Effective outsourcing: How to plan strategically despite time pressure?

Why should outsourcing be more than just an ad hoc measure?

Time pressure is omnipresent in IT. Organisations often need to respond quickly to new requirements, whether it’s introducing new technologies, scaling services or adapting to changing security standards. In this fast-paced environment, it can be tempting to make outsourcing decisions based on urgency, without comprehensive planning and strategy. But this carries the risk of inadequate quality, unexpected costs and a fragmented strategic direction.

Advantages of successful outsourcing

For many companies, outsourcing their own IT to a provider is a big step. If the IT is customised for the needs of your own business, you need to critically weigh up the advantages and challenges that outsourcing can bring.

How are quality standards ensured? Companies can ensure the high quality of their outsourced services through precise selection of service providers and clear communication. This includes agreeing on the provision of services and measuring them on the basis of service level agreements (SLAs). In addition to the agreement, the subsequent service provider-provider relationship also includes the continuous monitoring and adjustment of the agreed SLAs.

How cost control / savings are achieved Careful planning enables better control over costs. By avoiding unforeseen expenses and optimising processes, organisations can keep their costs under control in the long term. A well-organised tendering process, including a bidding phase in which providers submit a bid for the defined service, makes the (contract) bids more comparable and sound.

What role does strategic corporate alignment play? An ongoing planning process helps to align outsourcing with the company’s long-term strategy. It enables flexible adaptation to changing market conditions and digital/technological developments.

How risks are reduced A structured outsourcing process can help to minimise risks and adequately manage existing risks. By selecting reliable partners and clearly defining contractual terms, potential risks such as security concerns or unexpected failures can be better controlled and managed.

Is partnership an important factor? By getting to know each other in a regulated tendering process, which includes the RFI (Request for Information), RFP (Request for Proposal) phase, provider workshops and the negotiation phase, both parties can already introduce themselves and lay the foundations for a future partnership-based collaboration.

How can traceability/comparability be created? In the course of an IT tender, it is necessary to evaluate the different providers in order to reduce the large number of providers to a manageable number. Evaluation matrices are suitable for this, in which the providers are evaluated according to previously defined criteria. Each criterion is given a weighting which, in combination with the evaluation of each individual criterion, results in an evaluation of the provider. This transparency helps to show how the results have been achieved both internally and, if necessary, externally. Transparency and publicity limit the arbitrary selection of a provider. This also helps to reduce the selection based on personal relationships.

The biggest investment in structured outsourcing is the time factor, which can be significantly reduced through experience. If the organisation does not have the appropriate know-how, it is worthwhile making use of experienced (consulting) experts. This initial investment will pay off in the long term due to the advantages described above and can ensure an increase or development of the competitive advantage and have a significant impact on the company’s added value. The following steps can contribute to an initial orientation and draw attention to important planning steps at an early stage.

What is involved in a regulated tendering process?

• At the beginning of the tender, the outsourcing strategy should be developed or analysed and referenced to the client’s current challenges. This determines which service section (software / hardware) is to be realised and under which framework conditions the subsequent IT tender will be carried out.
• Once this IT sourcing strategy has been defined, a list of potential providers is then drawn up; this list can be based on current research and experience. It may already be possible to identify providers that do not fulfil certain minimum requirements and are therefore unsuitable for the award procedure. At this stage, it is recommended to start with a broader selection of providers to ensure that potentially good alternatives are not excluded from the outset.
• During the RFI (Request for Information) phase, potential suppliers receive information on the framework conditions of the tender and are asked to express their interest in participating. Optionally, initial exclusion criteria can already be requested.
• The number of providers can be reduced on the basis of the feedback received. An evaluation matrix can be used here, in which predefined criteria and their weighting are taken into account.
• The remaining providers then receive further information on the tender in the RFP (Request for Proposal) phase, often including service specifications and contract documents. Based on this information, the providers submit their offers and often also additional documents. These may include, for example, technical elaborations, contractual aspects to be adapted, evidence or implementation tips.
• Once this process has been completed, a detailed evaluation is carried out and the providers that best meet the requirements of the tender are invited to (working) workshops. These workshops serve to get to know each other and discuss open issues.
• The final step before the order is placed is the contract negotiation. The more thoroughly the contracts and notes of quantities have been drawn up in advance, the easier the negotiations will be.

IT outsourcing is a demanding process that requires preparation and experience in order to become a success for companies. The above steps can only provide an initial introduction and orientation and cannot replace a detailed discussion with experienced experts.

The special case: public tenders

Tenders for the procurement of information technology from governments (federal, state, local, etc.) and public institutions (public authorities, public administration) are subject to special rules, as transparency and equal opportunities must be guaranteed. Contracting authorities publish invitations to tender that encourage companies of all sizes to apply, thereby promoting competition and innovation. Compliance with legal requirements for the contract to be awarded ensures a fair and transparent award, which helps to strengthen the economy. Due to the more extensive formalities, public tenders are considered time-consuming.