The CIO Handbook
9 Essentials to Fix
Bad ITO Deals
Featuring research from
www.hcltech.com|www.hclisd.com
Executive Summary
2
Executive Summary
3
Changing Perceptions: From
Traditional to New-Age Outsourcing
4
Nine Essentials for a Successful
IT Infrastructure Outsourcing
Relationship
8
Conclusion
9
From the Gartner Files: How To Make
Bad Outsourcing Deals Better
13
About HCL
IT Infrastructure Outsourcing is not a new organizational trend.
It has been in practice for decades and has now matured and
evolved from a tourniquet to cut costs to a business imperative.
However, despite the evolution of outsourcing, the odds of being
involved in an outsourcing failure have not diminished at all.
“Many organization, vendor and sourcing managers tell Gartner
that they have substantial challenges with their outsourcing deals.
A common theme is that the service levels are being met, but customer satisfaction is low and senior management is disgruntled.
Other problems started as far back as the transition stage when
service providers (SPs) began delaying implementation of their
services for various reasons, which all results in delays to “going live” for consumers. Understaffed vendor and relationship
management functions and inefficient governance processes by
the client organization is another factor. Unsurprisingly, the SP is
then not aligned with the organizations’ goals, causing constant
disruption to the deal. Another contributing factor is that organizations in outsourcing deals for two years or more, where the
price is no longer cost competitive (compared to marketplace
data) are experiencing refusals by SPs to make price reductions
(and no benchmark capability exists).”1
As a result, CIOs feel frustrated and trapped in bad outsourcing deals.
This handbook suggests how organizations can mitigate
the risk of failure and achieve outsourcing success with a
new-age service provider.
1Gartner Inc., How To Make Bad Outsourcing Deals Better G00231999, 20 March 2012
The CIO Handbook: 9 Essentials to Fix Bad ITO Deals, is published by HCL. Editorial supplied by HCL is independent of Gartner analysis. All Gartner research is © 2012
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2
Changing Perceptions: From Traditional to
New-Age Outsourcing
In today’s highly competitive market, business expectations
from IT and outsourcing partnerships are changing fast. Business leaders today, are looking at IT to undertake initiatives
that make tangible improvements to business performance and
create a competitive advantage.
According to Gartner, “The early IT and IO, first-generation,
value proposition focused primarily on cost savings, asset control and staff augmentation or transfer, not only because this
was what was demanded by end user organizations, but also
because providers wanted to aggressively enter these longterm contracts and attempt to grow the relationship with the
buyer during the contract duration. Subsequent generations of
outsourcing aimed at a high degree of standardization — for
buyers to further cost improvements, as well as benefit from
“perceived” simplification, alleviation/elimination of assets,
while for service providers the subsequent generations of contracts were an opportunity to protect profitability though economies of scale.”1
Considering the evolving IT landscape, it becomes essential
that organizations revisit their outsourcing strategy and collaborate with the new-age service providers. However, switching
service providers requires careful consideration as there are
only a few new generation providers that have capabilities as
mature as those of traditional suppliers.
1
3
New-generation service providers, such as HCL Technologies,
can make the transition less risky for organizations. Over the
years, HCL Technologies has developed proven and matured
processes that help fix troubled outsourcing relationships, and
has many successful transitions to its credit. HCL’s deep technical knowledge, flexible approach to relationship management
and project skills, have helped more than 100 customers (including over 30 Fortune 500 companies) move from ineffective
black-box outsourcing relationships to an open, collaborative
and agile engagement model.
The success of one of the global pharmaceutical giants is worth
mentioning. The organization’s incumbent provider for seven
years, one of the world’s largest infrastructure service providers,
was failing to keep pace with the changing business needs and
was inhibiting the customer’s business rather than enabling it.
The client switched to HCL Technologies, a new-age service
provider who successfully transitioned from the incumbent with
minimal/zero disruption of services to the customer business.
HCL leveraged its proven transition capabilities and reliable
skills and experience in Infrastructure transformation to effectively align IT to the business.
