7 lessons from outsourcing failures

CIO Magazine derives some lessons learned at the state level

Outsourcing remains popular, but it's fraught with opportunities for failure. CIO Magazine has analyzed several disasters in information technology outsourcing at the state level and developed a list of seven key lessons from which others can benefit.

The article examines cases such as Indiana's suing a former IT outsourcing provider for $1.3 billion for breach of contract, and a seven-page letter from the chief information officer of Texas citing "chronic failures" in a four-year outsourcing relationship.

One lesson the article offers: "When the going gets tough, the tough go public."

Writes author Stephanie Overby: "When their outsourcing partners fail to deliver, state CIOs use a tool seldom wielded by their corporate counterparts — publicity. 'In the private sector, the executives tasked with managing the service provider relationships are largely accountable for making the sourcing a success, otherwise they run the risk of being replaced,' [says Adam Strichman, founder of outsourcing consultancy Sanda Partners.] 'When things don't go so well , [they] keep the deliberations private.' Many corporate IT deals also involve an offshore element that the customer may not want public. "

For the other tips and the full article, click here.

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Reader Comments

Fri, Aug 6, 2010 Michael D. Long Knoxville, TN

Strichman's examples of reasons for private organizations to avoid public disclosure are correct insofar as he goes, but overly simplistic. Large software implementations have widely been known for decades to fail to meet mission objectives far more often than they succeed. Such failures cause harm to the internal operations of the corporation, and the increased costs must be passed on to the consumer of the organizations good and services. Reasoning men would think you'd seek reparations from the vendor. However, in addition to the reasons already cited, all parties involved are typically bound by non-disclosure agreements preventing disclosure of proprietary information and/or trade secrets. Also, disclosure of such a failure will provide competitors with information that can be used to advantage, and negative impact to stock prices is almost a certainty.

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