in advance so that businesses could plan and ensure that sufficient contingencies, tailored to their specific business needs, were in place to keep things ticking over.

Recent news that General Motors plans to insource the vast majority of its IT support positions caused shockwaves through the IT outsourcing industry. Client satisfaction with outsourcing deals has always been mixed, and one can speculate that after a twenty-plus year wave of outsourcing deals, perhaps it’s time for the tide to turn the other way. So the questions are: Is this a meaningful trend? And what does it mean for you?

I hesitate to read too much into the GM announcement, given the taxpayer-funded bailout of GM and the current administration’s need to show some US job “wins” in the run-up to the November elections. But even beyond politics, we do see some movement among our own client base to insource some previously externalized functions or, for those new to outsourcing, to take a go-slow approach that would have been questioned by the executive suite only a few years ago. Areas where we see some degree of pull-back are in IT client-facing functions (where the IT organization needs to eliminate the “noise” so it can focus conversations with internal customers on adding business value) and in business-critical application support, where outsourcers sometimes have difficulty supplying the business vertical knowledge and process functional expertise to be effective. On the other hand, there are even more headlines about the Cloud and Mobility trends where, either because of scale (Cloud) or a dynamic marketplace (Mobility), outsourcers are able to leverage resources, skills and investments that most IT departments would be hard-pressed to match.

So to the first question, it’s very unlikely that this “pull it all back” approach will be a sweeping trend. What this does mean is that IT executives can now point to GM’s decision and other market experience to be in a better position to make – and effectively execute – sourcing decisions without having to take the all-or-nothing outsourcing paradigm they’ve felt pressured to in the past. But, while the GM decision provides the anecdotal support for challenging the past approach, what’s really underpinning the shifts you read in the headlines (and we see in our advisory business) is the rise of IT Service Management into a maturing capability.

Based on a 2011 Gartner study, numerous website and industry blog postings, and almost every executive I’ve spoken with, it seems that innovation continues to be lacking in outsourcing relationships. All companies want it, all providers promise it, and no one is happy with the actual results.

The study offers suggests three key steps for how to “contract” for innovation:

• Define Innovation