Gartner Inc., Market Trends: Ten Trends That Will Impact Infrastructure Outsourcing, Worldwide, 2012, G00231459, 19 March 2012
Source: HCL
Nine Essentials for a Successful IT
Infrastructure Outsourcing Relationship
So how do you identify a new-age service provider? There are a few critical characteristics such as transparency, flexibility, seamless
transition experience, continuous improvement and innovation expertise that need to form an intrinsic part of a new-age service provider’s culture. After speaking with our customers, we have defined few characteristics of new-age service providers that distinguish
them from the traditional outsourcing service providers in the table below.
Characteristics
Traditional Services Provider
New-generation Services Provider
Flexibility
Offers minimal or no flexibility.
Offers complete flexibility; the client doesn’t need to
go through contractual quagmire for meeting business needs.
Transparency
Black-box sort of engagement.
No smokescreen between the supplier and the customer.
Business-IT Alignment
Selectively aligned to business needs.
Clients’ business needs are topmost priority.
Transformation-focus
Transformation means more hardware to Focuses on unlocking capital through run-themost of the traditional suppliers.
business IT delivery and then on delivering
change-the-business capabilities.
Provisioning
Provisioning consumes months.
Provisioning is fast and easy.
Culture
Employees get bogged down by hierarchies.
Employees are empowered for value creation.
Executive Management Access
No visibility regarding whom clients can reach Executive management access is easy.
out to in the SP organization to discuss their
concerns.
Cost Optimization
Charge for every small change, ramp up Focuses on optimizing cost for customer and
hardware, deliver non-industrialized services. industrialized service delivery.
Innovation
Innovation is their last priority.
Innovation is their foremost priority.
Table1.1: New-age Service Providers vs Traditional Service Providers
Service providers need to translate these main characteristics into solutions and services that are ideal in solving crucial
outsourcing issues organizations may face. Highlighted below are nine issues/challenges that organizations typically
face with service providers and corresponding solutions developed by HCL to counter them. Over 100 HCL customers
are utilizing these tried and tested solutions (developed over years) to achieve success.
Source: HCL
4
Challenge 1: Is your IT bogged down by sluggish Incident
Management?
Solution: Achieve operational excellence with IOMS
IT Infrastructure availability and resilience has always been the
top priority for CIOs. However, in most IT support organizations, Incident Management processes are not integrated between infrastructure and application support teams. Following
a ‘proactive’ against the traditional siloed ‘reactive’ Incident
Management approach, HCL Technologies has developed ‘Integrated Operations Management Services (IOMS). IOMS is
HCL’s unique value proposition, which integrates application
support and infrastructure support. These new set of services
help enterprises achieve business effectiveness by creating application knowledge clusters and cross-training to ensure that
operations knowledge is institutionalized and is independent of
the people supporting it. This ensures greater accuracy in ticket
assignment, faster MTTR, lowers ticket hops with up to 30 %
improvement in availability.
Challenge 2: Is your IT roadmap determined by vendor targets
as opposed to your needs?
Solution: Gain greater control, improved flexibility and
higher ROI
Unlike other external technology vendors who define customer
organization’s technology roadmap considering new products
or technology they desire to push, HCL recommends a vendoragnostic IT architecture which could be a combination of existing technology, fresh build or refresh. HCL has devised Gold
Standard, an assessment-based roadmap development methodology to improve the way operations are run. It is a four-step
process of knowing where you are (AS-IS State), defining where
you want to be (DESIRED State), plan a roadmap to the desired
state and implement the roadmap.
5
Identifying the trends in IT infrastructure services management, HCL has introduced Management Tools as a Service
(MTaaSTM), a service-based industrialized delivery model.
MTaaSTM is essentially a business-ready hosted platform for
enterprise tools where customers can simply extend the consoles into their environment. It has a modular, layered architecture, with each layer adding value and complimentary functionality to the input from the layer below, and providing the
relevant input to the layer above.
Challenge 3: Do you feel trapped in your IT contract?
Solution: Leverage zero-risk transition methodology to
break-free
Culturally, traditional outsourcers are inflexible, non-transparent and unresponsive to new demands of the business that
fall outside the scope of the outsourcing contract. In most of
the traditional outsourcing engagements, regardless of nature
of the need, customers usually have no choice than to follow contractual quagmire even for meeting the most critical
demands of business. In such engagements, exit clauses act
more like a trap for customers and make transition decisions
risky and difficult for customers.
