2010: Is Outsourcing a Viable Strategy?

Few, if any, IT department heads are looking at a windfall when they review their budget numbers for 2010. As Peter Sondergaard, senior vice president and global head of research for Gartner, predicted at the 2009 Gartner Symposium in October, "More than half of IT budgets will be the same or smaller in 2010."

Whether you're looking at a technology budget that's smaller, equal to or larger than the 2009 version, the pressure on today's CIOs and IT managers is greater than ever. Most technology leaders have proven that they can cut costs with the very best of business leaders. The Herculean challenge is to make the IT organization a driver of innovation, revenue and competitive advantage with little-to-no new dollars (and in some cases fewer dollars).

As your organization continues its dual push toward absolute operational efficiency and revenue-driving innovation, it's important to consider where and how outsourcing might play a role. For decades outsourcing has been an essential tool regaining time for internal resources and maintaining IT excellence while reducing overall costs. Lower operational costs will be a big advantage to IT leaders looking to gain more resources and budget for innovation and revenue-driving activities. The challenge is identifying what ongoing and incoming projects are best suited for outsourcing.

To help your business in its 2010 IT strategy planning, STAR BASE Consulting offers you this quick refresher in what projects make the very best candidates for outsourcing.

Tips for Identifying Smart 2010 Outsourcing Opportunities
When analyzing the outsourcing potential of existing and incoming projects, consider the following three critical factors.

Skill Needs - Does the project require highly specialized skills and do those skills exist within your organization? If a project would require the recruiting and hiring of new talent to fill a skill gap, it might be a strong candidate for outsourcing. The key in this phase of analysis is to define what skill areas need to advance and expand within your organization and what skills your organization is willing to unleash.

Technology Specific Needs - Legacy platforms and hardware are often places where businesses identify strong outsourcing opportunity. For example, in recent years, STAR BASE has had several opportunities to maintain the IBM i platform and related applications for businesses that realized they would begin to migrate application development to other platforms. Rather than paying internal staff for maintenance, the clients have outsourced the function to STAR BASE, cutting the related costs by 50% or more.

A smart end-of-year planning process is to analyze all forecasted IT projects and IT maintenance work and analyze needs by skill. If you find an area where talented, high-potential team members are focusing their skills on maintenance work, further explore it for outsourcing potential.

Clear ROI - Investing in outsourcing should bring returns in greater efficiency and lower costs. If it's not clear that outsourcing a project will deliver clear and significant results in both areas, it's not a strong outsourcing candidate. If you find the project is too complex or loosely defined, it will be hard for any outsourcing firm to build guaranteed savings and performance numbers into its service level agreements (SLAs).

Once your organization has identified a way to reduce costs, increase expertise and win back team productivity through outsourcing, you'll need to find an outsourcing vendor that can support you. Tap into your network of resources for vendor references. Through research and due diligence, you will find an outsourcing vendor that meets your needs.

Be Strategic & Stringent in Your Outsourcing Choices
The stakes for success are very high in this still troubled economy, so be unabashedly rigorous when it comes to analyzing outsourcing from every angle. Making the right choices — the projects you outsource and the provider you choose — will have a significant and direct impact not only on your IT organization's performance and budget but also on the businesses' bottom line. And the better the IT organization contributes to bottom-line improvements, the better chances are at quickly winning back more budget, resources and room for innovative projects in the years ahead.