By Sara Cullen, Leslie Willcocks
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Be aware, however, that more often than not, the need has continued far beyond the projected exit date Can the organization be more effective performing the activity or using the output? If the organization needs to perform the activities itself because of the superior benefits the conduct of the process offers, rather than the smart use of the outputs, consider keeping the activity in-house and having performance improvement initiatives Is there potential for a monopolist supplier market? There are two key drivers of a potential monopoly: (1) a lack of a competitive market and (2) the degree of organizational specifity involved.
Much of the information contained within this assessment can be gained through published reports, guides and other documents; however, we also recommend contacting key personnel at the organizations identified along with their outsourcing suppliers to gather their insights and opinions. Information from IT experts can also be made quickly available, and these may well be within the industry, ex-supplier staff, academics and from specialist consulting firms. 23 2 The second building block – get equipped: prepare the strategies This building block, that of preparing the strategies, is crucial to the effective navigation of the entire outsourcing lifecycle.
And this is before getting to profit margin. Finally, also remember that if the supplier is struggling to make its profit margin, it may well decide to cut its own costs, which may well result in deteriorating service to the client (see below). ’ In fact, the record on these sorts of deals has been very mixed. Lacity and Willcocks (2001) looked at 29 such deals and found 38% meeting expectations, 35% unsuccessful and 27% getting mixed results. Risky business indeed. The early 1990s’ deals like this tended to be struck to reduce costs, often for financial reasons including restructuring the balance sheet of organizations in financial trouble.