Even though IT outsourcing regularly becomes a topic (mergers, acquisitions, next generation sourcing ...), it needs a lot of expertise and experience. Without good project management, IT outsourcing will not be a success. Holger Bredenkötter has been working as an IT consultant on this topic for more than 20 years. In his article, he explores the question of why IT outsourcing projects always represent a state of emergency for companies, what IT managers need to pay attention to when the time comes and why you actually need four project managers.

IT outsourcing is standard. If a company decides to have its IT operated by a service provider, this is not an unusual process. And yet the path to the sourcing partner is often not easy and burst sourcing contracts are not uncommon. But what has gone wrong if the partnership is not a real pleasure? IT tenders are the supreme discipline on the way to finding the right service provider and this is where things often go wrong.

Cloud computing is becoming an increasingly important topic in banking. Despite guidance from the EBA and BAFIN, uncertainty remains about the regulatory requirements. The question therefore arises as to which regulatory and relevant requirements must be observed in cloud computing.

Pandemic and lockdown have presented many PMI projects with unexpected challenges. Communication structures had to be reorganized, the cooperation with some suppliers was put to the test and last but not least the collective exodus into the home offices turned out to be a paradigm shift for the project organization. The PMI consultants of noventum consulting have accompanied such a project in the early Corona period and have gained some surprising insights.

The merging of companies, the outsourcing of parts of a company or the transfer of individual core processes to a service provider - corporate IT is directly or indirectly involved in all these complex processes. Sometimes it is even the direct and exclusive scene of the action. As different as companies are, as varied are the necessary steps they have to take on their way to each other or away from each other.

For the seventh time in a row, the magazine brand eins and the statistics company Statista have presented a detailed study on the performance of management consultancies. noventum consulting is among the best in this study. In a detailed special issue entitled "Consulting", brand eins presents the study.

Even if the new IT provider and the customer have already worked together successfully in previous years, the renewed service takeover after a provider intermezzo is still not a piece of cake and can become a lesson. noventum consulting has accompanied such a case in an advisory capacity and the realization on all sides after successful project completion is: the combination of a provider change with extensive system changes must not be overstretched if time pressure is high at the same time. 

According to the World Economic Forum up to 10 percent of the global gross domestic product will be generated via blockchains by 2027. Reason enough to take a good look at this technology already today. The upcoming opportunities of blockchain technology have, in fact, found their way into discussions on the executive level. Especially in terms of the alignment of the long-term IT strategy, the topic of blockchain should be taken into consideration in order to be able to identify early on opportunities for your own company. However, decision-makers should have a clear understanding of the potential impacts of the technologies on processes and industries.

The outsourcing market already reached ever new record levels in the past, both domestically and internationally. The number and complexity of provider agreements keeps increasing, so do the challenges for the IT procurement department. Not only does the latter have to master shorter sourcing cycles, but ever more frequently said department is also taking on the role of provider management. In the future, the IT procurement department – as central bearer of know-how – will decisively co-determine what’s going on in sourcing in the company. Whether or not the department assumes the leading role will, to a certain extent, depend on who within the company is one step ahead in terms of specialist knowledge.

Over the past few years, more and more IT service providers have relocated services to countries with lower wage levels, especially India. The aim of this offshoring is to meet the increased competitive and cost pressure of the markets. However, many companies had to realize after outsourcing that the expected savings potentials can only be partially realized. As great as the business incentives are, as high are the demands on the provider management of these offshore projects. Due to intercultural differences, serious inefficiencies can occur in such projects. In addition to purely organisational challenges, it is especially the large cultural differences that have a decisive influence on the success of an offshore project.

Today, most companies have already had experience with the cloud: applications, IT capacities or individual processes are sourced from a wide range of cloud providers. Agility, innovation, cost reduction, flexibility and scalability are the most common reasons for moving to the cloud. The practical questions are: which provider has the right services? Which parts of the corporate IT are suitable for outsourcing? How does a migration into the cloud actually work? How does it pay off and are the costs the only trigger for moving to the cloud? The question is usually no longer, "are we going into the cloud?" Rather, it is about questions such as "when and how?" or "which services are possible?". Not only beginners in the cloud topic ask themselves the question of the correct procedure.

Using the concrete example of the relocation of an HR analytics application to a cloud environment, some special features of cloud computing in the BI environment are presented here.

Digital transformation is everywhere! As if the IT-technological development of the last decades had only been an insignificant foreplay, digitization is on everyone's lips. No socially relevant field remains unaffected by this and it seems to be all about the question of speed. The demand for agility and flexibility sets the pace, and this has already clarified what the dynamics of digitization are aimed at. The different players are quite differently positioned and IT departments in companies are often unable to keep up with the pace on their own. Sourcing to IT service providers can relieve the burden on them, whether they are external service providers or internal service providers in larger groups. However, the ever-increasing expectations from business about the speed and scope of digital transformation are also changing the relationship between IT departments and their service providers. In the future, they will have to move much closer to the specialist departments in the companies in order to be able to deliver precisely and quickly.

Cloud computing is currently the technological answer to the many calls for agile IT environments in times of digitalization. However, the market is constantly changing and not a few cloud projects fail due to lack of preparation. The call for a sophisticated cloud strategy and secure procedural models is growing. Together with Microsoft and CAST, the market leader for software analysis and measurement, noventum consulting GmbH has developed a solution for these requirements. The professional partnership between the three companies culminates in a workshop offering for companies that want to test their way into the cloud.

Even in centrally managed international corporations, national or local developments have repeatedly occurred over the years, which run counter to a uniform approach. Such developments are often pragmatic and good, often they are simply expensive. Especially in areas driven by technical developments, such a "wildness" is not uncommon. In this sense, IT sourcing in corporate groups is sometimes confusing.

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).

When all IT systems must be relocated to another data centre, this often is a particular challenge for the affected IT departments due to today‘s complex IT structures. The effort in relocating a complete data centre while maintaining the agreed upon service levels is enormous. Most often, no or only little experience with such a relocation exists. The amount of work often exceeds the available personnel resources. Typically, to conquer this task, external know-how is purchased or the whole data centre relocation may even be handed over to a competent service provider.

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.