IS outsourcing in your GIS department's future?
Roy Forsstrom
Analytical Surveys, Inc., 11900 Crownpoint Dr., Suite 100 San Antonio, Texas 78233 Outsourcing Outsourcing is a business strategy still maturing in the IT industry. The term is barely a decade old, but its main concepts-sticking to the core business and letting a specialist agency handle other business functions-has a long history. We are all familiar with businesses turning over advertising or legal services to an outside firm rather than maintaining an in-house staff. Taken further, that has created today's model for corporations, where a business's major functions are contracted to specialist firms so that it can concentrate on its core business purposes. Within the IT industry, outsourcing has the dual ability of providing cost savings with service improvements while unfortunately causing employees to fear that they will lose their jobs. However, if negotiated and managed well, outsourcing can provide real benefits to a corporation along with opportunity and stability to employees. A corporation or government agency considering outsourcing will begin the investigation with the goal of achieving more predicable costs, more productivity and a better return on investment. With the new competitive environment in government and utilities, outsourcing can bring the benefit of being able to move faster and take advantage of new developments without being hampered by fixed infrastructure. However, a corporation considering outsourcing will need to keep in mind a few key factors in order to make choosing a vendor easier and the transition process flow smoothly. Outsourcing IT Functions At one time, the size of the business determined likely candidates for outsourcing. Small firms, generally unable to support an IT group economically, were early users of the service. Today, large companies such as banks and manufacturers have outsourced their IT functions. The outsourcing industry now has providers with sufficient resources to handle both large and small contracts. In addition to favorable economics, large and small firms look to receive three additional benefits to outsourcing: capacity, coverage and capabilities. Capacity is the ability to tap into the outsourcer's capacity at whatever level is needed. The outsourcer is able to accommodate business cycles at a predictable cost while maintaining the contracted service levels. Coverage is the ability to meet both the temporal and spatial needs of the corporation. With 24 by 7 staffing and placing staff in the proper locations, the outsourcer relieves the corporation of difficult staffing issues. Finally, the outsourcer's capabilities give a firm the skill sets and resources needed to handle new and evolving technologies. Over the past 10 years, the number of utilities outsourcing their entire IT department has continued to grow. Outsourcing companies such as SHL-Systemhouse, EDS, ISSC and Intellisource are gaining additional contracts as utilities streamline their operation for the deregulated market, which allow these utilities to concentrate on the core business of buying and selling energy. As another function of the IT department, the GIS system has usually been brought along in the deal with the outsourcing firm. At this point, the outsourcer has the option of continuing to manage the GIS or subcontract the function to a specialist GIS outsourcer. Outsource the GIS? With the trend towards outsourcing portions of the IT function, such as the help desk, network management or hardware maintenance, and with the appearance of qualified outsourcers bidding for the GIS function, full or partial outsourcing the GIS will become more prevalent. GIS outsourcing can encompass the entire operation or selected functions. For example, data maintenance is a key element to maintaining the reliability and credibility of data in the GIS. Backlogs of months are not uncommon in many utilities, while a week or two delay in updating GIS data can have adverse effects on system operation and customer service. Seasonal variations in construction and power system maintenance can make it difficult for a manager to have adequate skilled staff available. To remedy these significant problems, an outsourcer can provide the capacity to add staff at remote sites as needed to keep the backlog to the contracted service level, allowing the utility to provide smooth and efficient operation and service to its clients. Costs are predictable and may be lower with the outsourcer. Outsourcing allows the corporate manager to maintain a consistent staffing quality and level, which is often a difficult task. Top-notch application development and system administration staff usually have strong computer science backgrounds with specific skills in the GIS. Obtaining the skills is not easy or inexpensive. Before a staff member is truly productive, three to five training classes and a couple of years' experience are needed, and, of course, there is always the risk that other firms offering higher salaries and increased benefits may notice them. The outsourcer will have the capabilities within their organization to meet the application development and system administration needs of the client. Choosing an outsourcing vendor Deciding which vendor to depend upon for the next three to five, or more, years is not an easy task and requires careful consideration. The deal will include an investment in time and energy, a transfer of business functions, and possibly the transfer of employees along with hardware and software. Identifying a suitable vendor in this minefield is a daunting task. Unless the corporation has experience with outsourcing, the advice and guidance of a consulting firm will help ensure that the evaluation and selection of the outsourcing candidate produces the most qualified vendor. In addition, a consultant can