" While outsourcing to a single provider or location may be attractive from an IT management perspective, reliance on a single provider or offshoring everything to Bangalore won't sit well with finance.
7. Get CFO Signoff on Financial Terms The average IT outsourcing deal has hundreds of moving parts, but a handful of core financial performance aspects including pricing schedules, minimum spend or volume commitments and the implications of not meeting them, asset sale and buyback provisions, business downturn or divestiture terms, and termination considerations. Get finance to sign off on those before a contract is signed, advises Martin. "CFOs don't like to be surprised with a multi-million dollar fee on the eve of a major transaction."
8. Don't Forget the Case for Not Outsourcing It's just as important to make the case for what you don't want to outsource. "Justify why you haven't outsourced everything to India--even if nobody asked," advises Strichman. "
Every CIO should have an offshoring analysis at the ready especially those CIOs utilizing minimal offshoring. Somebody--especially the CFO and board members--is always wondering about this."
9. Measure and Report on Success--and Failure "At some point the CIOs organization loses credibility with finance because they make all these claims [about IT outsourcing], but after the fact there's no accountability or evidence that the promised value has been realized," says Masur.
CIOs need to establish metrics relevant to the success of the initiative that can be measured later if they want to be taken seriously by finance. "Provide real post project performance impacts--even if not requested--showing projects that exceeded expectations as well as those which fell short on their potential impacts and costs to the entire company, not just IT," says Strichman.
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