"Companies that nurture their in-house core competencies and carefully offload other functions to vendors often reduce near-terms costs," notes Phil Fersht, research director of global services and outsourcing for AMR Research. "Adding more variable costs to the design of the business gives management more freedom to respond to shifting economic conditions."
To successfully manage initiatives, retaining internal IT expertise becomes increasingly imperative. "What was happening in the first rounds of outsourcing is that the company let the outsourcer do everything," Curran points out. "Organizations were giving away the whole core of traditional IT keystone skills; project management, business analysis/requirements management, technology/architecture, quality assurance."
"Expertise needs to be within your company so that when you want to expand, that expertise is in-house," suggests Belissent. "You need to make sure that you have your eye on the long-term implications."
The Keys to Success: Internal Project Management Skills
Companies need to envision where they want to be globally in the future and align their internal IT management to reaching business objectives in the most optimal way. "One of the differences with the current economic recession is that economies across the globe are so much more integrated than they used to be," Fersht notes.
Diligence needs to be applied strategically in deciding what to cut, what to outsource, and what to retain in-house "based upon understanding the business capabilities that they are trying to enable in the next two to three years and assigning them a priority," advises Curran. "They then need to score their discretionary investments against that to create a roadmap."
"You also need to make sure that you have the project management internally," Belissent advises. "You cannot just have a short-term perspective of saving money by outsourcing."
"Use this time wisely," urges Fersht. "Smart businesses are likely to emerge from this economic slump more nimble, more competitive. The right service partners can help companies grow their business globally. They must forge a partnership with a provider that will work with them to add a lot more competitive bite to their business."
Competitive advantage for an organization in the future is very much determined by the decisions made today. A short-term adjustment to meeting the current challenges must not come at the expense of the future.
Curran warns that companies must heed the past. "The lesson learned that has not been wholly applied is the recognition that keystone IT skills atrophied because key employees were let go and companies lost their best subject matter experts and project managers."