Did you sign up for outsourcing figuring you could forget about IT?

Ignore the management of IT at your own risk. One company outsourced its IT, negotiating excellent rates. Sadly, the outsourcer failed to purchase software, installing the same copy again and again. Horrendous customer service created productivity issues. The company paid a penalty to exit the contract and had to purchase the unlicensed software, taking a serious hit to profitability.

In another case, the organization picked an outsourcer based on a board member’s recommendation. Now the outsourcer is struggling with tasks many would consider standard, including simple tasks like monitoring backups. Are they a poor outsourcer? For a smaller company, they may be fine. For a mid-sized organization, not so much.

We discuss the management of the outsourcer that sets up and maintains your servers, network, help desk and other IT functions, referred to as a managed services provider (MSP).   Here are four areas critical to managing your outsourcer:

Strategy

• Your IT strategy, including project prioritization, should be driven from your business strategy. If a project does not support your business strategy, why are you spending money and resources on it? Make sure your outsourcer understands the strategy, and there is a process to approve projects.
• Avoid relying on your IT outsourcer to provide your IT strategy. Your needs will change over time. You can outgrow your outsourcer. It may be cost-effective to bring some functions in-house. Don’t put your outsourcer in the situation of having to choose between an appropriate recommendation and their own profitability. Include someone with CIO experience that has no vested interest in the outcome of the strategy.
• Understand the outsourcer’s scope, especially when they provide CIO services. Do they focus on project prioritization and execution? Do they have the background to advise on acquisitions, specialized applications or other major projects?

Policies and Procedures

• How does equipment get purchased? Is every order placed by the vendor, or is pricing cross-checked by your CIO or by purchasing? Match quotes, purchase orders, invoices, packing slips and vendor license receipts prior to issuing payment to minimize the risk of fraud.
• Does the vendor prioritize projects for you? Instead, have a project prioritization process that includes business leaders and an outsourcer representative, along with your CIO if you have one. Discussions should include business benefits, costs and risks. Is it above and beyond the contract? Is the outsourcer the best resource for the project?
• Who can open tasks with the outsourcer? If it’s everyone, is that driving up your costs? The outsourcer may also be spending significant time sorting through duplicates and trainings questions. Depending on the structure of the contract, the outsourcer may not be incented to create efficiencies, or to address training issues.

Reporting

• The outsourcer should have a help desk/service management software package that shows open tasks, status and resolution including timeframes. Online viewing or frequent reports is important.
• Obtain monthly reports of tasks, how quickly issues were closed and hours spent. Understand projects in process and waiting, including changes to the original schedule or estimate.
• Review statistics monthly. Include metrics showing system availability, critical hardware and telecom resources capacities and project snapshots for multi-month projects. Larger organizations create a balanced scorecard that shows objectives, measures, targets and results for the IT area. This focus on tying IT to the business can be used as a guide for smaller companies as well.
• To measure quality, survey users on the help desk’s responsiveness and capabilities, and look for re-opened issues and repeat issues.

Audit

• How do you ensure competence? If you are not an IT expert, get a third party opinion annually. Make sure to work with someone who does not have a vested interest in the outcome.
• If you outsourcer brings in other vendors, make sure you know their relationship. Is it purely a referral, or are they receiving a commission?

For many organizations, IT outsourcers provide deeper levels of expertise for less cost than an in-house IT department. However, the convenience of someone else managing the day to day resources does not alleviate your organization’s need to manage the outsourcer. To minimize your risk, make sure someone with IT experience and availability is charged with managing them, whether it be an internal executive or a retained CIO.

About The Guest Author: Laura Pettit Rusick helps CEOs leverage IT to support growth and change in mid-sized organizations. Her company, OPT Solutions, provides IT Evaluations, Software Selections and Retained CIO services to enable growth, reduce costs and increase productivity. For those interested in benefiting from business process efficiency, sign up to receive the PDF “Ten Critical Success Factors for Optimizing Business Processes“.