6-Step Process to selectively Outsource and Transform your Business

Posted by Jesse Henry on September 16th, 2015

What is the #1 concern for CIOs in 2015? According to 2015 Gartner’s CIO survey, Data/Analytics was cited by 51% of CIOs as their top priority (20% higher than in 2014 – data center and cloud transformation were second and third). After years of sweating assets, enterprises are now faced with the twin problem of first, catching-up; and secondly, regaining competitive footing by climbing the back of the analytics wave.

Having a roadmap to decisively step through a process is important. Over the years, we have developed a 6-step outsourcing consultancy process that seems to adapt well to strategy frameworks for most clients.

Step 1 – Base Case. Step 1 is to take close inventory of the underlying means of production across three axes: people, assets, and third party contracts. Be honest with yourself and build a credible base case so you understand exactly where you stand. It’s harder than it looks, so give yourself time and put good people on extracting the data.

Step 2 – Discover. The second step is to evaluate where your business imperatives that will require technology support. Fine Line recently used our Adaptive Sourcing process for a luxury retailer. Their business imperative was to transform their 6,000 global locations aesthetically and functionally. Their goal was to become more Apple-store-like but simultaneously increase digital marketing customised to each customer who walked into the store. The resulting technology puzzle formed the foundation of our strategy.

Step 3 – Strategy. Next is building the right strategy – the “Exam Question.” A good strategy includes multiple parts: operating model (including support and sourcing); technology enablement (applications, infrastructure, etc.); governance; transformation; and investments (business case). The Strategy phase typically has strong internal opinions, so this is a great place to invest in a skilled external consultant (IT Outsourcing Consultant often bring considerable real-world experience). Key success factor is senior executive sponsorship and close communications.

Step 4 – Build a Plan. Step 4  is translate the strategy into a plan (answer the Exam Question). At this point, you have a strategy that will deliver the business requirements, and you understand where you are today. If you know exactly what you need from here, you can skip to execute. But most clients – especially those who spent the last 5-years minimizing infrastructure investments – are not sure how much of their estate is reusable and how much needs replacing. And some technology elements are dynamic. If you’re unsure what the best blend of technology and operating model is right for you, take the time to explore the market using a ‘speed-dating’ process to interview several suppliers. Fine Line’s Adaptive Sourcing was developed for this very purpose.

Step 5 – Execute/Transform. By now, you know where you need to go, and it’s time to assemble the right team and begin the transformation phase. There are two major elements to transformation: internal; and external. This is where the strategy developed in Step 3 starts to shine. You should understand what the end-state looks like, and know the right blend of internal development and external partners. Your IT outsourcing consultant or Cloud Consulting Services can help navigate not just the traditional outsourcing/out-tasking questions, but also as-a-Service options (IaaS, PaaS, SaaS, etc.). This is often a 12-18 month process for large organizations.

Step 6 – Lifecycle/Governance. Traditional tools are reporting and SLAs, but we at Fine Line strongly recommend developing business-relevant KPIs to monitor effective delivery. If you’ve built some enhanced innovation-provisions into the relationship, those need special attention too (we use score cards as part of our vendor management best practices). This is not the time to relax and take a breath – 10% of the business case is often lost in this phase to “Value Leakage.” Value leakage in Outsourcing most often results when clients pay project-fees for work that is already covered in an existing agreement, but there are internal sources of value leakage too.

Pivoting from an aging infrastructure and platform is difficult, but is also a great opportunity to streamline operations and develop a more intimate relationship with the business requirements. Key to success is developing a good plan, executing flawlessly, and demanding top performance from your team (internal team members, suppliers, and external team members such as outsourcing consultants).