Outsourcing IT Projects to Managed Hosting of the Cloud

12 Critical Success Factors

Outsourcing IT Projects to Managed Hosting or the Cloud

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Moving an application or workload from your data center to a 3rd-party managed service or cloud service.

Our Definition of Outsourcing IT

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out·sourc·ing/out, sôrs, iNG/

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Why Businesses Outsource IT

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• Move costs from CapEx to OpEx

• Eliminate mundane IT chores

• Reallocate staff to more strategic projects

• Preserve governance

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What Factors Make Projects Successful?

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• Involve all departmental and executive stakeholders whose budgets will be affected by the effort

• Create a statement of the problem that is specific, quantifiable and properly scoped

• Understand effective use cases for outsourcing IT, including– Reducing high IT costs, especially for CapEx

– Improving response to user requests for new apps or new workloads

– Increasing data center capacity

– Eliminating mundane IT chores that distract from strategic projects

• Realize when outsourcing IT is not a good fit– Solving an irritating or non-mission critical challenge

#1: Clear Definition of the Problem

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• Begin with the end in mind

• Make goals quantifiable and measurable, such as– Increased revenues – How much extra

revenue do you want to generate, and in what timeframe?

– Cost savings – How much can you save on infrastructure by turning in-house IT functions over to an outsource provider? How long will this take to achieve?

– Reduced time-to-market – How long will it take to put your outsourced IT into production compared with today?

• Set quantifiable goals and review them periodically to increase outsourcing success

#2: Quantifiable Criteria for Success

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“An engaged executive sponsor—with a vested business interest in the project from kickoff to close—can mean the difference between

success and failure.”

- Project Management Institute

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• An executive sponsor for an outsourcing project should have– Enough authority to see the project through

– A vested interest in achieving the stated goals

– Control of resources required for the project

– A willingness to be actively involved, but comfortable delegating day-to-day authority to the project manager

#3: Appropriate Executive Sponsor

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Vice President

Director

Manager

Executive Sponsor

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• Role– Add outsourced IT as a new project in the PM’s workload

– Make PM final decision-maker and accountable for overall project success

• Responsibilities– Serve as single point of contact for partner and internal resources

– Oversee day-to-day decisions without constant approval from the executive sponsor

#4: Competent, Empowered Project Manager

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“Every negative issue encountered boiled down to poor communication.”

- Six managers who led 16 IT outsourcing projects over an eight-year period in a University of Portsmouth (UK) research study

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Alessio Ishizaka and Rebecca Blakiston, “The 18C’s model for a successful long-term outsourcing arrangement”, Industrial Marketing Management, 41(7), 2012, pages 1071–1080, section 4.3.1

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• Change happens

• Create an escalation process – a systematic way for any changes to be handled by the PM

• Keep communications open, clear, systematic and unhindered

#5: Clear Channels of Communication

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• Identify clear phases

• Organize the effort required during each stage

• Three-stage Unisys Transitional Methodology*, an example– Planning – Define objectives, evaluate application or workload, assign roles and engage partner 

– Knowledge transfer – Familiarize partner with internal team, workload to be outsourced, and expected results

– Responsibility transfer - Bring outsourced IT into production (partner)

#6: Identified Phases of the Project

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Planning Knowledge Transfer

Responsibility Transfer

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• Flow milestones naturally from project phases– Agree on them with partner

– Make them visible to all interested parties

• Meet weekly to evaluate progress

• Balance accountability and flexibility, especially as milestones get closer

• Stay engaged with the service provider throughout

#7: Clear Project Milestones

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Milestone 1 Milestone 2 Milestone 3 Milestone 4

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• Listen to your outsourcing partner’s ideas – They know how to avoid issues that threaten success

– They can suggest smart course corrections that save time or effort

– They have experience on their side

#8: An Open Mind

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• SLA with a service provider will likely include these metrics:– Network uptime

– Incident response time

– Hardware replacement response time

• It should also include metrics that matter most to the project champion: – Business-unit satisfaction levels

– Results against criteria set up when you defined the problem

• Best practice – discuss metrics monthly with line-of-business managers, executive sponsor and outsourcing partner

#9: Metrics that Matter

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Hardw

are

Repla

cem

ent T

ime

Incid

ent R

espo

nse

Time

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1015202530354045

Overall Response

Time

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• Record the work the provider has done (or will do) and any issues encountered during implementation

• Pay particular attention to transitions**

– Asset ownership or transfer

– Data protection and retention

– Rights for departments or new contractors (e.g. gaining access to information, accounts, physical locations, etc.)

– Labor termination and compensation

• Create documentation templates to save time during future projects

#10: Adequate Documentation

www.rackspace.com**Government of Hong Kong Efficiency Unit, “A General Guide to Outsourcing, March 2008, page 12, retrieved 21 May 2014 from http://www.eu.gov.hk/english/psi/psi_guides/psi_guides_ppgpop/files/guide_to_outsourcing_200803.pdf

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• High project success rate is correlated to companies using scorecards

• Focus scorecards on your needs as a customer, not the provider’s capabilities

• Set performance targets

• Retain scorecards as part of the project record

#11: Vendor Scorecards

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• Contract Management*** magazine suggests including:– System outages – The acceptable number of outages over a period of several months (“no more than two monthly outages

in any given six-month timeframe”)

– System interruptions – How long an interruption lasts (“no more than two interruptions of service lasting longer than 10 minutes each between the hours of 8:00 AM to 5:00 PM weekdays”)

– Time to resolution – How long it takes to fix any issues that require a skilled technician or developer (“95% of priority #1 escalations will be fixed and deployed in no longer than 72 hours”)

What to Include in a Vendor Scorecard?

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#12: Scheduled Post-Mortem

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• Focus discussion on what happened, not on assigning blame

• Cover issues such as– What worked well?

– What didn’t work as well as it could have (or perhaps not at all)?

– What painful processes could have been avoided?

– What did you learn about working with this particular vendor?

– What opportunities do you see to implement the successful points in future projects?

IT Project Management Literature Review of Success Factors

Source: International Journal of Project Management 24 (2006) 53–65Total number of publications analyzed: 63

Clear Definition of problem

Quantifiable criteria for success

Appropriate executive sponsor

Competent PM

Clear Communication

Identified phases

Clear milestones

Open mind

Metrics that matter

Adequate documentation

Vendor scorecards

Post-Mortem

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51

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7

12

13

10

10

29

15

9

Times Cited in Recent

Literature

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Need help outsourcing IT workloads?

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Next Steps...

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Rackspace consultants have years of experience helping businesses move applications and

workloads off-premises.

Contact Rackspace or read more at

Outsourcing IT Projects to Managed Hosting or the Cloud – White Paper

Call Rackspace at 800-961-2888 to talk to an expert.

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