outsourcers: are they hijacking your company’s future?

By in banking, cloud, general, management, products, strategy, uncategorized on Tuesday, 19 October 2010

Imagine this scenario. You’re living in a nice house, but the window frames need replacing.

You have a good look round and find a new window company offering you a great deal. Lower maintenance, more light, much better looking and adding more value to your home. Your neighbours down the road have switched to them and really love them.

But your window cleaner doesn’t want you to have them. So he says no.

What, he’s your window cleaner. You pay him to do what he does. He’s actually saying no?

You’d fire him, wouldn’t you. No way you’d accept a decision of yours questioned like that. But if he’s your IT outsourcer, that’s exactly what he thinks he can do. And you let him do it.

An outsourcer wants to make money from supporting you, I don’t have a problem with that. What I have a problem with is anyone trying to hijack your company’s future.

Technical hostage taking

The information technology you’re running with isn’t just a major enabler for your business, it represents a substantial proportion of your OpEx costs as well.

A well-considered technology choice could not only leapfrog you beyond your competitors, but could reduce your running costs and allow a totally new direction for your business.

It’s quite unimaginable for an external service provider to veto a business decision like this.

There’s a clear line between someone providing a service and controlling your business. When a provider feels they can decide, rather than contribute to your technical strategy, they’ve overstepped that line.

They’re holding your technology hostage for their own monetary gain, not for your benefit.

Understanding why your service provider is reluctant to change

The value in money terms a provider draws from a service contract can be considerable, but will also represent a cost for them for product training, skills updates and man-power. There can also be another, far more sinister reason.

Most service providers – certainly the main players – enjoy a very lucrative partnership with software and system hardware providers. For every piece of tin they look after, not only do they get the support charge, but also a percentage of any software or hardware involved.

If you make a choice outside of that arrangement, they stand to lose a considerable amount of money which could well damage the relationship they have with that software supplier. They’ll resist that at all costs – particularly yours.

The Cloud – do turkeys vote for Christmas?

No enterprise today should be ignoring the Cloud. But if you solely rely on your outsourcers for strategy advice, are they likely to put a technology on the table that slashes their revenue and removes 90% of the infrastructure they support?

To do so would be contractual suicide for them. You’re more likely to see a turkey voting for Christmas than a big outsourcer voting to remove himself from supporting your tinware.

Time to re-calibrate that relationship?

A good service provider is a valuable asset. One that oversteps their authority for their own benefit is a liability. It’s vital to define the influence they have over any business direction.

Ultimately, the final decision about your business is yours and yours alone to make.

If in any doubt about your technology decision – get advice

Whatever you may think about the idea of commissioning specialist strategy consultants, this is one time it is essential to spend that money. Just ensure that whoever you choose has no alliances with anyone who may influence any advice they give you.

Invite your partner along to any discussions you have and encourage them to contribute. Their opinions and knowledge of your existing systems are essential.

Above all, make sure you understand the proposition and how your business will benefit. Good consultants these days are far more business focussed rather than high-end techies. They’ll talk your language.

Whose business is it anyway?

Your technology is the fundamental and biggest component underpinning your business. Its evolving constantly. You will need to be fully committed to the evolution of your systems – and your provider to driving that for your business to compete.

Competition is driving change. Whatever you do, be assured your competitors are evolving.

If your tech isn’t moving forward, your provider won’t have a business to support anyway.

LANZen provides strategy consultancy to all sizes of business. Contact me today!

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