Outsourcery...

We are in a global recession. The future is unclear. Sales and revenues are declining. Profit margins are under attack. Costs need to be cut. The The drama begins....

Even before recessionary times of course, outsourcing has been a legitimate tool for Oracle applications implementations, development work and support services. I could put a good case for outsourcing, but I'm not going to...

I have witnessed outsourcing in various guises: Competing for Quality; Market Testing; Private Finance Initiative; et al. What grinds with me is the unfairness at times to the client's in-house team. The guys and girls who have been doing the job for years, albeit maybe not as efficiently as is possible. Suddenly, they feel they are under attack and for good reason.

So just in case you find yourself in that position I've made a shield...

In summary, the quoted advantages of outsourcing are:

24 x 7 application support
Clients focus on their core business
Cost savings
In-house staff risks such as holiday/sickness/leaving
Access to a large pool of Oracle skills
Improved customer service

24 x 7 application support

I have yet to see effective 24 hour cover provided by a supplier support team. Quite often you either get the company help desk which is not very helpful, or it fails to send the message on to the right analyst or DBA. The alternative is to talk to the guy directly who is often out of the office or home and away from his computer until later. Additionally, they usually know little about your company or the urgent issue. Language and communications are further difficulties at times too.

Very frustrating and and a lots of wasted time.

Client focus on their core business

Ah OK so we concentrate on producing, packing, marketing, distributing and selling our widgets then. Fine. Except that we inevitably want to do all these activities much better. To do that we need meaningful information. Which in turn means we process huge amounts of data, refine it and the end product is company information.

Our information is therefore very near the core of our business.

Do we need to pay out large fees to outsourced consultants to constantly enhance and optimise reporting and intelligence. Can we afford to trust them to deliver and secure company data and information?

Cost savings

These are likely to be short term only. The supplier will press for a short term contract. The client company will lose is own experienced resources and the next time the contract negotiation comes up there will be a big hike in price.

Make sure you have a good accountant look at the costs of the rival camps. For decision making purposes, only in-house 'avoidable costs' should be considered rather than total costs for the in-house team. Basically these are the client company's cash savings as a result of outsourcing.

The vast majority of Oracle internal applications services are for internal use only. They don't need to make a profit. The supplier should be at a distinct disadvantage here. A rough guide would be that the service provider needs to be 25% more efficient on cost than the in house team.

In-house staff risks such as holiday/sickness/leaving

Get yourself some staff turnover figures for IT companies and you will probably find the in-house team fares better than most of them. A well managed and flexible applications team can cover sicknesses and holidays and a fall back position is to employ contractors on short term engagements.

Access to a large pool of Oracle skills

Another myth in my opinion. Only the very biggest companies have such a pool and many of the smaller and medium sized companies engage contractors on individual projects.

Cover this risk with an Oracle Support contract.

Improved customer service

It is hard to see how remote working can improve the service offered to users and ultimately the customer. The warm approach engendered by working for the same company is lost and the supplier's team will be pressurised to deliver new pieces of work at a significant cost to the end client.

Offshore support and development can be particularly difficult especially around communications. Many times in the past I have had to replicate discussions about issues during a telephone call by email because the analyst's English just wasn't good enough.

World class organisations will always treat their employees in a fair manner. Executives and managers responsible for the past performance of their in-house teams should not be allowed to shop internal resources. In-house teams can offer an efficient and effective Oracle applications service given a level playing field.

Otherwise they may well have an axe to grind...

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