help the corporation determine realistic objectives that are to be met with outsourcing. The choice of a specialist GIS outsourcing vendor or generalist IT vendor can be based on the amount of IT services to be outsourced and the management resources available within the corporation. Complete outsourcing of the IT function to a generalist outsourcing vendor is viable if the vendor has adequate GIS resources already or a track record of subcontracting qualified specialist GIS outsourcing vendors. If the generalist firm is weak in GIS skills, the corporation has the opportunity to contract with a specialist GIS outsourcing vendor directly. While this option will only work if there are sufficient management resources available to handle two outsourcing vendors simultaneously, the client benefits by bringing in the best available vendors for the relationship. The outsourcer must have sufficient GIS resources and expertise to handle the specific needs of the corporation. For example, GIS systems such as Smallworld or Intergraph FRAMME require knowledge and skills that are not readily available. An outsourcing vendor with experience in the specific GIS, along with experience in providing a variety of services in various business environments, can supply many innovative solutions. It is important that affected employee concerns about the outsourcing selection be handled with clarity and openness. Employee participation is key to a successful relationship. If the corporation is considering transferring employees to the outsourcing vendor, they must be assured about the new working relationship, benefits, seniority and retirement. Contracts frequently guarantee a position for at least one year and include the opportunity to obtain a position at another of the outsourcing vendor's sites, as well as provide preferential treatment for the transferred employee. Typically, opportunities within the outsourcing vendor are good in that the vendor provides many different services to many different customers. Transition Mistakes made during the transition of the GIS to the outsourcing vendor can be difficult and expensive to rectify, creating a high risk of inadvertently nullifying expected benefits. Dramatic changes in working relationships and processes are best managed with a comprehensive change management program. For example, long-term employees with no desire to change jobs may be unhappy and resentful or other departments may believe they will not receive the level of service required. An experienced consultant outsourcing vendor can provide strategies to smooth the transition such as internal communications, meetings and presentations to give employees and other corporate departments an understanding of the new relationship. Adequate time must be provided for the transition. A frequent problem is rushing the transition to "get it over with quickly," with the result that the change is inadequately managed. This can result in service levels dropping below contracted minimums and senior managers and other departments doubting the benefit of outsourcing. In addition, the outsourcing vendor must have sufficient, if not extra, resources available for the first six months of the contract. As the transition progresses and the client becomes comfortable with the level of service, excess resources may be removed. The first few months of the outsourcing contract, if not handled properly, can make the remainder of the contract difficult or nearly impossible to manage. Management and Contract Issues Managing a long-term outsourcing contract and vendor from the client's point of view is not an easy task. To ensure that the relationship remains workable and meets the needs of both parties, careful attention from management is needed in several areas. The client may underestimate the amount of time needed to manage the relationship and lose control by allowing the vendor to assume responsibility. Service levels may deteriorate as the vendor is not in the same business as the client. Lack of management involvement may be caused by using a team to manage the contract that is different from the team that negotiated the contract. The new team may not understand the contract's intentions. Additionally, a lack of flexibility in the contract can cause dissatisfaction as issues such as technologies, personnel, business conditions and other concerns no longer meet initial assumptions. Pricing and service levels set at the beginning of the contract that do not have a mechanism for adjustment or improvement may also cause dissatisfaction. Finally, cultural differences between the outsourcing vendor and the client may result in misunderstanding and distrust. A disruption in continuity by transferring employees from the pre-outsourced environment to the vendor's team may have significant adverse effects on the outsourcing relationship. All of these issues can create significant barriers to successfully outsourcing the GIS department. Careful research, planning, and dedicated management can help to ensure that that the outsourcing effort is not derailed. Conclusion With the growth of outsourcing as a business strategy, the appearance of qualified firms to handle GIS outsourcing, and the desire of utilities and other businesses to concentrate resources on core-competencies, the likelihood of your GIS department being outsourced is increasing. Whether the outsourcing vendor is generalist IT or specialized GIS supplier, if you are transferred to the outsourcing vendor, you can expect opportunity for you to participate in bringing new and innovative services to the GIS department. As a manager of the GIS, you can expect improved service levels, predicable costs and a better return on investment. Is outsourcing in your GIS department's future? The likely answer is, "Why not?" | ||
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