|
Page 6 of 6
Recommendations
Reduce costs and minimize financial risk through application outsourcing by using the following strategies:
1. Start small. Organizations that are not currently outsourcing and want to position themselves for effective cost management can begin by outsourcing a low-risk project, as it can take time to learn how to outsource. Once basic competency and trusted partnerships are established, organizations can rapidly ramp up critical projects as needed.
2. Consider hiring third-party help. Obtaining third-party help to manage the outsourcing relationship is a strong predictor of successful cost reduction. Spending a bit of extra money on relationship management is often worth the cost savings that can be achieved in the end.
3. Consider going offshore. Organizations that use an offshore outsourcing vendor are often more successful at reducing costs than those that outsource onshore. If cost reduction is the primary goal of the application outsourcing project, examine possible offshore options. However, be careful to ensure that the offshore vendor has the necessary expertise to provide high quality deliverables, as well as the governance competency needed to manage projects across time zones and distance.
4. Manage cost with the contract. Negotiate an agreement that either permits resources to be scaled up and down as required, or provides a defined deliverable at a fixed price.
5. Institute strong project and vendor management. Ensure that the lines of communication are always kept open with the outsourcing vendor. Have an internal and external resource assigned to manage the outsourcing relationship, as well as regular meetings to discuss project status. These practices help to avoid cost overruns caused by misunderstood requirements and missed milestones.
Bottom Line
A recent Info-Tech survey found that it is possible to reduce IT costs by outsourcing application development, provided that the outsourcing relationship is carefully managed. Application outsourcing can also be used as a strategy to minimize financial risk during uncertain economic times. Learn how to leverage application outsourcing as a tool to both reduce costs and minimize risk.
Only registered users can write comments.
Please login or register.
|
