Look closely at outsourcing

Big outsourcing deals may not be as popular as they once were (see my May 13 “Outsourcing still an option” column, Quicklink 050013), but judging by the number of outsourcing deals being trumpeted by Canadian managed services providers, outsourcers aren’t hurting for business.

One of the reasons outsourcing has experienced so much success is it looks like a simple way to get rid of some very complex IT headaches. But what looks like a simple solution often winds up being more convoluted than it first appears.

Take the example of Call-Net Enterprises Inc. on the front page of this issue.

We first covered Call-Net’s outsourcing deal almost exactly two years ago (see “Letting go of the network”, June 13, 2003). At the time, Call-Net’s chief technology officer Serge Babin seemed relatively content with his outsourcing arrangement. On the help desk side, for example, Babin noted Call-Net had only between 10 and 12 help desk agents and the company couldn’t justify shelling out for the latest help desk software for an operation that size.

On the other hand, Babin’s outsourcer, EDS Canada, had a massive help desk operation with all the latest bells and whistles.

Call-Net was also enticed by the potential savings it could gain with an outsourcer.

In addition, Babin noted EDS could provide his IT employees with career paths, something he couldn’t do, because Call-Net’s primary business was operating and maintaining a telecom business and not worrying as much about IT systems.

Even two years ago though, there were hints that not everything was perfect. Call-Net and EDS didn’t set strict service level agreements at the start of the contract, which led to some difficulties later on. And Call-Net wasn’t completely satisfied with EDS’ problem resolution.

In the most recent article, Babin noted that handing IT tasks off to EDS created an extra layer of complexity that led to some project delays.

Babin hasn’t decided yet whether to renew his outsourcing deal with EDS when it expires.

There are several lessons IT shops can learn from Call-Net’s outsourcing experience. Perhaps the most important one is to allow for flexibility in the contract.

A second lesson is to keep some form of control of the IT operation in case the relationship with the outsourcer sours. By maintaining ownership of his network assets, Babin gave up technology refreshes EDS might have performed, but he gained the ability to easily bring more IT processes back in house if that’s required.

Finally, SLAs are key to any outsourcing arrangement. Handing off IT processes to an outsourcer might look like an easy way to get rid of some headaches. But if not done properly, the headaches are bound to get worse.

QuickLink: 052898

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