Outsourcing
IDC, 11/02: Can Sprint Sprint into Providing "IT" Outsourced, Managed Services?
David Tapper
Sprint's announcement that it is looking to expand its presence in the IT outsourcing and managed services space by moving "up the stack" to support customer LANs, servers and applications appears to signal the company's intent to compete more heavily in this market. Other NSPs (Network Services Providers), such as Verizon, are also looking to expand their presence in the outsourcing space. While the time may appear ripe to pursue such a strategy, given the increased trend toward outsourcing in general, success for NSPs will require implementing some strategic initiatives to compete in a space that is very consolidated and has some significant barriers to entry.
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Gartner, 12/18/02: Successful Outsourcing Means Retaining Some Staff
Contrary to popular belief, enterprises must retain some staff when they outsource. Often, they underestimate the in-house resources needed to ensure that sourcing relationships succeed and get the desired results. When enterprises decide to outsource a business function, they seldom give enough time and thought to how they will manage the deal once the transition is completed. However, once an external service provider (ESP) is selected and the contract is negotiated, the next important step is to establish the team that will be retained in-house to manage the sourcing relationship. This team will act as a watchdog organization by monitoring the contract, managing day-to-day interactions with the ESPs, maintaining relationships with business units and overseeing the operational activities. This team also will monitor and ensure that the anticipated and promised benefits (in terms of reduced costs and added value) are delivered to the enterprise.
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Gartner, 12/19/02: Predicts 2003: Gartner View for Buyers of IT and IT Services
Buyers of IT and IT services will need to tread carefully in 2003 as they confront resource constraints and a risky vendor landscape. During 2003, IT buyers — whether they are buying tools, applications, services or infrastructure — will be under increasing pressure to demonstrate lasting business value from their investments in IT and services. Memories of year 2000, the dot-com meltdown and disappointing returns on past initiatives, such as e-commerce, supply chain and enterprise resource planning, have reduced IT’s credibility as a strategic investment. Whether enterprises pursue an external or internal sourcing strategy, the challenge during 2003 will be to cope with the rigorous demands while preserving future flexibility and resilience.
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Gartner, 12/19/02: Don't Expect Total Employment Guarantees in Outsourcing
A cost-focused, globally sourced market increases uncertainty for IT staff. Enterprises and external service providers must jointly address outsourcing-related human resource issues and share accountability and risk.
Outsourcing (whether IT or business process) has always raised critical and sensitive human resources (HR) issues for external service providers (ESPs) and enterprises. Perhaps the most-sensitive issue is the proportion of the enterprise's staff that will make the transition to the ESP as part of a deal. As Figure 1 shows, the willingness of ESPs to guarantee employment has fluctuated considerably, and this will continue. The changing hiring practices of ESPs are influenced by an array of business and economic factors, technology trends and the scarcity of IT skills and personnel.
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Gartner, 12/23/02: Human Resource Issues in Outsourcing
Human resource issues figure prominently in outsourcing decisions. They can be addressed at each stage of the sourcing life cycle, from sourcing strategy to deal management.
The transfer of responsibility for providing services to an external source is a fundamental component of outsourcing. This entails the transfer of assets, which usually include human assets. The effect that outsourcing will have on employees is a major factor that influences outsourcing decisions. From our interactions with enterprises and external service providers (ESPs), we know that the parties involved in
the deal care about the impact on employees and try to offer solutions. Some try to find other
opportunities inside the enterprise for displaced employees, some try to transfer the greatest number possible to the ESP and others work closely to find opportunities outside of the enterprise. Too often, however, the timing of the solution, communication about it and the execution of the changes fall short of the employees’ needs.
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Meta, 12/10/02: Business Strategy Outsourcing
Electronic Business Strategies
Kip Martin
In the footsteps of data center outsourcing and business process outsourcing, organizations will find benefit in having expert third parties monitor and manage corporate and competitive strategies.
As Global 2000 organizations continue their evolution from internally focused organizations (possessing all necessary business process, operational, and managerial capabilities) to organizations focused on core businesses, core competencies, and externalized processes and systems, we see an incremental increase in utilizing outsourced business functions. Indeed, this evolution has long been underway, starting in the late 1990s with the outsourcing of information systems administration and data center management. As many companies discovered that managing their own data centers did not create sustainable strategic competitive advantages, they turned to outsourcers to achieve greater operational efficiencies through economies of scope and scale (see EDCS Delta 971).
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Giga, 12/19/02: IT Trends 2003: IT Services
Julie Giera
Giga Position
The IT services landscape was changed forever in 2002 with the merger of Hewlett-Packard (HP) and Compaq to create the third largest services firm in the world, the collapse of Andersen Consulting and subsequently the sales of its services businesses, the sale of PricewaterhouseCoopers (PwC) to IBM, the spin-off of Deloitte Consulting (soon to be called Braxton) and the IPO of KPMG Consulting (now BearingPoint). And those were just some of the changes. As Giga looks forward into 2003, we anticipate another slow economic year worldwide, which will again drive much of the IT services landscape. The pressures CIOs and CFOs are under to reduce costs will cause growth in outsourcing next year, in both IT outsourcing and, increasingly, business process outsourcing (BPO). The rest of the IT services marketplace, however, from management consulting through systems integration and Web hosting, will see little, if any, noticeable growth.
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Giga, 12/20/02: Enabling Business Value via IT — Effectively Leveraging Outsourcers
Julie Giera and Dan Merriman
Contributing Analysts: Chip Gliedman, Mike Dodd, Duncan Ellis
Giga Position
CIOs are facing the dual pressures of driving explicit business value from IT while also improving the cost effectiveness of the services they are currently providing. The resources and skills of outsourcers are often some of the most valuable potential assets of many IT organizations in addressing both of these challenges.
However, the focus of most outsourcing relationships is solely on reducing the cost of current services, resulting in an important missed opportunity for increasing the business impact of IT.
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Giga, 12/23/02: IT Trends 2003: Desktop Outsourcing
Robert McNeill
Contributing Analyst: David Friedlander
Giga Position
The stand-alone desktop outsourcing market will grow by 2 percent to 5 percent in 2003, principally fueled by potential cost savings and by the fact that desktop management is not seen as a strategic IT/business process. Much of the cost savings are being driven by the standardization and commoditization of the technical and service components that support desktop management, including software distribution, install, move, add, change (IMAC) services and on-site break fix services. Net margins for the desktop outsourcers continue to be thin, and consolidation will continue with the market. Service providers will either exit from this business or acquire higher-margin services to offer in conjunction with the desktop. At the same time, many of the managed services providers that typically are more infrastructure operations-centric (focused on the data center and mainframe) are increasingly packaging desktop outsourcing within their services
portfolios.
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Mobile
The New York Times, 12/26/02: Now Your Cellphone Can Remember Mom's Birthday
By JOE HUTSKO
HAVING all your contacts and appointments at hand is one of the most convenient things about owning a hand-held organizer, and synchronizing makes it easy to keep both the hand-held and your big computer up to date. Press a button, and everything on the big computer transfers to the pocket-size one. Add or change things on the hand-held, and the next sync transmits the changes back to the mother ship.
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