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 Back to 2006 Press Releases
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Australian Companies Face Business Disruption Caused by Outsourcing Failures: Gartner Global Survey |
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| Eight out of ten Australian companies have no sourcing strategy in place, ‘Disciplined Multisourcing’ to be a focus of Gartner's upcoming Outsourcing and IT |
Sydney, 29 March 2006 — Gartner today released survey results revealing that while outsourcing is on the rise, Australian companies face the risk of significant business disruption because too many decisions are taken without any overall strategy being in place or the ability to take a disciplined approach to the ongoing management of sourcing.
According to Gartner's latest global IT outsourcing survey conducted among 1002 companies, 495 of which were in Asia Pacific, Australian companies were found to be less strategic in their use of outsourcing than other developed economies. In Australia, 63 percent of companies who outsource use multiple service providers, with the average number being 3.4. Yet 84 percent of Australian companies say they have no sourcing strategy in place, making their decisions purely ad hoc. Globally, this compares to 46 percent of companies that don?t have a formal sourcing strategy.[1]
“Outsourcing has typically been seen as an IT or procurement issue. But this survey in Australia raises important questions about proper risk-management and business continuity, not to mention the appropriate use of shareholder or company funds,” said Rolf Jester, Gartner vice president and distinguished analyst.
“The lack of an appropriate multisourcing strategy will lead to business disruptions at best, a business disaster at worst,” he said.
Gartner is advising companies to adopt a new management skill it calls ‘Disciplined Multisourcing’. This is the controlled provisioning and blending of business and IT services from an optimal set of internal and external providers, aimed at helping companies achieve their business goals.
“As part of their sourcing strategy, organisations must carefully examine the goals they wish to reach from outsourcing, as well as their concerns. This exercise will not only help develop a sourcing strategy, sourcing maxims and the prioritisation of goals, but it will educate various stakeholders about realistic outcomes and possible false assumptions or misperceptions currently held about outsourcing,” Mr. Jester said.
The following principles apply to all forms of outsourcing, but become more important when companies use multiple internal and external providers:
- Start with a clearly articulated business strategy as the context;
- Build a sourcing strategy that is linked to your company's business strategy, values and maxims. Keep that sourcing strategy up-to-date and make sure it is widely understood and accepted;
- Agree on clear, documented business goals for each outsourcing engagement, goals that are understood and agreed by all;
- Benchmark your business processes - you can't improve or save money on what you haven't measured;
- Design and enforce sound sourcing governance throughout the organisation;
- Assign sufficient resources to the continued sourcing management task. Outsourcing is not abdication; you are still accountable for the outcomes and you must spend money to manage that.
Mr. Jester, together with Gartner's top global outsourcing experts, will be speaking at Gartner's Outsourcing and IT Services Summit in Sydney, 11-12 April, providing practical insights into this new and essential sourcing management discipline. For more information on Gartner's Outsourcing Summit, visit www.gartner.com/ap/outsourcing.
Top highlights during the upcoming Gartner Outsourcing and IT Services Summit include:
- A keynote presentation from US based Research vice president Allie Young on moving beyond outsourcing to achieve growth and agility;
- A session looking at the top 10 reasons why outsourcing deals fail, to be presented by US Research vice president Helen Huntley. Helen will also be presenting on best practices in outsource contracting;
- Rolf Jester will offer advice on avoiding recurring problems in outsourcing deals;
- Jim Longwood, Research vice president will present on a host of topics, including how to select vendors in the multisourcing environment, and assessing sourcing risk; and
- A presentation from Richard Harris, Research vice president on how to transform in-house process excellence into a shared services organisation.
Press Contact:
All speakers are available for interview either leading up to or during the event. For further information or to register to attend the event, please contact Angela Graham at Text 100 on (02) 9956-5733 or angela.graham@text100.com.au
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About Gartner:
Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for its clients to make the right decisions, every day. Gartner serves 10,000 organizations, 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 consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit www.gartner.com.
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