In this article, Adam Ripley looks in to how outsourcing is a necessity for business these days.
With the proliferation of outsourcing, there is little doubt that it has become the business byword of the last few years. Organisations of all sizes are realising the benefits of using suppliers to handle processes such as technology, HR, finance and procurement. Lured by the cost savings and the ability to harness external expertise much more economically than providing that experience in-house, more and more organisations believe outsourcing to be the cure all for business ills.
However, this is not necessarily the case. The rush to outsourcing that has been endemic over the last five years or so has been followed by a number of monumental outsourcing disasters. This has served a purpose in the sense that organisations now realise they shouldn’t be blinkered by the promises of cost savings–outsourcing is a very tricky and subtle process and needs to be broached as such.
Outsourcing can fail for a number of reasons, from contract issues to relationship breakdowns, from clashes in working practices to soaring costs. But recently it has been reported that failures in quality assurance and inadequate testing have been behind some large scale outsourcing failures.
The Child Support Agency is a prime example. Dogged by innumerable problems, the CSA's £456 million computer system caused havoc with the organisation’s attempts to track and secure child support payments from absent parents. The government threatened to pull the plug on the system and the supplier, EDS, also blamed the government for ordering 2000 changes from their original requirements. However, it is evident from the government reports available that there are many defects outstanding in the IT system and incompatibilities with the CSA business processes. A more stringent process would have ensured changes were correctly managed and tested and that the changing requirements did not impact the quality of the system.
However, whilst public sector outsourcing disasters get more headlines, this is not to say the commercial sector is any more on the ball where it comes to adequately testing outsourced services. A high profile example of this is online bank Cahoot. At the end of 2004, Cahoot suffered a security lapse, when a failure to adequately test an upgrade resulted in a breakdown to the password system, exposure of customer account data and significant brand damage.
Government failures just receive more press attention, as they tend to be more publicly accountable. The private sector tends to be more skilled at smoke screening when things go wrong. However, with outsourcing rising in prevalence in every sector with the financial services sector leading the way and Kable estimating that the public sector is due to spend £20 billion on outsourcing in the next few years, the need for sound quality assurance and testing in outsourcing has never been more apparent.
With the litany of testing and quality assurance failures that litter the outsourcing space, why is this not a problem that is being addressed by both the user and supplier audience? Testing shortcomings in outsourcing projects can be down to a number of reasons:
- Lack of strategic perception around testing: testing and quality assurance is often considered a tick box, operational function, when it should be about the verification of a solution to fit the business. It is not simply about checking that the system works. Testing needs to be thought about in terms of the whole organisation because if any problems do arise, it can seriously affect the business. In terms of the whole outsourcing environment, the complexity of testing can be doubled–problems and potential scenarios need to be thought of from every perspective.
- Leaving it too late: a problem that