Friday, April 21, 2006

Lack of Planning and Objective Consensus Hampering ITO – Study

According to a study by PA Consulting, a UK-headquartered consultancy firm, the lack of sufficient planning as well as proper understanding of the objectives of an IT outsourcing (ITO) agreement are the main factors hampering the achievement of strategic value from IT outsourcing. The differences in interpretation and the lack of planning were found to result in poor realization of returns, lost opportunity, and failure to achieve transformational objectives. The study covered about 300 executives, major IT outsourcing suppliers, and legal advisors.

Suppliers quoted cost reduction, followed by access to IT skills and IT investment as the clients’ desired results from ITO. Clients, however, quoted access to skills as the most important objective. According to the study, about 42 percent of the clients undertook proper planning before the initiation of the deal. About 68 percent of the clients wished to have an increased focus on the suppliers abilities.
Misinterpretation was a major drawback that hindered the derivation of maximum value from the project. Only 21 percent of the suppliers and 38 percent of the legal advisors receive complete information about the deal from the clients.

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