The 'New' Outsourcing is about Business Outcomes

Too many Australian organisations are still reaching outsourcing agreements for the wrong reasons and without the level of detail necessary for them to be a success, according to Peter McFarlane, Executive General Manager Services, Fujitsu Australia.

Speaking at a Gartner Dataquest conference entitled Outsourcing - The Next Generation Technology Summit, Mr McFarlane said that for many organisations outsourcing remains a painful experience that has had to become much more rigorous and disciplined. However, while many first generation outsourcing agreements have expired, the vast majority of organisations are continuing to outsource rather than bring functions back in-house.

Mr McFarlane said the most common mistake organisations make when outsourcing is to focus on short-term goals rather than longer-term objectives. This is a symptom of treating the outsourcing process as transactional and confrontational, rather than a partnership.

"Organisations are too concerned with cutting costs at the expense of delivering business value," Mr McFarlane said.

"Many also fail to specify service-level agreements from a business perspective. There should be an early consensus between both parties to develop common goals and set mutual expectations backed by performance measurements."

Mr McFarlane said it is important to ensure that outsourcing contracts can evolve to support the organisation's business requirements. Such agreements need to have a flexibility that allows both the outsourcer and the customer to respond to change.

"Fujitsu has supported many government departments and enterprise clients through restructuring, and assisted clients going through mergers and acquisitions," Mr McFarlane said.

"Our experience is that successful relationships thrive in a culture of trust and commitment. We believe a partnering culture grows when the stakeholders agree upon areas such as common goals, potential obstacles, mutual expectations and performance measurements. This provides opportunities for outsourcers to provide real innovation by leveraging new technology and improved processes.

"Both sides of the outsourcing industry - vendors and customers - have made the mistake in the past of dealing with outsourced services on an IT level. The flavour and style of outsourcing has changed. The focus now is on business outcomes."