“We’ve seen greater willingness on the part of buyers to increase their IT outsourcing in 2001,” says Steve Sullivan, president of Enterprise Managed Services for Getronics, an Amsterdam, the Netherlands and Billerica, Massachusetts based IT outsourcing supplier specializing in network and desktop services. “Companies that were once reluctant are now open to considering outsourcing,” he says.
The holdouts are now becoming converts because cost savings became the hot button last year. Sullivan says corporations weren’t as interested in the cost savings in previous years as they were last year. “Cost was at the top of everybody’s hit parade,” Sullivan reports.
The Getronics executive says corporations “took an aggressive look” at how they could drive down costs throughout the enterprise by working together with their outsourcing supplier. “They focused on things we could do collaboratively,” he says. For example, introducing desktop standards and eliminating multiple email systems were two areas of focus.
Reducing SLAs to Save Money
Corporations also took a hard look at their service level agreements (SLAs) to see if the cost justified the return. “Buyers are now saying, ‘Maybe we don’t need these extraordinary SLAs.’ They are entertaining the idea of reducing the SLAs to save money,” Sullivan reports.
The Getronics executive also noticed a “paradigm shift” in 2001. This was the advent of the mobile user. Companies are seeing an increase in employees who don’t work in the office on the corporate T-line. These employees want remote access support for their laptops, Palm Pilots and Blackberries, Sullivan continues. This is a new area that is gaining interest since September 11 with the impact of losing thousands of offices. Business continuity plans must include both the end user system and the data center.
Centralizing IT Functions
Many of Getronics’ clients are divisions of large corporations. Last year these companies realized they were relying upon a patchwork of solutions based on individual business units. Now, they have decided to centralize their IT functions instead, Sullivan continues. They have asked Getronics to create a strategic, enterprise-wide IT outsourcing plan and then implement it.
Happily, Getronics experienced growth in 2001 by encouraging its existing clients to add new functions to their IT support. Applications management and applications hosting have been the two functions corporations are adding to their dance cards.
After September 11, Sullivan saw a slowdown in decision-making. “People hunkered down and didn’t want to make a front end investment to gain on the back end,” he notes. “My sense was a lot of outsourcing decisions went into limbo.”
Then budget season arrived in November. Executives looked to outsourcing to achieve their business objectives. Already this year the pace of new contracts is picking up. Sullivan says, “The ball started rolling in the fourth quarter. We’ll be able to grow our business in 2002.”
Lessons from the Outsourcing Journal:
- Cost cutting is now the No. 1 reason to outsource.
- Companies once wary of outsourcing are now open to the option so they can cut costs.
- Companies already outsourcing now want to centralize their solutions across the entire enterprise, not just by business unit.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].