IT outsourcing should not impede innovation - the time has come to rethink

Original author: Robin Schlee
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Currently, nine out of ten Fortune 500 companies have outsourced some of their IT functions, but many of them still do not understand all the benefits. They are often locked in long, unbending contracts that provide only marginal savings and entail limited mobility and flexibility due to loss of control. However, times have changed, technologies have changed, and business priorities have been redefined. In the digital age, traditional IT outsourcing (ITO) models can no longer work efficiently. It's time to rethink and change the conditions.

Digital transformation is happening right here and now. The convergence of cloud, social, mobile, analytic applications and the Internet of Things (IoT) is the creation of new products, services and even business models that were unthinkable just a few years ago. Studies show that companies that firmly believe in the benefits of introducing new technologies are more likely to quickly increase revenue and market position.

In order to be agile, dexterous and realize the potential of digital technologies, companies can no longer afford to be bound by inflexible models of service delivery. The limitations of the traditional model of outsourcing - with their tough scope of work, disparate operations and KPIs, as well as cumbersome multi-year contracts are unacceptable.

Digital transformation requires the introduction of flexible models in order to encourage innovation, and this has a significant impact on the search for a solution. Discussions are based on three factors.

Performance . IT outsourcing has historically been focused on cost savings through flexibility and future innovation. To ensure that the process does not happen again, measurements should be fully focused on core business metrics, and suppliers will receive contracts based on the result. This will encourage partners to integrate their own solutions with third-party value-added products and to continuously improve services that will increase efficiency throughout the life of the contract.

For example, security, an essential function, is often outsourced, as many firms are unable to keep up with real-time threats, with limited internal resources. Specialized security organizations can offer global visibility via the Internet in order to identify new attacks and develop protective measures. Here, the results are also measurable - the time taken to fix the zero-day vulnerabilities, or help the organization comply with payment card security standards (PCI DSS).

Platforms. The digital business revolution caused by cloud, social networks, analytic, mobile applications and the Internet of things (IoT) will continue to determine for the company what functions they will outsource. Service-oriented models can help provide flexibility, versatility, efficiency, and cost reduction, but should only be applied when they add value.

For example, cloud-based and service-related offerings enable companies to shift IT supply costs to operational costs when they pay for what they consume. It also frees companies from having to invest heavily in assets such as data centers, which may need to be repaid for 20 years. Instead, they can simply buy what they need when they need it.

Partnerships . An ITO should not be regarded as merely transferring a problem / service to third parties and denying participation in a problem. Companies must carefully select partners and ensure that they work well together for the success of their current business. Digital transformations drive the era of Smart Partnership, and I will share some thoughts and guidelines in future articles.

Obviously, in order to become one of the successful digital companies in the future, organizations need to find new ways to interact with technology partners and use this experience in their business. They should be able to quickly recognize and respond to potential business opportunities, respond quickly to changes in markets and should not be bound by fixed ways of working in order to get ahead of competitors.

In my next article, I will look at the rise of new ITO thinking. Will traditional ITO models support the digital age and what are the other options?

About the author :Robin Schlee is vice president of Verizon Global Integrated Solutions. He manages the global organization responsible for the development, receipt and implementation of large comprehensive IT infrastructure agreements with corporate clients of the company, including in the field of retail, banking, financial services, oil and utilities. He is also responsible for the development of Verizon's outsourcing, integration and management of significant services.

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