Gartner: Business units to drive more outsourcing deals

Who's going to be calling the shots when it comes to outsourcing? Business people. That means IT people and the companies that serve them need to bone up on their business terms if they don't want to be bucked off the bandwagon.

IT may need an image makeover. And we're not talking about putting highlights in the Windows administrator's hair or dressing the DBA in designer duds.

We're talking about putting a pinstripe suit on the whole IT department.

According to Gartner Inc., more and more business ends of enterprises will be calling the IT spending shots. Gartner analysts predict that, within two years, one-third of IT outsourcing deals will be hammered out from a business perspective rather than a technical one. That means outsourcing providers will need to be ready to "talk business" when they negotiate with customers who are outside the IT department. That's all the more reason to get busy and learn the business language.

Gartner analysts say that CIOs and other IT managers will have to tweak the way IT is positioned, managed and regarded inside the enterprise in order to ride this trend. "Internal IS organizations must become experts on business processes, their underlying enabling technology and accompanying service life cycle management," said analyst Ben Pring in a statement. He also said that IT service providers have to be ready for this business-centric approach if they want to stay in business.

"ESPs [external service providers] need to respond to this increasing focus on business process by developing business process skills and solutions and by balancing their courting of IT and non-IT staff in their business development activities," he said.

This trend is not lost on Bill Hayduk, director of professional services at Real-Time Technology Solutions, Inc. in New York. He said that middle managers used to call up and buy consulting services. No more. Either there's no money in the budget for it, or services must be approved from way up the ladder on the C-level rungs.

"We even wrote a white paper to justify why you would buy our services. Everything's a ROI calculation. We've turned into a partner for our customers, helping them make their case to the business units," Hayduk said.

Although Gartner has said previously that cost savings should not be the engine that drives outsourcing strategies, it will be through 2004, the firm predicts. And that means ESPs will have a choice: offer services based on cost or expertise. Most ESPs will draw up deals based on cost -- at least for now.

"CIOs are being told to cut costs any way they can," Hayduk said.

The "savingslust" will take U.S. firms all over the globe to find the best deals, and it won't be long until the global model becomes the norm. "The global-delivery-model genie is out of the bottle," said Pring, "and U.S. organizations must move urgently to embed this style of delivery/management into all aspects of their operational business models."

Gartner analysts say that the marriage of business and technology is more important now than it ever has been, because a harmonious and successful relationship between the two can give a firm an edge over its rivals. Development of an outsourcing strategy that balances risk and value and is flexible enough to roll with changes in delivery and management models also will be important, analysts said.

Gartner said that focused application of IT, use of global delivery and utility models, virtualization, realistic expectations of technology's promise, and cost savings will all work together to make IT a lean, mean machine that delivers business value.

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