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Bad News on IT Outsourcing Risks: If not treated, their effects are cumulative

publicado por Alfredo Saad

Figura - Bad News on IT Outsourcing Risks: If not treated, their effects are cumulativeTwo conflicting, although inseparable, characteristics occur in any project: the materialization of an improvement opportunity and the unavoidable risks inherent to its attainment.

Also in an IT outsourcing project, the achievement of benefits strongly depends on the way their risks are managed. Moreover, the capability to proactively identify and treat them is vital to minimize the risk exposure of the organization.

The greater or smaller degree of urgency adopted to identify and treat them along all phases of the project determines its success or failure.

Let us consider the phases of an IT outsourcing project in an organization:

  • Decision taking
  • Provider selection
  • Contract negotiation
  • Services transition
  • Contract governance
  • Contract closure

 

Each of these phases has risks inherent to its own nature. The bad news is that unidentified or non-adequately treated risks during any phase may be materialized in a later phase with aggravated effects as a consequence of the accumulated effect observed jointly with the materialization of another risk inherent to this later phase. Such aggravation may occur as an increase of its probability of occurrence and/or an increase of the resulting impact of its materialization on costs or schedule of the project.

Conceptually, the resulting cumulative effect over the project risk exposure may be seen on the figure below. It shows both cases:

  • An unacceptably high project risk exposure, as a consequence of the cumulative negative effects observed when an inadequate risk management discipline is implemented
  • A nearly negligible project risk exposure which is achieved in the opposite scenario

Risk Exposure Graphics

Both paths, radically opposed, distinguish the routes to project failure or to project success.

In future articles we will identify and discuss the risks inherent to each phase of an IT outsourcing project, in both cases:

  • A “traditional” outsourcing project
  • An outsourcing project based on the adoption of a cloud computing alternative

 

Distinct and complementary approaches of this theme were already discussed on previous articles:

 

Do you agree with the concepts issued on the article? Enrich the discussion with your comments.

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A versão em português deste artigo, com o título “Más notícias: riscos da terceirização de TI são cumulativos quando não tratados”, foi também publicada aqui no site TI Especialistas. Para vê-la acesse o link abaixo:

Más notícias: Riscos da terceirização de TI são cumulativos quando não tratados

[Crédito da Imagem: Risk – ShutterStock]

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Autor

Alfredo Saad has been acting on IT area since 1970, taught more than 100 lectures in Brazil and abroad (USA, France, Portugal, Chile, Argentina & Uruguay). He has been acting on IT Strategic Outsourcing Services area since 1997. He negotiated and managed, as Varig's IT Technology Manager, the contract signed with IBM (1997-2004). In 2006 he published the book "IT Services Outsourcing" (Brasport Publishing House). He managed (2006-2009), as an IBM Project Executive, the South American section of Michelin's global outsourcing contract. Risk Manager of all IBM Strategic Outsourcing contracts in Brazil (2009-2014). From March 2014 on, he has been acting as an independent consultant, lecturer and writer on IT Outsourcing as the principal of his own company, Saad Consulting.

Alfredo Saad

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