IT services outfits and users - collaborate better

IT services providers and large user organisations have to try harder at marrying technology and business needs if we aren't to see many more outsourcing deals end in tears.

That's according to analyst house Ovum, which has charted growing expenditure on outsourcing in Europe over the past few years, up from 36 per cent of the IT services market in 2001 to a projected 49 per cent in 2006.

Neil Ward-Dutton, director of technology practices at Ovum, calls outsourcing "the fly in the ointment" against a backdrop where decentralisation of IT buying and operations over recent years has resulted in decentralised understanding.

He said that within organisations "people see what they want to see. Different perspectives drive different understanding of what's needed."

This, in the Ovum analysis, has led to four things: ghettoised IT, imposed outsourcing (based on cost cutting alone), stovepipe solutions and poor returns on investment due to inefficiencies.

Outsourcing can be an answer for user organisations but there can be problems brought by either side of the equation - the outsourcers and users.

Services companies, who will manage functions on users' behalf, make life difficult when they unduly influence IT buying decisions, said Ward-Dutton, or when they merely try to hit a contract's targets.

For example, he warned: "Fixed price deals only incentivise outsourcers to do the absolute minimum."

Equally, however, users must allow outsourcers to be partners who collaborate on tech architecture issues.

One result is that the behaviour of a company with services and IT products, say an IBM or HP, is markedly different to a straightforward services outfit such as EDS or CSC.

Much of the collaboration between users and services providers must depend on what's being outsourced, Ward-Dutton added, saying the relationship isn't about selecting technology suppliers but supporting business processes and working to certain frameworks such as web services standards.