The Winchester Services Group

Consultants to Management for Information Technology

 
 
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Deriving value from contracting and Outsourcing
 
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Deriving Value from Contracting and Outsourcing

 

 

 

"We have a most interesting chess game here.  All the important moves are the opening ones" - Admiral Lutjens, Commanding Bismark Battle Group, May 1941.
  The Need:
       
  Outsourcing (the use of third parties to provide some or all aspects of IT services) offers many attractive opportunities to a business.  In considering the Outsourcing option, many businesses become infatuated with the prospect of significant cost savings.  Experience has shown such savings to be elusive, declines in service levels to be significant, the organizational impact to be more severe than expected, and management of the Outsourcer and the contract to require skills and experience not present in the residual IT organization.  These challenges can be met and the benefits realized, but upfront consideration of what, when, how and to whom to outsource is required to avoid costly and unpleasant experiences.
   
 
   
  The Objective:
       
  The objective of entering into an outsourcing arrangement (or in a broader context, the objective of changing existing IT sourcing arrangements) is to increase the value being received from the company’s investment in technology.  Realization of the objective requires a broad-based, strategic approach to assessing, developing and implementing sourcing solutions that support the organization’s information technology strategy and address the following questions:
   
    Ø What IT services should be outsourced – which should be kept in-house?  
    Ø What are the projected life-cycle costs and benefits – best and worse case?  
    Ø What are the technical, business and cultural risk to outsourcing?  
Ø What do we need to do to manage the vendor during and after the transition?  
    Ø How often should the sourcing solution be re-visited?  
Ø Will a decision to outsource increase or decrease the business’ ability to achieve its goals and objectives?  
     
  Approach:  
     
  Our approach to assisting you to achieve the objectives of outsourcing are depicted in the figure above and consists of five phases:  
     
Ø Assess:  We begin by assessing which services should be considered for a sourcing solution change.  (Examples of services are computer infrastructure, networks, development, help desk, process management.)  This phase also identifies potential sources for services and estimates transition costs and schedules.  
         
Ø Design:  During the design phase, expected service levels are specified and the goals, expected benefits, and on-going costs estimated.  A preliminary migration plan is architected including designing the process for acquiring services and transitioning to the new arrangement.  
         
Ø Develop:  The RFP is developed and distributed to potential vendors.  Needed processes and procedures are developed including how service level agreements will be measured, reported and penalties assessed; how issues are identified, tracked and resolved; and how costs and invoices will be reviewed and administered.  
         
Ø Implement:  Negotiations with responsive vendors are conducted and the sourcing contract signed.  Assets including hardware, software and people are transferred or acquired.  
         
Ø Manage and monitor:  Implementation of the new sourcing arrangement is monitored and transition issues identified, tracked and resolved.  Transition status reports are prepared and distributed, and Re-Sourcing program status review meetings established and facilitated.  
Benefits:
Successful Outsourcing (Re-Sourcing) of IT Services can produce dramatic cost savings; improve service delivery, reliability and quality; and enable the business to focus management’s attention on core competencies.  Use of The Winchester Group’s services to assist in the transition ensures that the IT Outsourcing make-or-buy decision is comprehensive in approach, magnitude and scale; is aligned with business objectives; considers the total cost of operations; has an appropriate IT governance structure; and provides the flexibility necessary to meet tomorrow’s business requirements.

 

To see an example of this service in action, click on the button below to view Success Stories:
  High Tech Manufacturer
  Nonprofit Association

 

 

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