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Tips for Successful Software Outsourcing

In the recent survey on outsourcing KPMG revealed interesting facts about successful outsourcing projects.  More than 650 organizations in 32 countries participated in this survey. Most of the responders were C-level executives.

Over 80% of the contracts refer to information technology outsourcing (so the results can be applied for software outsourcing as well).

The organizations most satisfied with outsourcing took the following approach:

  • Vendor selection process tend to be shorter
  • Organization shares clear and consistent view of the purpose of outsourcing contract, it is shared across impacted business parts
  • Board level involvement is limited to one contact per quarter
  • Contract is flexible, to allow for changing situations
  • Organizations are happy with the level of innovation the service provider has offered
  • Processes are less bureaucratic, but service provider is monitored closely, including SLAs, financial metrics and others
  • Organizations have clear understanding if the service provider met their expectations

These facts (successful vendor selection, contracts, business part involvement and others) are discussed in our Outsourcing Manual.

Other interesting facts:

  • Organizations are looking for long term benefits of outsourcing, but more than 40% of the contracts are not supported by formal measurement.
  • Although time is critical in business, more than 50% of respondents said they take more than 6 months to complete Request for Proposal (RFP), 30% more than nine months, 79% didn’t know the cost of selecting a sourcing provider.
  • 60% responders said that most of the problems with their outsourcing provider are people related

Interviews were conducted between July and November 2006.

Source – KPMG survey: http://www.kpmg.cz/czech/images/but/2007_Strategic-Evolution.pdf