* Has outsourcing matured enough for standard statements of work?
Editor’s Note: The Network World Outsourcing Newsletter has a new author: Dan Twing. Dan is vice president of research and consulting services at Enterprise Management Associates, and has more than 20 years of experience in business process automation, distributed systems and outsourcing services. He leads EMA’s analyst and consulting functions and we are very pleased to have Dan on board as our new author. As always, please let us know what you think of the outsourcing newsletter and if there are any particular topics you’d like us to cover.
I recently caught up with a former colleague as he returned to the U.S. from an international consulting engagement. His firm helps IT organizations with outsourcing decisions, assisting them through the contracting and implementation stages. He just completed a six-month engagement on the renewal of a large, multi-department outsourcing contract for a government agency. There was one big name outsourcer that had done several contracts with different departments over the past several years. As part of the renewal, some functions were going to be outsourced to other vendors while the big name firm was retaining much of the work. A major pain point for working out this new, and now multi-sourced relationship, was the lack of standard statements of work (SOWs) from the vendors involved.
We both wondered if the outsourcing market was mature enough to see widespread availability of standard offerings from vendors. As much as the outsourcing industry has matured over the past 25 years, there are still significant challenges in the establishment and governance of outsourcing relationships. Many vendors have tried, some more successfully than others, to package or productize their outsourced offerings around standard SOWs. Certainly some functions lend themselves more easily to standardization, such as desktop management or collocation of servers, while other functions such as software development require more custom definition. Whatever the function, standardized offerings can speed both the contracting and the implementation process.
Packaging their services into standard SOWs, vendors can more effectively train their staff, produce consistent results and drive down costs. I believe that outsourcing vendors with clearly packaged offerings represent a reduced risk because they can build repeatable processes around their standard SOWs. Buyers have a better understanding of what they are buying and at what level of performance. Packaged offerings usually include multiple service levels (e.g. bronze, gold or platinum), so buyers have the opportunity to make a cost/benefit decision around specific service bundles. Selecting from such sevice bundles also reduce the effort to define and agree on SLAs.
Buyers should embrace standardized SOWs. Some buyers will always think their need is unique and work toward a customized group of SOWs. However, more and more buyers are embracing standardized SOWs as a starting place for this most important part of an outsourcing contract. Certainly, there is room for additions or modifications to the standard SOW to handle unique needs. One of the functions that my consulting friend had to address was desktop management. His client was able to take advantage of a standard vendor offering once a smart card device was added to the mix to meet regulatory requirements for user authentication. A small change to an existing well-defined SOW gave the buyer what they needed, but allowed the vendor to work from a predefined set of offerings.
The convergence of vendor packaging and buyer acceptance of standard SOWs are further indications of the maturing of the outsourcing marketplace. If you are a provider of outsourcing services, I encourage you to bring standardized SOWs to the table. If you are in the process of outsourcing part of your operation, search out packaged offerings to make the contracting process easier and delivery more predictable.
