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12 Critical Success Factors
Outsourcing IT Projects to Managed Hosting or the Cloud
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Moving an application or workload from your data center to a 3rd-party managed service or cloud service.
Our Definition of Outsourcing IT
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out·sourc·ing/out, sôrs, iNG/
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Why Businesses Outsource IT
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• Move costs from CapEx to OpEx
• Eliminate mundane IT chores
• Reallocate staff to more strategic projects
• Preserve governance
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What Factors Make Projects Successful?
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• Involve all departmental and executive stakeholders whose budgets will be affected by the effort
• Create a statement of the problem that is specific, quantifiable and properly scoped
• Understand effective use cases for outsourcing IT, including– Reducing high IT costs, especially for CapEx
– Improving response to user requests for new apps or new workloads
– Increasing data center capacity
– Eliminating mundane IT chores that distract from strategic projects
• Realize when outsourcing IT is not a good fit– Solving an irritating or non-mission critical challenge
#1: Clear Definition of the Problem
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• Begin with the end in mind
• Make goals quantifiable and measurable, such as– Increased revenues – How much extra
revenue do you want to generate, and in what timeframe?
– Cost savings – How much can you save on infrastructure by turning in-house IT functions over to an outsource provider? How long will this take to achieve?
– Reduced time-to-market – How long will it take to put your outsourced IT into production compared with today?
• Set quantifiable goals and review them periodically to increase outsourcing success
#2: Quantifiable Criteria for Success
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“An engaged executive sponsor—with a vested business interest in the project from kickoff to close—can mean the difference between
success and failure.”
- Project Management Institute
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• An executive sponsor for an outsourcing project should have– Enough authority to see the project through
– A vested interest in achieving the stated goals
– Control of resources required for the project
– A willingness to be actively involved, but comfortable delegating day-to-day authority to the project manager
#3: Appropriate Executive Sponsor
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Vice President
Director
Manager
Executive Sponsor
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• Role– Add outsourced IT as a new project in the PM’s workload
– Make PM final decision-maker and accountable for overall project success
• Responsibilities– Serve as single point of contact for partner and internal resources
– Oversee day-to-day decisions without constant approval from the executive sponsor
#4: Competent, Empowered Project Manager
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“Every negative issue encountered boiled down to poor communication.”
- Six managers who led 16 IT outsourcing projects over an eight-year period in a University of Portsmouth (UK) research study
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Alessio Ishizaka and Rebecca Blakiston, “The 18C’s model for a successful long-term outsourcing arrangement”, Industrial Marketing Management, 41(7), 2012, pages 1071–1080, section 4.3.1
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• Change happens
• Create an escalation process – a systematic way for any changes to be handled by the PM
• Keep communications open, clear, systematic and unhindered
#5: Clear Channels of Communication
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• Identify clear phases
• Organize the effort required during each stage
• Three-stage Unisys Transitional Methodology*, an example– Planning – Define objectives, evaluate application or workload, assign roles and engage partner
– Knowledge transfer – Familiarize partner with internal team, workload to be outsourced, and expected results
– Responsibility transfer - Bring outsourced IT into production (partner)
#6: Identified Phases of the Project
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Planning Knowledge Transfer
Responsibility Transfer
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• Flow milestones naturally from project phases– Agree on them with partner
– Make them visible to all interested parties
• Meet weekly to evaluate progress
• Balance accountability and flexibility, especially as milestones get closer
• Stay engaged with the service provider throughout
#7: Clear Project Milestones
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Milestone 1 Milestone 2 Milestone 3 Milestone 4
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• Listen to your outsourcing partner’s ideas – They know how to avoid issues that threaten success
– They can suggest smart course corrections that save time or effort
– They have experience on their side
#8: An Open Mind
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• SLA with a service provider will likely include these metrics:– Network uptime
– Incident response time
– Hardware replacement response time
• It should also include metrics that matter most to the project champion: – Business-unit satisfaction levels
– Results against criteria set up when you defined the problem
• Best practice – discuss metrics monthly with line-of-business managers, executive sponsor and outsourcing partner
#9: Metrics that Matter
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Hardw
are
Repla
cem
ent T
ime
Incid
ent R
espo
nse
Time
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1015202530354045
Overall Response
Time
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• Record the work the provider has done (or will do) and any issues encountered during implementation
• Pay particular attention to transitions**
– Asset ownership or transfer
– Data protection and retention
– Rights for departments or new contractors (e.g. gaining access to information, accounts, physical locations, etc.)
– Labor termination and compensation
• Create documentation templates to save time during future projects
#10: Adequate Documentation
www.rackspace.com**Government of Hong Kong Efficiency Unit, “A General Guide to Outsourcing, March 2008, page 12, retrieved 21 May 2014 from http://www.eu.gov.hk/english/psi/psi_guides/psi_guides_ppgpop/files/guide_to_outsourcing_200803.pdf
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• High project success rate is correlated to companies using scorecards
• Focus scorecards on your needs as a customer, not the provider’s capabilities
• Set performance targets
• Retain scorecards as part of the project record
#11: Vendor Scorecards
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• Contract Management*** magazine suggests including:– System outages – The acceptable number of outages over a period of several months (“no more than two monthly outages
in any given six-month timeframe”)
– System interruptions – How long an interruption lasts (“no more than two interruptions of service lasting longer than 10 minutes each between the hours of 8:00 AM to 5:00 PM weekdays”)
– Time to resolution – How long it takes to fix any issues that require a skilled technician or developer (“95% of priority #1 escalations will be fixed and deployed in no longer than 72 hours”)
What to Include in a Vendor Scorecard?
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#12: Scheduled Post-Mortem
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• Focus discussion on what happened, not on assigning blame
• Cover issues such as– What worked well?
– What didn’t work as well as it could have (or perhaps not at all)?
– What painful processes could have been avoided?
– What did you learn about working with this particular vendor?
– What opportunities do you see to implement the successful points in future projects?
IT Project Management Literature Review of Success Factors
Source: International Journal of Project Management 24 (2006) 53–65Total number of publications analyzed: 63
Clear Definition of problem
Quantifiable criteria for success
Appropriate executive sponsor
Competent PM
Clear Communication
Identified phases
Clear milestones
Open mind
Metrics that matter
Adequate documentation
Vendor scorecards
Post-Mortem
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51
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7
12
13
10
10
29
15
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Times Cited in Recent
Literature
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Need help outsourcing IT workloads?
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Next Steps...
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Rackspace consultants have years of experience helping businesses move applications and
workloads off-premises.
Contact Rackspace or read more at
Outsourcing IT Projects to Managed Hosting or the Cloud – White Paper
Call Rackspace at 800-961-2888 to talk to an expert.
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