HCL’s AsseT™ transition methodology ensures smooth and riskfree transition. AsseT™ is an integrated end-to-end transition
methodology framework covering the entire transition lifecycle.
It has been designed to focus on ‘Service Transition’ phase for
various streams across all lines of business. The process encapsulates all transition-related activities and key responsibilities
initiated post-contractual go-ahead from the client.
Challenge 4: Does IT provisioning consume months of valuable time?
Solution: Quickly provision (and orchestrate) infrastructure and applications with HCL MyCloud
MyCloud is HCL’s advanced Cloud management platform that can help enterprises cope with the increasing complexity in the
Cloud space. This easy-to-use platform provides end-to-end Hybrid Cloud management features and helps businesses overcome
the challenges posed by the hybrid environments. It addresses aspects like monitoring, governance, risk and compliance, migration,
security, ITIL-based service management, assessment and service level management, across the hybrid IT landscape.
Challenge 5: Frustrated by being short changed for every small change by your IT vendor?
Solution: Experience a relationship-focused, approach to service delivery rather than a contract-centric one
HCL believes relationship management is the key to both the short-term and long-term success of any partnership. There’s evidence
to show how HCL‘s way of maximizing agility and improving flexibility in partnering engagements can make a real difference. Also,
HCL’s zero nickel and dime policy is enabling 99% renewal rate for HCL.
6
Challenge 6: Tired of navigating IT vendor’s organization for the right resource?
Solution: HCL’s Employees First Customers Second management model ensures the right resource at the right time
HCL Technologies has shattered the myth that top management is the primary creator of strategic value by putting “Employees First.”
The Employees First mindset nourishes high performance teams and makes behavioral competencies an organizational differentiator by focusing on the employee-to-customer interface. An example of Employees First Customers Second (EFCS)-based initiatives is
the Customer Value Portal, a unique online framework that provides a formal channel between HCL and its customers to mutually
agree on value-based project outcomes and then to track those outcomes throughout the life of the project.
HCL has created systems, processes, and ultimately a culture of empowerment. EFCS is a framework that tuned HCL employees for
perpetual change, always on the lookout for imbalances that can be turned into opportunities of leadership. This ensures that HCL
customers get the right kind of leadership, willing to resolve everyday challenges of the customer as well as bring transformational
changes for the business benefit.
Challenge 7: Does your IT Infrastructure seem like a black-box?
Solution: Gain complete visibility into your IT infrastructure with MyDashboard™
MyDashboard™ is an HCL IPR visibility tool that offers complete visibility for different layers of IT Infrastructure and enables transparency of HCL IT services to clients. It provides an integrated view of all managed services giving both business-centric and processlevel views of IT Infrastructure with intuitive user interface and personalization features.
MyDashboard allows powerful trend analysis, intelligent root cause analysis, and SLA monitoring and management.
Challenge 8: Interested in transformation but limited by IT?
Solution: A technology-agnostic services provider like HCL helps you take the right decision
HCL thinks and executes transformation differently. HCL assesses the actual business or technology need for transformation, and
does not thrust transformation just for the sake of it. For HCL, transformation has various facets including, but not limited to: IT
service management process automation, tools rationalization, global multi-lingual service desk Standardization, support model
rationalization and centralization, and data center consolidation or moving to converged next generation architectures.
HCL has successfully executed more than 70 complex IT transformations in the past 4 years; some of these initiatives were run
parallelly with complex service transition from the incumbent. HCL delivers transformation along with its global technology and
operations partners, while not being driven by the partners’ interests.
Challenge 9: Not Strategic to your BIG IT vendor?
Solution: Unlock positive transformation with a vendor, who continually strives to add greater value
HCL has pioneered what is known as ‘co-sourcing’ approach against the traditional ‘all or nothing’ outsourcing model. Cosourcing stands for ‘collaborative sourcing’, which assesses the best model for the engagement and customer context, where the
customer may opt to retain people and assets ownership. But operations and transformation are owned and executed by HCL.
