Companies, public institutions, and state institutions are feverishly dealing with strategies for the digital age and are exploring how this technological megatrend is carrying changes over into all areas of life. The insight is taking a hold that any and all structures and processes will have to endure the digitalisation check-up. In this, sourcing strategies are also prominently encountering the pressure to change. However, a lot of companies do not yet have such strategies to date, and run the risk of losing control in the maelstrom of changes.
Since Indian companies have, for a long time already, been successfully acting internationally as software producers, outsourcing deals have, in recent years, increasingly be awarded to India. In the day-to-day work of provider control, cultural differences become apparent that can make a successful cooperation considerably more difficult. German managers and administrators must be aware of these differences in order to do a good job with the Asian partners. Outsourcing expert Tamara Wagner of the IT management consulting firm noventum consulting has made remarkable observations in the cooperation with large Indian providers.
The change from one IT provider to another is always a demanding project. The more complex an IT landscape is, the higher the requirements posed to project management and communication between the companies involved are. In mid-2015, a new contract was signed with a new service provider the hosting of the IT of ista International. The change was to be completed by the end of May 2016. noventum consulting assumed responsibility for the superordinate management of the transition project. In the end, the committed and professional cooperation of all parties involved allowed for a successful transition already 4 weeks ahead of the planned schedule. Very satisfied with the perfect timing and with the financial impacts associated therewith, the new provider and ista now have tackled the first steps for the pending transformation.
In the selection of their IT provider, customers must pay particular attention to quality and costs. Especially the question of cost is quite often the triggering factor to start tackling a sourcing project. Especially in the assigning of commodity services, a lot of companies then do not see significant differences between the numerous providers and consider additional decision criteria other than price and quality to be insignificant. What is forgotten in this quite often is that a well functioning cooperation also includes a good communication. In day-to-day business subsequent to the signing of the contract, a lot of different employees of the customer and of the provider also have to clarify controversial questions with each other. If this does not work, the strong focusing especially on the cost factor can quickly turn out to be a "bottomless pit". What initially appeared to be economically lucrative becomes very expensive mid-term. What is to be concluded? In the process for selecting a provider, one additional factor is gaining increasing importance as a decision criterion, the so-called "Cultural Fit".
„Never change a running system.“ This motto is known to every IT employee. But, what to do when the system does not function perfectly anymore? Customers complain about the lack of quality. The management complains about ever-rising IT costs. An IT landscape that often has developed over years in small steps is no longer meeting the requirements and is up for discussion. Now, the management of IT has to think about changes. But what should be changed? Are small corrective actions sufficient or does it have to be more
Even still today, IT is merely a means to an end at a lot of companies. The history of in-house IT is long and twisted, the basic technical facts are confusing, and only comprehensible to „old hands“ at the company. IT serves merely as a tool for the core business and does therefore not receive the attention of a strategic factor in the planning that is decisive for success. At the same time, IT costs a lot of money and has to prove that it has an up-to-date cost/benefit ratio. This is the moment for a paradigm shift: the end of reaction and the beginning of strategy and planning. Hartmut Ossowitzki, management consultant at noventum consulting, has been working as an IT specialist for more than 20 years and advises heads of IT regarding the setup of a strategic EAM (Enterprise Architecture Management).
Cloud-based services provide some advantage over standard IT services such as scalability, cost reduction, and lower investment costs (operating costs instead of investment costs). The large cloud providers do by now offer a very diverse portfolio from Infrastructure-as-a-Service, via Platform-as-a-Service, all the way to Software-as-a-Service. With the AWS Marketplace, Amazon does, for example, offer the opportunity to provision more than 1,500 software products in 25 categories at the push of a button. In recent years, the cloud market has grown significantly and is playing a more and more important role.
To simplify the reading of this article mainly the term transition is used for both transition and transformation. Transition projects where IT Outsourcing (ITO) providers are switched are highly complex, resource intensive, challenging and risky. Typically, the ITO customer has outsourced the required knowledge to the incumbent provider. The new provider has not yet the required knowledge to provide IT services as needed at the beginning of the transition. Therefore, both parties, the ITO customer and the new provider rely on the support from the incumbent provider.
In terms of outsourcing, the opinions were split for a long time: the big ones among the companies obtained room to manoeuvre for their core business by outsourcing functions. Small and medium-sized enterprises (SMEs), however, shied away from this step. Insufficient outsourcing experience, worrying about their business-critical data, fear of intransparency and dependency were hindering a good many in terms of handing tasks over to third parties. Now also available in German, the first international standard for this subject area – DIN ISO 37500 „Guidance on outsourcing“ – standardises the process of outsourcing.
As part of a larger IT outsourcing project in Singapore, Tamara Wagner, IT Outsourcing Consultant at noventum, visited the Asian computer centre of its German client. From an IT point of view, this client represents the German company in Asia on the Germany-Singapore-USA axis.
The partners have already completed the first successful joint projects, and another prominent IT outsourcing project, in which both companies are involved with their consulting expertise, is currently heading towards completion. Now, Diapharm and noventum consulting have sealed their cooperation with a cooperation agreement.
In 2015, the internationally standardised ISO standard ISO 37500 will regulate all essential details in outsourcing. Experts from 42 nations are participating in the development of this standard that is recognised worldwide, among them Frank Wübken, IT outsourcing expert and management consultant at noventum consulting. Frank Wübken is participating in the development of the standard as "Head of Delegation" of the German participants. In this function, he participated in an international conference in Delhi, India, at the end of February.
Motivation and added value of outsourcing activities nowadays differ from those in the early years of this important business segment of the world of IT. Originally, the purpose often was to unburden the IT budget. Through standardisation of platform or implementation of ITIL processes throughout, providers were able to achieve considerable cost-savings, which initially even made one or the other bumpy start into the outsourcing business forgivable.
There is no question: the cloud is here to stay. What it is, what use it has and whether it should be welcomed or feared is being discussed everywhere. Cloud computing will be a fundamental component of the future of IT. Sceptical voices are becoming quieter and we are discovering that processes, technologies and organisations can work together with the changes brought about by cloud computing and the discussion is generally taking place at a procedural or technological level.
Increasing internationalisation, constantly growing IT requirements and increased cost pressure force companies to review their IT strategy with respect to integrating cloud computing. In addition, cloud computing promises high agility, flexibility, reliability, security, availability and efficiency.
In the pertinent media, be they digital or print, the topic of EAM (Enterprise Architecture Management) is en vogue. The CIO online portal addresses „Painful EAM project experiences“ and urges those responsible to not approach the topic too technically. CIO, there, promises to those who stick it out a „plateau of productivity“ through EAM, past the „valley of disappointments“ and the „path to enlightenment“. The German edition of „Computerworld“, Computerwoche, does not see an easy way with respect to the EAM topic and provides a comprehensive list of „Day-to-day EAM pitfalls“, where it perceives the biggest challenges in the staffing of EAM projects. To date, there is no generally accepted definition of the term „Enterprise Architecture“ / EAM. The pertinent software suppliers with their respective focal point also are not of any help in this regard. At the beginning of each and every EAM process, a detailed and individual definition of one‘s position therefore is a necessity.