Gartner: IT Outsourcing Vendors Must Cater to Non-IT Business Users

By 2005 one-third of IT outsourcing deals to be measured using business, not technological, metrics

By 2005 one-third of IT outsourcing deals to be measured using business, not technological, metrics

Lake Buena Vista, FL — October 22, 2003 — As more business units outside of the IT organization make decisions on IT spending strategies, IT outsourcing vendors must cater to non-IT business users, according to analyst firm Gartner Inc.

IT and its value contribution will consequently be measured in business terms. In fact, Gartner predicted that by 2005, one-third of IT outsourcing deals would be measured using business, not technological metrics.

"To achieve these goals and retain relevancy, internal IS functions — and management — will need to alter the way IT is positioned, managed and perceived within the enterprise," said Ben Pring, research vice president for Gartner.

Pring went on to say that internal IS organizations must become experts on business processes, their underlying enabling technology and accompanying service lifecycle management. ESPs need to respond to this increasing focus on business process by developing business process skills and solutions and by balancing their courting of IT and non-IT staff in their business development activities."

Through 2004, Gartner said cost reduction would remain the dominant driver in enterprises' IT sourcing strategies. To keep up with this trend, ESPs must choose between offering business propositions focused on low cost and expertise. The majority will be required to focus on being the lowest-cost, or targeted niche, provider.

The search for less-expensive sources of IT services and models for its delivery is leading to the mushrooming interest in global delivery models and offshore resources. "The global delivery model genie is out of the bottle, and U.S. organizations must move urgently to embed this style of delivery/management into all aspects of their operational business models," said Pring. "Managing globally will fast become the norm, and this irreversible mega-trend will clearly have a huge impact on enterprises, IT solution providers and organizations in these emerging areas."

Gartner analysts said that buyers and sellers must prioritize IT spending and offerings on areas where competitive differentiation can genuinely be achieved; buyers must drive toward the fusion of business and technology. The development of sourcing strategies that balance risk and value and anticipate the changes that new delivery and management models will require will also be of high importance, Gartner said.

The firm's analysts also said that the focused application of IT, the leverage of global delivery and utility models, the development of sourcing models based on virtualization, and the development of more realistic expectations of what real benefits technology can deliver, coupled with an ongoing reduction of cost, will lead to a leaner use of IT that will deliver greater real value.