In partnership with the CEO, COO, or Business Line head as the ‘involved’ executive sponsor, HCL establishes a focused governance
plan for each engagement. The HCL executive sponsor has an operational view of the engagement and participates in one or
more reviews personally. The other facets of HCL’s Engagement Governance include Operational Excellence levers, Automated
Operations Health Index and others which ensure optimum delivery, whatever be the engagement size.
Source: HCL
7
Conclusion
Vendor and sourcing managers can use the insights outlined in this document to tackle the problems they face with their outsourcing service providers/deals. Either they can mitigate risks by switching over to a new-generation service provider or maneuver their
current contract in a way to bring in the characteristics of next-generation sourcing.
The trend shows that the possibility of the latter is abysmally low, whereas the former requires careful consideration of suppliers as
there are only a few new-generation suppliers having capabilities as mature as those of traditional suppliers.
In such a scenario, organizations can partner with new-age service providers like HCL Technologies, whose experience of curing
troubled IT environment, technology-agnostic services, transparency and flexibility, making it the ideal choice for organizations that
are ready to move into a second- or third-generation of outsourcing.
Source: HCL
8
From the Gartner Files:
How To Make Bad Outsourcing Deals Better
Sourcing and vendor managers should use this research to understand why outsourcing deals fail. Improve deals by learning
from others’ mistakes, changing expectations, transition, communication, service levels, innovation, performance, flexibility,
alignment, pricing and relationship management.
Key Findings
• Most companies have access to global service solutions
and the market provides interesting but challenging sourcing options.
• IT budgets are under pressure, with organizations being given a mandate to do more with less. Organizations
constantly seek how to increase the breadth and depth of
sourcing to meet this requirement.
• Organizations are pushing for a business value focus, including directly linking IT outcomes to business objectives,
but they continue to face challenges when implementing
business-based measures in their outsourcing deals.
• Overall satisfaction across IT towers2 in sourcing is increasing year-over-year, based on reference checks from client
participating in Gartner’s Magic Quadrant sourcing research, including help desk, desktop and data center, as
well as various application Magic Quadrants.
Recommendations
Vendor and sourcing managers should:
• Ensure that all stakeholders can meet their strategic and
tactical goals while responding to business and technology
objectives.
• Close any gaps in the overall vision by understanding all
stakeholder visions and executing an attachment to the
contract that defines each respective vision.
• Ensure that the deal is adaptable and will enable or support
business and technology innovation.
• Ensure that all stakeholders are aligned by confirming that
they have a shared view of the deal type (which results in a
clear view of the key objectives).
• Be certain that all participants achieve their business value
from the relationship by defining what constitutes business
value — including how it will be measured in the short, near
and longer terms of the engagement.
Analysis
Vendor managers support transformation, drive governance
and manage the ongoing deal to ensure optimal vendor performance, which is not an easy task. Many organization, vendor and sourcing managers tell Gartner that they have substantial challenges with their outsourcing deals.1
9
A common theme is that the service levels2 are being met, but
customer satisfaction is low and senior management is disgruntled. Other problems started as far back as the transition stage3
when service providers (SPs) began delaying implementation of
their services for various reasons, which all results in delays to
“going live” for consumers.
Understaffed vendor and relationship management4 functions
and inefficient governance processes by the client organization
is another factor. Unsurprisingly, the SP is then not aligned5
with the organizations’ goals, causing constant disruption to the
deal. Another contributing factor is that organizations in outsourcing deals for two years or more, where the price6 is no
longer cost competitive (compared to marketplace data) are
experiencing refusals by SPs to make price reductions (and no
benchmark capability exists).
Additionally, organizations frequently state that SPs promised
to bring innovative7 deals, but fail to provide even continuous
improvement. Other challenges8 include poor communication,
missed expectations and a lack of flexibility.
Avoid These Key Factors in Deal Dissatisfaction
Outsourcing deals are generally long-term relationships and
deals signed today may not be the deal required in the future.
Organizations should avoid these key factors to dissatisfaction:
• Deal expectations. Clients and SPs expect different deal
outcomes and because each party pursues different objectives, activities are often prioritized differently.
• Transition. Organizations often encounter resistance to
their decision to outsource at many business levels. Organizations often do not supply the right information at the right
time and do not identify business requirements. Providers
often do not apply the right or enough resources to the transition process, sometimes due to the lack of proper information provided by the client, but more often than not, it is an
attempt to limit resources.
