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Multi-Sourcing
deals that are cobbled together could lead to business
disruptions: says
Gartner
IT
managers face a variety of potential business
disruptions, from system failures to security breaches
and hurricanes, to name a few. Gartner analyst Linda
Cohen at Gartner Inc.’s outsourcing conference warned
that by 2010 Organisation are heading for a much more
complex operating environment where they have more
services delivered externally. A lack of discipline in
multisourcing management, would result in 'large-scale
business disruption' - especially as companies deal with
more and more service
providers.
Gartner’s
global outsourcing forecast reflects that view. It
envisions worldwide annual growth for IT and business
process outsourcing (BPO) services at 5.5%, rising from
$582 billion in 2004 to $760 billion by
2009.
Outsourcing
services is still a relatively new practice for many
companies, driven in part by interest in leveraging
savings from offshore projects. Key to managing multiple
vendors, according to IT leaders at Du Pont Co. and ABN
AMRO Bank NV, is retaining strategic planning and
architecture in-house.
Bruce
Jacobs, CIO of the North American operations at ABN
AMRO, is outsourcing infrastructure, applications and
development and telecommunications services. In fact,
the company has five vendors now delivering application
services, including Infosys Technologies Ltd., Tata
Consultancy Services Ltd., Accenture Ltd., IBM and Patni
Computer Systems Ltd.
Under
the model ABN AMRO is using, those five vendors compete
for contracts and must work as a team on a 'peer-to-peer
relationship,' said Jacobs. The bank has, in effect,
created an 'internal market' for contracting application
development work globally, he said. It finalized the
arrangement with the five vendors last
September.
To
manage his service providers, Jacobs kept management and
strategic planning internal and assembled IT teams with
people who have strong business knowledge. He also kept
architectural skills close to home. 'We think that
architecture is best retained ... because you are
responsible for your own destiny in defining how the
systems work together,' said
Jacobs.
The
bank has also established subject-matter experts --
staffers who are very experienced, for instance, in
payments or how trading systems work -- who work with
the architects and relationship management staffers to
help build systems.
Another
job function created by ABN AMRO is a requirement
analyst, who can actually turn a business requirement
into something a vendor can produce, Jacobs said. Just
to be safe, the Amsterdam-based bank has retained some
coding capabilities 'as insurance,' he said. 'The bank
is risk-averse.'
Still,
Jacobs is forecasting a drop in application development
services costs from about $92 an hour in 2004 to about
$60 in 2008, a figure that includes savings from
offshore work but also reflects internal management
costs. Overall IT savings, including savings from
infrastructure and telecommunications, are expected to
total about 20% a year, money that may be reinvested in
new IT projects.
Du
Pont has been using outsourcers since 1997, and Maryann
Holloway, director of alliance management and operations
at the company, said it’s important 'that both sides
understand what their roles are and what they are going
to deliver.'
To
help ensure delivery of services, Du Pont retains all of
the IT leadership roles. People who fill those roles are
often midcareer IT managers.'We really look for IT
leadership skills,' said
Holloway. | 
