Companies that outsource packaged-software implementations can benefit from shorter time to implementation and lower costs as opposed to taking on these tasks in-house. IDC estimates that the time to implement an application can be reduced by 43 percent if performed by an outsourcer because of its superior experience in an application area and more effective cost and resource management.
“In the short term, hiring additional personnel reduces productivity of existing employees due to training and assimilation,” says IDC Program Manager Amy Mizoras. “When you outsource, the application outsourcer absorbs these risks and can maintain a steady level of productivity.”
While attrition of skilled IT workers can be a problem for client companies and outsourcers alike, outsourcing places this risk on the provider, rather than on your organization. In our Nov. 15, 2002, feature “Less Pain More Gain,” we cited an AMR Research Inc. study that found that companies that hand over responsibility for their upgrade projects experience a cost increase due to outsourcers taking time and money to first understand their business. This IDC study agrees, but it found that the initial cost eventually levels out.
The Outsourcing Advantage
Outsourcing software implementation takes less time and encounters fewer setbacks than implementing in-house. As a result, when you outsource, the rate of software units implemented is greater and the time needed to implement those units is reduced.
Best Practices
Go with an expert. Make sure the outsourcer you select has expertise in the particular application you’re implementing. “If the outsourcer has less experience in an applications area than the customer, there is little benefit to outsourcing,” says IDC’s Amy Mizoras.
Outsource incrementally. Since most organizations have already made significant investments in IT during the past few years, outsourcing parts of the implementation and operation process can still provide benefits. “Pick a niche area like time-and-expense reporting or a self-service HR application — areas that have high success rates — to get buy-in, then expand your outsourcing,” Mizoras says.
Get references from peer companies. Select an outsourcer that has experience with similar situations to yours — company size, implementation approach (incremental versus entire project) and application type (mission critical or not). This ensures that the outsourcer will understand your needs and in many cases can suggest other applications and features helpful to your organization.