Organizations keeping their plans a secret or trying to avoid
communicating all the facts will create a climate of uncertainty,
fear and mistrust that is difficult to cure. Informal communication plans often lead to a say anything, anytime mentality that
causes constant disruption to deals. SPs often provide communications to the wrong people, at the wrong time.
Organizations often ask providers to suggest service levels. Providers typically revert to measures that they know they can meet,
ignoring whether it meets client requirements or not. Worse still,
is if clients use the suggested measures or agree to a “to be
determined” service level approach. Regrettably, contracts are
rarely definitive enough regarding service levels.
Clients expecting providers to be innovative in solving their
business challenges and goals, must share business directions
and issues with them, yet most organizations regularly fail to do
so. Clients rarely establish clear contract-based guidelines on
what innovation means, how it will be delivered, who will be
involved in the process and the expected outcomes.
The ability to meet performance requirements based on service
levels is another significant problem. Clients often feel that the
provider has reached its limits and that there is no way to improve. Providers say they can still do the job by being allowed
to make a few adjustments. Worse still is when the contract
terms and conditions rarely contain the necessary behavior
driver tools, including a lack of proper penalties, absent or
weak benchmarking requirements and a poorly written termination process.
A contract should drive flexibility, but if it is woefully lacking in the required structure, standard solutions, pricing, exit
and demand management plans, cooperation between the
organization and its provider and close alignment between
the contract and business requirements will be absent. This
means that little to inadequate risk assessments are completed, which reduces flexibility.
Deal alignment is a frequent problem. Both parties have little to
no understanding of the other’s business goals and deal objectives. This alignment issue greatly concerns CIOs and sourcing
leaders. Alignment of sourcing initiatives to business objectives
is essential and is rarely achieved.
Organizations frequently base their pricing model decisions on
ease of use or familiarity. They fail to understand the implications, or misjudge the role that baseline requirements play in
pricing. The wrong pricing model is all too often the fatal flaw
in a deal. A single pricing mechanism for the entire deal is a
dangerous misconception.
It’s a tough challenge to fix the deal relationship. Organizations say they can’t access the right level of provider management, while providers say they can’t do the job because the
client is always seeking meetings. Even so, if organizations had
only one provider relationship it would be reasonably straightforward to manage and ensure alignment of mutual business
objectives for both parties. Most companies organize their resources as if there were only one SP, yet in most cases, there is
at least one additional key source for service delivery.
Recommended Actions: Nine Steps to Improve Your Outsourcing
Deal
Gartner has developed nine steps to assess and fix deal issues.
These steps include assessing your view of the current situation,
identifying goals, achieving consensus and prioritizing the issues
by properly escalating all issues, assigning an executive with the
authority to fix the issues, conducting an issue escalation review
meeting, updating the issue list and where possible, agreeing on
service levels and appropriate penalties and managing the risks
by focusing on the most important issues.
1. Assess the Situation
A paramount requirement is getting answers, identifying the
impact, determining the investment required to fix the issues
and prioritizing the solutions, by aligning them with business
requirements. The key questions, identified in the following list,
addressing the services, relationship, finance and commercial
parts of the engagement with the strategic vendor is the foundation for achieving the nine steps in the “solution” process.
Key assessment questions you should ask:
• Are you receiving the expected service?
• Are the expected levels of service performance being delivered?
• Are business objectives being met?
• Do you have a good relationship with your SP?
• Are your end users satisfied?
• Do you pay a realistic price?
• Does the service grow and shrink with your demand?
• How responsive is the provider to your questions, needs and
demands?
• Is the SP proactive and innovative, while recommending improvements?
• Does the SP have a stable workforce?
• Will insourcing or switching providers be trading one set of
problems for another?
• Is the SP getting what it needs from the deal?
• Does the provider offer what is being done now and what
might be possible for the future?
• Do both sides have appropriate staffing levels for conducting
the deal?
