October 01, 2005
10 Outsourcing AntipatternsRonald B. Smith
It's deceptively easy to farm out IT work. Here are some worst practices that guarantee your time and money won't be well spent. But if you cared about that, you wouldn't be reading this, right?
Having worked in IT services for several decades, I've conducted many types of outsourcing projects for clients, from Y2K updates to transition teams that take over ownership of a company's IT department and its assets. On every outsourcing project I've participated in, the client has committed one or more of the following 10 antipatterns, causing delayed completion dates, increased costs and scope creep. If you're eager to bumble your next outsourcing effort, here's how to get on the fast track to failure.
Antipattern 1. The Big Whim
An April 2005 study by Deloitte Consulting found that almost 50 percent of respondents didn't formally evaluate the business case for outsourcing. A methodology should include your strategic reasons for outsourcing (such as improving business focus, gaining access to novel capabilities, accelerating reengineering efforts, or sharing or transferring risks). It should also cover your business reasons for outsourcing (such as reducing operating costs, making capital funds available or accessing resources not available internally).
Antipattern 2. The Sponge
Not identifying all costs is the problem that crops up most often in outsourcing agreements. If you want a successful outcome, do all you can to avoid these mistakes:
If you haven't taken a long look at what it really costs to develop a particular project in-house as compared to outsourcing it, the supposed savings of sending work to a consultant or overseas service provider may spontaneously combust, leaving you with insufficient funds and an incomplete project.
Antipattern 3. The Dark Glasses
If other projects overlap your planned outsourcing project, are you prepared? Internal and external project schedules must be coordinated to eliminate any duplicate efforts, unknown dependent activities, out-of-sequence tasks and payment confusions. Other potential obstacles include special promotions, the opening or closing of facilities, and moratorium dates that conflict with holidays, payroll processing, backup periods and financial closings.
Antipattern 4.The First Base
It happens all too often: Stakeholders don't see eye-to-eye or have different agendas, whether due to interpersonal, geographic or cultural differences. Or, the project's sponsor isn't truly committed to the project and hinders progress by not making timely decisions to keep it moving. Finally, some client teams and management just don't like ceding control to outsiders. Research and document all the stakeholders and their competing obligations before you outsource the project, or run the risk of having it torpedoed in mid-course.
Antipattern 5. The Rock 'n' Roll
I've worked on projects that met all the conditions of the contract (as well as being completed on time and within budget) and still weren't considered successful by the client. Why? Because the conditions of satisfaction (COS) weren't defined (for example, minimizing interruptions to the business so that the knowledge transfer will be completed successfully) and passed on to the outsourcer before the project started. A smart outsourcer knows this, and will help you develop your COS.
Antipattern 6. The Softie
Most companies underestimate their own management requirements when it comes to outsourcing. The way around this? Have the outsourcer develop a communications plan at the start of the project, to be approved by you. This plan should:
Antipattern 7. The Orange Alert
I've worked on outsourcing assignments in which the client wasn't physically prepared for us—no office space or facilities had been designated, entailing a lot of scrambling around. I've also seen clients who didn't implement a virtual private network to support the requirements of the outsourced project. I've also seen clients who didn't implement an agreed-upon technology change that was vital to fast progress on the new project, such as using Java tools instead of a C shell to develop websites. Listen to the Boy Scouts, and make sure you've got your site and your software ready for your consultants or overseas offshore service provider.
Antipattern 8. The Second Base
In my experience, the client is always quick to define the outsourcer's responsibilities, but slow in defining his own. But this isn't just a handoff—the degree of discipline that the client's leadership exercises can make or break a project. To succeed, you must meet your own schedule commitments (say, by supplying equipment and people).
Expect the outsourcing company to outline your responsibilities in a contract or statement of work. If it doesn't, or does a poor job in defining them, look for a firm that knows what it's doing.
Antipattern 9. The Black Hole
A parsimonious attitude toward personnel will doom your project from the start. But you can't toss unlimited resources around, either. Before the services begin, you need to designate a project manager (PM) to work with the outsourcer's PM. Your PM manages many of your responsibilities as a client, acting as a liaison between your project team and the outsourcer's project team. The PM provides data and makes decisions in a timely manner, ensures that the appropriate personnel are available to the outsourcer when needed, participates in project status meetings, helps resolve problems and escalates issues as necessary, and directs the project implementation schedule along with the outsourcer's PM.
But that's not all: You may also need to deal with other personnel issues, such as hiring new people or using subcontractors to match required skills for the project, ramping up and rolling off staffing, training and learning curves, planning for holidays and vacations, and choosing personnel to commit to multiple projects.
Antipattern 10. The Third Charm
Many firms don't bother spending time and energy to select the best outsourcer—and most come to regret that oversight. This is a big investment decision, and you'll have to live with it during and after the project. First, seek bids from at least two or three outsourcers. Make sure they're qualified and have references. Learn about the people the outsourcer uses: experience, locations, subcontractors. Don't assume anything when reviewing proposals; when in doubt, ask questions. Don't base your final decision solely on the lowest bidder. And remember, always consult with legal counsel before signing anything.
Foiling Failure
Ronald B. Smith, PMP, has more than 25 years' experience in project management and works for a Fortune 100 corporation. He has published three books and a dozen articles on project management and the application development lifecycle. Contact him at ronjansmith@earthlink.net.
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