CIO Summit 2014: Outsource Smarter

Everyone agrees that keeping the lights on is no longer enough. Businesses expect big things from IT and as CIOs try to walk this tightrope between business and technology, they will need help. But what does it mean to create meaningful partnerships? Ramachandran S., research manager with IDC Manufacturing Insights Asia/Pacific, says that the basis of these strategic relationships should not just be about SLAs but evolve into a more outcome-based model.  “There needs to be an equal sharing of risk and the vision of working towards a greater goal, which, of course, needs to be aligned with the business’ requirements,” he says.But why this need to rethink partnerships? If SLA’s are being met, why tamper with this model? The answer, says Ramachandran, lies in the way business models are changing. With mobility, BI, e-commerce, and the internet of things, businesses are moving out of the traditional produce-and-sell model.   Quoting a CIO, Ramachandran says that traditional KPIs like uptime, cycle-time, and cost-variants, among others, are being pushed down to three levels below the CIO. And one way CIOs can focus more on innovation and business is to delegate work not just within the IT team but to partners as well.  Kavita Bhadauria, manager for Software and Services Research Practice at IDC India, says that the first step toward this journey is to stop looking for suppliers and start looking for partners instead. To do that, CIOs need to first understand the partner’s world and make an attempt to understand their business imperatives as well.   “As IT buyers, it is important for the CIO to help their partners build sustainable businesses. If their partners are bleeding, they can’t help CIOs,” she says.Bhadauria says that although many IT models are still time-and-material driven, there is a traction building for outcome-based partnership models, which not only help CIOs make IT perform better, but also ensure that partners have healthy bottom-lines and can see the prospect of non-linear growth.  Businesses are not bothered about applications and platforms but the final value a project delivers. And if the CIO starts engaging partners in more conversations around final business outcomes, it empowers partners to think differently.   To be able to do this, Bhaduaria says there are six key steps CIOs need to think about. These include creating more standardization, talking about a value-based approach, having measurable metric-driven results, smartly linking price to performance, pushing co-innovation, and defining KPIs. With these in place, CIOs can create meaningful partnerships that are not about projects, but life-long engagements that bring value to everyone.