Outsourcing Advisory Services
Things to consider when choosing an IT Sourcing Strategy
If IT is not your primary line of business, strategic technology vendors often provide a great opportunity to increase your technical capabilities and accelerate innovation. The approaches utilized can provide point solutions or assume full responsibility for IT Services.
Staff Augmentation
vs.
Managed Services
Strategic Sourcing - Outsourcing Design Considerations
The outcome you are trying to achieve will help establish the type of Strategic Sourcing arrangement you want to deploy. If you are looking for niche skills or to solve temporary spikes in resource requirements, consider Staff Augmentation (Capacity Services) arrangements. If you are looking for dramatic shifts in cost of delivery and organizational skillsets, consider adopting a managed services delivery model.
Staff Augmentation (Capacity Services) - Executive Summary
Overview:
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If you need to add additional resources to your current team, either to provide specialty skills or additional capacity and you want to maintain control over the work effort and accountability for the results, you should explore Staff Augmentation arrangements.
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​This sourcing model is the easier to implement and is easy to discontinue the contracting services if necessary. Since there is little to no change to your existing delivery model or organization structure, there are few change management impacts. Commercially fees are paid on a time and materials structure with little vendor accountability for the quality of delivery.
Staff Augmentation - How it Works:
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Staff Augmentation is best articulated as, the Client defines "what, when, who and how" the work will be delivered and is responsible for delivering the product according to IT standards.
The Client is responsible for providing direct oversight of the work and the ultimate quality of the delivery. The Vendor is responsible for providing the agreed upon resource for the hours identified”.
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The Vendor provides candidates for the Client to consider, the Client interviews and selects the resource that is the best fit. Fees are traditional based on time and materials and under the construct of a rate card.
Managed Services - Executive Summary
Overview:
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Managed Services is the most complex form of Strategic Sourcing models that can be implemented and is used when a company desires TRANSFORMATIONAL changes to the way IT delivers services. When selecting a Managed Service delivery model, the IT vendor takes accountability and control of the services being outsourced. They are accountability for successful delivery, often with financial penalties for non-performance.
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In this model, there are significant changes to the existing delivery model and organization structure. Often a portion of the current IT staff will be severed or redeployed to other roles. New vendor resources will replace the existing IT staff, often operating from low cost locations such as near-shore or off-shore.
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Managed Services arrangements are very difficult to discontinue as there normally contract restrictions on termination of services and since the previous employees have been displaced, there are no resources readily available to take over performance of the services.
Managed Services - How it Works:
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Managed Service is best articulated as, the Client defines "what and when" something needs to be completed and the Vendor determines "who performs the work and how it will be executed”.
The vendor takes the accountability and direct oversight of the execution of the work and is responsible for delivering the product according to the agreed upon performance measures.
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