2. Identify Goals for the Improvement Process
The next step is to utilize the answers to the previous questions
and determine their goals (for example, which problems to fix,
by when and by whom) in terms of the business requirements
supported by the deal, the financial requirements required to fix
the problems, other necessary resource commitments necessary
to fix the problems, the appropriate behavior drivers needed
and the change processes necessary to change the governance,
services to be delivered, scope of work and relevant service levels and pricing mechanisms (by both parties).
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Once the goals are identified, then a revised set of processes,
relationship structures and terms and conditions necessary to
achieve the objectives are defined. This is not merely a discussion between the sourcing organization and the provider, but
the sourcing/IT organization must have a good knowledge of
what, when, where and why for the organization’s specific objectives and business goals and how the sourcing organization
can bring the goals to the table with the provider.
3. Achieve Agreement on Critical Goals
Utilizing the goals and a revised set of processes, relationship
structures and terms and conditions identified earlier in this
analysis, the organization must next prioritize its goals.
The prioritization process includes:
• Ensuring that the issues and relevant goals are clear, real
and that an agreement is achieved on the issues and goals
with all stakeholders.
• Identifying and agreeing all necessary corrective actions.
• Gaining commitment for the necessary financial and resource requirements, including formalizing the agreement
with signed new contracts and other agreements (such as
hiring and changing personnel, acquiring new tools and
implementing processes).
Priorities will change, so all parties must understand the other’s
ability to identify priority changes, as well as the means, by
which this re-prioritization must occur.
4. Escalation Plan
Utilizing the prioritized goals from Step 3, develop an escalation plan by determining who should be involved in each goal.
As part of the escalation process, organizations must ensure
that they seek approvals at the right level on both sides of the
deal, as aiming too high often does not get the required action or support. Instead of the correct fix “work arounds” are
helpful, as aiming too low often does not get the issue fixed at
all, because there is a lack of empowerment to drive activities.
Both parties must have these roles identified to avoid a bureaucratic stalemate.
5. Escalation Executive
As part of this process it is paramount that the plan is lead by
a client executive who is assigned the responsibility of ensuring
that the changes are implemented. This executive should be in
place as soon as possible in the process, hopefully during the
identification and prioritization procedure, but no later than
prior to escalating and seeking approval of an investment in
the plan by both parties’ key stakeholders.
11
6. Review Meetings
The organization and its provider must continuously review and
change the plan. Meeting on a regular monthly basis with updated plans communicated to all stakeholders is the objective
of the review process. New issues will arise, other issues will
change. Changes often occur at random, so the continuous review and change process must be a long-term commitment by
all stakeholders. The organization and its providers must act
as a team and the escalation executive should lead this effort
with the authority necessary to amend the plan and commit the
funds, as appropriate.
7. Issue List Update
Once the updated list has been approved it must be communicated to the appropriate stakeholders at the right level of detail
and at the right time. Next, follow up stakeholders to ensure
they understand the report and its impact on each stakeholder
— normally completed via a report review meeting. Remember
that the updated list, like the review meetings process, is one
that takes place on a regular basis.
8. Implement Behavior Drivers
Implementing the required changes must be founded on an
ability to drive the provider’s behavior. While this can be a
tough step (as you may not always have the necessary negotiating power), if the plan has been followed to this point the
organization and provider will have resolved any issues or differences along the way, so it is paramount that all stakeholders
are involved from the beginning.
Implementing behavior drivers can be challenging, but ensuring
that the following items are completed will aid success:
• Penalties are a service-level agreement necessity. Without
penalties, you just have objectives and you will not be able
to drive a provider’s behavior. Penalties should be not less
than 10% or more than 20% of the cost of the service and a
full earn-back should accompany the penalty.
• Consider evolutionary metrics, such as business-based
outcomes, but do not forsake the technology and process
measures as part of the process.
• Identify reasonable measures, as seeking 100% achievement
will not work. Using business measures when they can’t be
linked to the services being delivered will also fail to deliver.
• Penalties should be used only to drive provider behavior,
so full earn-back clauses for all penalties must be used because once a penalty is incurred the behavior being driven
as a result will be wrong unless a full earn-back opportunity
is provided.
• Make the service levels sharp and powerful, as well as ensuring they can be linked and are relevant to the business.
• A clear understanding of the intent of the deal and the expected behaviors must be at the forefront of the deal and
regularly revisited. Techniques and tactics for driving behaviors are paramount, but understanding the “how” in
how this deal will work for both parties is also relevant.
