Gartner Says Half of ESP Projects Will Be Considered Unsuccessful for Not Delivering Anticipated Value
Outsourcing Strategies and Challenges Discussed at Gartner Symposium/ITxpo 2003 in San Diego
San Diego, CA., March 24, 2003 — Many outsourcing deals today are failing to satisfy their client's expectations. Through 2003, 50 percent of external service provider (ESP) projects will be considered unsuccessful by senior executives because they have not delivered the anticipated value, according to Gartner, Inc. (NYSE: IT and ITB).
Gartner analysts presented their findings today during Gartner Symposium/ITxpo 2003, which is taking place March 23-27 at the San Diego Convention Center in San Diego.
Gartner analysts said service providers must maintain better communication with their clients, and they must be more accommodating to their client's issues.
"Understanding and choosing what type of relationship best fits an enterprise's business strategy, and the value it wants from the deal, lays the groundwork for all subsequent decisions on how the deal is managed," said Linda Cohen, managing vice president for Gartner.
"The service receiver and the service provider should commit to regularly scheduled, formal meetings to review the progress and achievement of objectives to ensure mutual benefit," Cohen said. "Failing to do this, the relationship can be seriously compromised because corrections are not made in a timely fashion."
Through 2003, fewer than 30 percent of enterprises will have formal plans for managing long-term relationships with their ESPs. Over time, changes in the business and evolutions in technology will create a need for contract renewals and adjustments.
"Recognizing these inflection points will be critical to the long-term success of an enterprise sourcing strategy," Cohen said. "Long-term arrangements with ESPs must be built for change, rather than 'built to last.' Flexibility is the key to successful long-term service supplier and buyer relationships."
As enterprises become more dependent on ESPs, they face the decision to build a sourcing strategy around a single, external source, or multiple, integrated sources.
A single-source approach works for enterprises that can manage a single, complex contract, but lack the capability to manage and integrate multiple suppliers. However, Gartner analysts said that through 2004, multisourcing will remain the dominant sourcing strategy, and 40 percent of large enterprises will adopt a prime or general contractor to manage the ESP chaos.
"As the enterprise's understanding of multiple suppliers increases, as well as the processes to manage and integrate them, a prime or general contractor approach is beneficial for obtaining a mix of suppliers without the job of managing the suppliers directly," said Cohen. "The single or multisource decision must be made with full recognition of the enterprise's business competencies to manage the relationship, contracts and integration requirements."
Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with an insightful look at the future of IT. For more than 10,000 IT professionals from the world's leading enterprises, Gartner's annual Symposium/ITxpo events are key components of their annual planning efforts. Attendees are responsible for more than $35 billion in IT spending for their respective companies. For more information about Gartner Symposium/ITxpo 2003, please visit www.gartner.com/symposium or call 1-800-778-1997.
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
and actionable advice to enable clients to make more informed business and technology
decisions. The Company's businesses consist of Gartner Intelligence, research and
events for IT professionals; Gartner Executive Programs, membership programs and peer
networking services; and Gartner Consulting, customized engagements with a specific
emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, and has 3,700 associates, including more than 1,000 research
analysts and consultants, in more than 75 locations worldwide. For more information,
visit www.gartner.com.
