GOVERNMENT TECHNOLOGY/Finding the resources
Increasingly, local governments are outsourcing some of their IT functions. Overburdened with routine network management and maintenance, government IT personnel are neglecting initiatives such as improving network security. And with budgets strapped, many IT departments cannot afford to solve the problem by hiring staff. To ensure that outsourcing arrangements result in better, more cost-effective service, IT managers should identify which functions to outsource, adopt performance-based contracting, establish incentives and disincentives in service agreements, involve senior-level managers and foster trust between in-house staff and contractors.
Not every function of a government IT operation should be outsourced. For instance, government officials should be responsible for program management because they can ensure that technology stays aligned with local needs. However, using full-time government employees to maintain desktop computers may not be cost-effective. IT managers also might consider outsourcing a specific project for which there are no qualified staff.
Performance-based contracting can be helpful in structuring outsourced projects. Instead of specifying the number of individuals to employ and the hardware and software to use, the IT manager identifies the required outcome. That gives the contractor the latitude to creatively meet the government’s needs.
The IT manager and contractor must then define firm metrics, benchmarks, disincentives and incentives in a service agreement. For example, the contract to operate the government’s help desk might specify the number of rings within which calls must be answered.
Service agreements traditionally have been based on disincentives, penalizing contractors for failing to meet requirements. It is at least equally important, however, to establish incentives that encourage contractors to exceed the minimum performance levels. Governments might reward contractors for superior service, encouraging innovation and improvement. If the contractor regularly earns incentives for better-than-acceptable performance (or incurs penalties for failing to meet initial expectations), benchmarks should be reset accordingly.
To keep ongoing costs controlled, IT departments should own their infrastructure and assets. They have less flexibility in terminating a contract if third parties own the hardware and software.
Executive participation is necessary on both sides of the relationship. Key government and contractor decision-makers must continue to be involved throughout the lifecycle of the agreement to ensure accountability.
A lack of trust between the in-house IT staff and partner can prove to be the downfall of an outsourcing arrangement. If in-house staff members fear losing their jobs to outsourcing, they might become competitive and undermine the arrangement. In contrast, if their duties shift and they become responsible for other tasks, they will feel less threatened.
Often, IT managers find that outsourcing allows them to simultaneously enhance their return on investment and service. Contractors can handle problems and complete routine tasks, and IT staff members are available to address long-range objectives, such as integrating existing infrastructure and introducing new technologies to improve services.
The author is president and chief executive officer for Vienna, Va.-based Reliable Integration Services.