9. Identify and Manage Risk
Organizations must understand the risks associated with all
changes made to the relationship. This is achieved by defining
and implementing a risk management plan.
The plan should include the following items:
• Input and activities:
• Clearly articulate the intended business goals of sourcing risk management.
• Align sourcing maxims/objectives and the organization’s
risk profile.
• Define intact and self-directed teams (sourcing, risk, IT,
business unit, human resources and legal teams).
• Design and define the structure of tools.
• Define standards and policies.
• Deliverables include:
• An assessment of all recommended deal changes to include the risk of doing and/or not doing.
• A sourcing risk management plan.
• The business goals.
• A risk management budget.
• Assessment of the alignment to a sourcing strategy and
standards and policies.
• Methods and tools used.
• Team design/staffing.
• Risk treatment plan.
• Sourcing risk categories/register.
• Probability and impact matrix.
• Sourcing risk reporting templates/examples.
• Definition of risk policy and standards.
To change deals that are not meeting expectations, organizations should utilize the Gartner nine-step process, as this
will help ensure that the deal works for all stakeholders. Not
doing so means dissatisfaction or potential failure when negotiating deals.
Evidence
Over the past 12 months, Gartner completed three Magic
Quadrant documents, where more than 150 end-user clients
were interviewed, as references and more than 1,500 client interactions at various Gartner summits and symposia were completed, as well as regular analyst and client phone calls. These
interactions called out several issues that we have addressed in
this analysis and the following information details the evidence,
including examples of client issues.
During the Magic Quadrant processes for help desk, desktop
and data center outsourcing, Gartner completed more than
150 reference checks with clients. During this process, clients
identified one or more challenges with their outsourcing deals.
In addition, Gartner analysts spoke to more than 1,500 organizations facing challenges with one or more of the identified
challenge factors.
2
Clients (22 reference clients and 52 others) stated that they had
had incorrect or inadequate service levels, or were unable to
change the service levels in a timely manner, if at all.
3
Clients (17 reference clients and 45 others) stated that they had
some degree of difficulty with the deal transition process.
4
Clients (22 reference clients and 39 others) stated that their relationship with their provider was strained, due to their inability
to work with the provider’s management staff or gain the attention of senior management when necessary.
5
Clients (28 reference clients and 46 others) identified alignment with their provider as a deal issue, including the provider
and the client having a different understanding of the intent of
the deal — such as lower cost vs. improved performance.
6
Clients (19 reference clients and 31 others) stated that they had
the wrong pricing model causing problems with payments, an
inability to benchmark and to achieve the desired cost savings.
7
Clients (59 reference clients and 72 others) stated that they had
few or no plans for innovation and or a process in place and
that the provider indicated (rightly so) that innovation will cost
money and could not be achieved without a substantial investment by both parties.
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Other challenges included poor communication, missed expectations and a lack of flexibility. Clients (18, both reference
and other) stated that they had missed expectations, had inadequate or limited communication plans (29 clients, both reference and other) and that they lacked the necessary flexibility in
their contracts (31 clients, both reference and other).
1
Source: Gartner Research G00231999, William Maurer,
David Edward Ackerman, 20 March 2012
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About HCL Technologies
HCL Technologies is a leading global IT services company, working with clients in the
areas that impact and redefine the core of their businesses. Since its inception into the
global landscape after its IPO in 1999, HCL focuses on ‘transformational outsourcing’,
underlined by innovation and value creation, and offers integrated portfolio of services
including software-led IT solutions, remote infrastructure management, engineering and
R&D services and BPO. HCL leverages its extensive global offshore infrastructure and
network of offices in 31 countries to provide holistic, multi-service delivery in key industry
verticals including Financial Services, Manufacturing, Consumer Services, Public Services
and Healthcare. HCL takes pride in its philosophy of ‘Employees First, Customers Second’
which empowers our 85,335 transformers to create a real value for the customers. HCL
Technologies, along with its subsidiaries, had consolidated revenues of US$ 4.3 billion
( 22,471 crores), as on 30th September 2012 (on LTM basis). For more information,
please visit www.hcltech.com
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