Companies unhappy with results in 50% of IT deals

26 May 2004
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27 May 2004

An estimated half of all IT outsourcing deals in Europe fail to meet expectations, according to a year-long study of more than 20 companies in major deals.

Analysts Gartner said relationship management would be a key factor this year for deals to work as businesses became more dependent on long-term relationships with outsourcers, and blamed internal IT teams as the main weakness in many deals.

Roger Cox, managing vice-president at Gartner, said: "The internal team is frequently overworked, undervalued and lacks the skills and tools to perform complex business-critical roles.

"Companies should invest 3-4 per cent of the total IT budget in the critical skills and know-how required to build high-performance relationships. This is business critical."

Gartner found that companies focused excessively on the process of selecting a service provider and negotiating the deal at the expense of working out how to make the deal work for the business.

It explained the key ingredients for creating high-performance relationships were the right mix of internal skills, formal relationship management processes and active trust management between the customer and its service provider.

Gartner found a strong correlation between the overall success of outsourcing deals and the quality of business and behavioural skills, while organisations with a predominately technical team had poor outsourcing deals.

Cox said IT leadership would remain the most important role, but supplier relationship management skills would grow in importance as organisations became reliant on external, and increasingly global, deals.

He added: "Organisational agility and the ability to create value require flexibility and creativity that go further than process excellence.

"These factors are often 'negotiated out' of outsourcing deals owing to traditional approaches based on control, but we have seen that relationships with higher trust levels deliver more value, less waste and resolve problems more effectively."



SMmay2004

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