Avoiding outsourcing problems by better documentation

A Position Paper by Vic Lilley, Director, Lilley Information Systems Ltd

Outsourcing is still a popular trend, with organisations trying to be more efficient by concentrating on their core competencies and buying in the rest. However, the initial promise of more management time and capital being released, to capitalise on what the business does best, can turn into an unexpected nightmare, with the organisation becoming worse off than it was before outsourcing. It can also be bad news for the supplier, where the expected profitable opportunity turns out to be a loss making headache. Such disasters can be avoided by paying more attention to documentation, which is a strategic risk management tool.

What disasters?

What specific disasters are we talking about? Well, for a start, it is not uncommon for companies to lose millions in legal fees and damages over disputes about what each thinks the other should have done. See http://www.lilleyinfosys.co.uk/poor-specifications-rfp-prl-feb-2002.html for a real-life example. With no clear documentation, there is no clear evidence as to what each should expect from the other. It is asking for trouble to rely on people's memories. Even honest people genuinely forget or misunderstand.

Relationships are not enough

Relationships are important, of course, and can smooth over some problems. But it's a mistake to rely on them too much to paper over a poorly specified agreement. In fact, poor specifications can cause a deterioration in relationships. Also, when people's jobs are at stake, you can suddenly see a personality change.

Making the wrong decision

Wrong decisions are made because of a lack of clear documentation at all levels, including the project brief, general design, project plan, business case, specifications, contract and so on.

Going over time and budget

Getting projects and operations completed on time and budget is not easy but you stand no chance if your documentation is not clear on what is you are supposed to be doing.

Wasting time and money

Time and money is frequently wasted on projects because of unnecessary reworking and unnecessary duplication of documentation. Causes of unnecessary reworking includes; lack of appropriate and clear objectives, vague scope, vague specifications and carrying out tasks in the wrong order. The unnecessary duplication of documentation occurs because the documentation is designed piecemeal instead of being an integrated documentation system.

The danger of stress

Trying to do complex things in your head, without the aid of proper documentation, can be confusing worrying and stressful. The resulting frustration and exhaustion can lead to making a decision the buyer can live to regret. The stress can also lead to personal health problems or aggravate existing ones.

Lock-in

Another potential problem is insourcing (bringing the service back inside the organisation) after outsourcing. Without proper documentation of exactly what is being supplied by the outsourcer, bringing the work back in house can be too risky, so that the organisation is locked into the supplier.

Better documentation

Any documentation can be seen as better than none, so better documentation needs to be complete. This means considering all that is needed for procurement, development and operation. Using software development and operation as an example, this includes briefs (objectives and scope), general design, project plan, business case, detailed design specifications, Request For Proposals (RFP'S), Invitation To Tender (ITT's), test data and results, change control procedures, operational user guides, manual procedures, business processes, help screens, Service Level Agreements (SLA's), the contract and so on.

On the other hand, any (poor) documentation can cause such disastrous results, that it often would have been better never to have started a project in the first place, even though some documentation was available. So any documentation will not do, it needs to be right, to be better.

One aspect of getting it right is carrying out tasks in the right order so that time and money is not wasted in reworking. For example, the common mistake in software development is trying to specify the data base before you define the outputs from the data base. This causes people to go round in circles with unnecessary changes.

Aligned to business needs, understandable and specific are other requirements of right documentation. If it isn't aligned to business needs, although it might be perfect otherwise, it will be ineffective. If it isn't understandable and specific this will lead to communication problems, which waste money in scrapped projects, re-working and litigation. Note that it is possible to be specific at general levels, like a project brief and a business case, as well as in detailed user requirements specification.

Also, better documentation needs to take into account the entire life cycle of creation, operation, modification (including outsource and insource) and disposal. So this includes documentation such as change control procedures.

Another characteristic of better documentation is that is designed as an integrated system so that unnecessary duplication is avoided, saving time and money

Lack of in-house expertise and manpower

Solving these problems by yourself is not easy if the expertise is not in-house, or even if it is, staff cannot cope with the increase in load caused by the outsourcing project. Also, it's easy to lose objectivity when you are so close to a project. So it makes sense to consider using an experienced external service provider.

Director: Vic Lilley MIMIS
Lilley Information Systems Ltd
16 Kingsway
Hayes
Middlesex, UB3 2TY
UK

Telephone: +44 (0)20 8573 3911
Facsimile: +44 (0)20 8573 3915

Email: vlilley@lilleyinfosys.co.uk