Elsevier UK Jobcode:RTF Chapter:CH17-H8304 22-3-2007 5:13p.m. Page:325 Trimsize:165×234MM
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Being in charge of IT costs 325
will evolve over time, and which parts of the value chain will most influence the
insourcing industry’s development, and what dominant technologies are most likely
Who is not ahead of the curve, and who continues living in the world of legacy
IT, is not fit to be an insourcer. As for outsourcers, the principle of ‘know yourself’
and ‘know what you really want from an SLA3’ can be bypassed only at the cost
of burning up careers. The best managed insourcers know this and therefore seek
answers to questions which condition the outsourcers’ policy:
Why is a company outsourcing?
What is it most likely to outsource?
What are the core activities companies will not wish to outsource?
What’s the projected cost/benefit to the client?
What else other than costs and benefits will make the outsourcer tick?
Well-managed IT insourcers also appreciate they have to gain credibility with the
client. One of the better ways is to have some of their people work with the outsourcer
prior to insourcing, so the client could see them in operation. Then, when the client’s
delegation visits the insourcer, its members already have a positive view about its
17.6 The art of negotiating
A prerequisite to a successful negotiation for outsourcing IT services, or for any
procurement reason, is to clearly define issues that will be negotiated. Prudence calls
for including the way the counterparty might define them. This requires that the
outsourcer ranks his own goals and needs; does the same for goals and needs char-
acterizing the insourcer; identifies disputed items; and tries out different negotiating
strategies – prior to meeting with the counterparty.
Quite evidently, one of the first questions is how big a chunk of the company’s
information technology should be subject to outsourcing? Experience has taught me
not to be in favour of delegating the whole IT operation to an insourcer. It is no less
true, however, that even if only part will be at the negotiation table, some companies
are challenged by the choices they have to make.
Purchasing IT services has become a sought-after skill, needing people who are both
good negotiators and well aware of technological challenges and solutions. A number
of companies want the CIO to involve the purchasing department in investigating
alternative IT procurement solutions. This happens for a couple of reasons. Purchasing
has negotiating skills, and its agents know they have got to strike the right balance
Moreover, there is a lot of handholding needed in the procurement of IT services,
and outsourcers have to be careful they are not simply reshuffling jobs from one part