Outsourcing can provide significant benefits in the form of cost savings and crucial skills in times of short supply. However, often the benefits of outsourcing are outweighed by the considerable risks that go undetected, or are simply ignored.
Unless outsourcing is done right, enterprises often experience disappointment rather quickly and find they are powerless to address the situation effectively. The two principal reasons, according to Peter Hill, managing director of IT governance specialist company Info Sec Africa, are the inability of enterprises to govern their outsourced arrangements and the low levels of process capability with which many service providers operate.
Executives take decisions based on short-term needs such as cost reduction or skill shortage without regard for the longer-term higher costs associated with outsourcing and ever-increasing dependence on third-parties.
This leads to the business` sustainability being intertwined with that of the service provider. Separation from the service provider becomes impossible. A significant oversight frequently is ownership of the intellectual property associated with the IT support processes. By the end of the outsourced contract just about all the intellectual property is owned by the service provider and there is no plan for returning any services in-house or transferring the contract to another party.
The solution to this problem lies beyond operational management, and can be found in better IT governance. Using a framework like CobiT will provide enterprises with a basis to communicate their expectations to the service providers. The content of the CobiT Control Framework provides a comprehensive procurement framework for outsourcing contracts and service level agreements. The CobiT Management Guidelines provide a maturity model to assess service provider process capability and determine process specific performance measurements for regular monitoring of the service provider`s processes and the business benefits realised.
Measuring process capability and suitable software solutions are some of the topics to be discussed at the IT Governance Forum to be held on 6 and 7 June at the VW Conference Centre in Midrand.
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