Gartner warns that IT outsourcing growth will come at a cost

That’s the warning from analyst Gartner in its report, Gartner on Outsourcing, 2007-2008. “Although users often have fundamentally sound procurement organisations to initiate outsourcing contracts, for many, their IT sourcing strategies and governance structures are still immature, lacking altogether, or misaligned with enterprise objectives,” says Kurt Potter, research director at Gartner. And he adds: “Because these organisations lack the basic building blocks for successful vendor management and outsourcing success, expected cost savings and other benefits are difficult to obtain. In extreme cases, the lack of needed trust and control to optimise the outsourcing relationship results in deal failure.” However, Gartner’s research also suggests that more organisations focused less on outsourcing for cost savings than in previous years, and more on using providers’ global delivery models to access the right skills at a reasonable price, wherever they are. Potter suggests that the outsourcing market has reached a tipping point with regard to utility delivery models, and that change and innovation will take hold and accelerate through 2008. It notes that more providers are developing utility-based offerings across infrastructure, applications and business processes. “User organisations need to realise that the utility delivery model is a viable alternative to traditional outsourcing, and they should seriously consider utilities in their sourcing strategies,” he says. “In 2008, we expect to see some early adopters of multi-sourcing to consolidate around fewer providers to reduce their service integration costs and harvest the benefits of better relationship management with fewer strategic suppliers,” says Potter. “Because of multi-sourcing complexities, often associated with handoff points between competing providers, and unclarified vendor management processes, some organisations will consider prime-contractor outsourcing models or the appointment of new vendor management roles in their retained organisations.”