Gartner: Companies Unprepared for IT Outsourcing Growth

Colliding interests of multiple providers will diminish value they provide to enterprises, researchers say

Colliding interests of multiple providers will diminish value they provide to enterprises, researchers say

Stamford, CT  September 2, 2003  By 2005, 70 percent of enterprises will use more than three sources for information technology (IT) service delivery in key areas, but fewer than 10 percent will have the appropriate processes and governance structures to effectively manage multiple external service providers (ESPs) that contribute to common enterprise objectives, according to new research from technology consultancy Gartner.

"As the number of sources required to fulfill enterprise IT and business demands increases, Gartner has not seen a comparable effort in most enterprises to create organizational structures, apply the necessary management resources and implement processes to manage this new environment effectively," said Christopher Ambrose, research director for Gartner. "As a result, the overwhelming majority of enterprises using multiple service providers repeatedly experience a collision between the interests of these sources, which diminishes the value of the service they provide to the enterprise."

As enterprises outsource more strategically, they are using a wider mix of ESPs, in addition to internal service providers. "The landscape is complicated, and competing interests among external and internal sources often create an environment that encourages minimum effort over best effort," Ambrose said. "Many enterprises have not focused on creating the agile, responsive, flexible organization necessary to effectively manage the multi-sourced environment, leaving them vulnerable to low return on service value."

Gartner analysts said that enterprises should examine and quantify the value lost due to poor multi-sourced-environment management practices, identify where gaps exist in their own management, gain executive commitment to change and develop a structure to manage relationships, not just service delivery.

The research is included in Gartner's new executive report, "Successful IT Outsourcing: Strategies, Tactics and Management Approaches for Effective Strategic Sourcing," which provides guidance on the implementation plans and best practices that enterprises need to develop successful outsourcing strategies.