VideoReal pressure to nail down final SLAs will come if and when Atos Origin assumes responsibility for Collex's network management — a task currently handled by Sydney-based telecommunications company Cable & Wireless Optus. At that point, the outsourcer would have responsibility for Collex's information infrastructure — lock, stock, and barrel. A more complicated regime of financial incentives and penalties would be required. For now, though, Goodwin's outlook is more straightforward. "At the end of the day, the outsourcer will keep our business if they keep their promises — that's the incentive," he says.
Adam Lincoln is an executive editor of CFO Asia.
Helping Hands
Accenture (www.accenture.com): strategy and technology management
Atos Origin (www.atosorigin.com): infrastructure and application hosting
Cap Gemini Ernst & Young (www.cgey.com): management consulting, IT services
EDS (www.eds.com): data centers, network management, strategic consulting
iASPEC Technologies (www.iaspec.com): application service provider
IBM Global Services (www.ibm.com/services/): infrastructure hosting, strategic consulting
Infosys Technologies (www.inf.com): software development
National Computer Systems (www.ncs.com.sg): systems integration, data hosting
Oracle (www.oracle.com): ERP applications on tap
PricewaterhouseCoopers (www.pwcglobal.com/us/): strategic consulting
Sema (www.semagroup.com): systems integration, consulting
Wipro Technologies (www.wipro.com): systems design services
Buyer Beware
Talent on tap comes with some hidden traps. Here are five to watch out for.
Self-absorption. Trouble brews as each party, despite starting with the best intentions, concentrates on its own agenda. The customer feels that it has passed responsibility to another so it can focus energy and time on more strategic aspects of the business. The vendor has its own priorities, not always at one with the customer's.
Inequality. Many outsourcing partnerships deepen and expand with time as companies acquire a taste for easy access to otherwise scarce expertise. In itself, this is not a problem. But companies should watch that they don't let go of areas they did not intend to outsource, or develop a dependency that delivers too much bargaining power to the outsourcer when it comes time to renegotiate contracts.
Noncooperation. Many companies rely on several outsourcing arrangements, yet the history of vendor cooperation is patchy — particularly if they are competitive. Similarly, most outsourcers profit by exploiting economies of scale — they want to get as much activity out of their infrastructure as possible. Often, it is not in the outsourcer's interest to integrate new technologies.
Pigheadedness. Issues of control also arise when the customer wants to modify the behavior of its service provider to meet a new business challenge. Often the outsourcer is the only party that understands what's needed to change the infrastructure. If they are enjoying economies of scale from serving multiple customers, resistance will be all the greater.
Lawlessness. Trouble escalates if employees on the customer side feel that the outsourcer's service levels fall below par. Things get messy when unhappy staffers take matters into their own hands and go off on technology tangents. Not properly coordinated, this creates interoperability problems — and ad hoc patch jobs are never large enough to benefit from economies of scale.
Source: Everest Group
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