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Midmarket CIO guide to building a successful outsourcing strategy

Find advice on developing an outsourcing strategy, including tips on what to consider when outsourcing applications and help choosing an outsourcing partner, in this CIO guide.

Outsourcing is becoming increasingly common in information technology and other industries. Organizations often turn to outside sources to complete projects efficiently, and sometimes at a lower cost than if they did so in-house. But developing an outsourcing strategy requires a lot of homework, and organizations need to answer several questions before seeking an arrangement with an outsourcing partner.

Is outsourcing even necessary? What are the crucial indicators when considering outsourcing applications? Which outsourcing partner is right for you? In this CIO guide, learn how to develop an effective outsourcing strategy for better business performance results.

This guide is part of SearchCIO-Midmarket.com's Midmarket CIO Briefings series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of topics covered to date, visit the Midmarket CIO Briefings section.

Table of contents

  Outsourcing applications
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With the overuse of the term cloud computing, many seem to have forgotten that this type of migration is nothing more than outsourcing applications to a hosting service provider. We shouldn't get caught up in a hype cycle that can damage an organization's ability to do business in the near term. It's critically important that there be solid business justification and the risks and rewards are analyzed to determine both the short-term and long-term impact before moving applications to cloud providers.

Westminster College recently utilized a learning management system (LMS -- sometimes referred to as a course management system). Faculty and students supplement and enhance their in-class learning experiences by continuing their instructional engagement beyond the confines of the classroom walls via the LMS. When used correctly and combined with great teaching, an LMS provides students with the best combination of synchronous and asynchronous instructional delivery. It was a critical decision to ensure that the college is running the right LMS. At the same time, the LMS is just like any other business application -- the total cost of ownership has to make sense.

In short, no matter where you are considering outsourcing applications, you must balance a number of factors.

Learn what those factors are in "Is it time for outsourcing applications? The service provider dilemma." Also:

  In-house versus outsourcing
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Outsourcing is one of the best ways to get a new project off the ground quickly. When you outsource a project or a service, you can often get it up and running much faster than doing it yourself -- and you don't need to evaluate whether you have the capabilities to run the project in-house. However, there may come a day when revisiting the argument of in-house versus outsourcing indicates that you have several good reasons to reintegrate an outsourced system into your own IT environment. Your job is to make sure this reintegration will have a positive impact on your existing IT environment.

There are several key factors to consider to minimize the effect that the reintegration will have on your organization in the short and long term.

Find out what those factors are in "In-house versus outsourcing: How to bring your IT home." Also:

  Choosing an outsourcing partner
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Outsourcing -- to another provider, the cloud or any combination thereof -- has taken on a new emphasis as IT departments around the world look to become profit centers rather than cost centers. But what are the right steps and important considerations when choosing an outsourcing partner? What due diligence can you perform to really make a huge impact on the business?

Check out this quick-hit list for a guide to selecting the right partner and ensuring the right fit for whatever business process or service you've decided to ship off-site.

Learn more in "Strategies for choosing an outsourcing partner." Also:

  Building an effective outsourcing strategy
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An outsourcing strategy rarely follows a single template. A core function for one company may be a commodity service for another. The legacy application that's efficiently handled in-house by one IT department might be a nightmare worth unloading for another. Experts caution, however, that the old wishful thinking about "outsourcing our mess for less" usually is still wishful thinking.

One thing holds true for most CIOs: It's prudent to get your outsourcing strategy as right as possible, given that research shows you are unlikely to reverse a decision to outsource. In fact, when an outsourcing contract is up for renegotiation, companies end up staying with their current provider more than 70% of the time, according to Gartner Inc. -- even when performance or cost has been a problem. "The bias is to the incumbent," said Allie Young, research vice president and distinguished analyst in Gartner's technology and service provider group.

Here are six key questions that will help you build an effective outsourcing strategy.

Find out what those questions are in "Six questions for building an effective outsourcing strategy." Also:

  More resources
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