Delegating non-core functions to professionals remains the most efficient way of managing a company. Chief Executive Officer speaks to Alexej Spas, CEO of *instinctools, about finding the right partner in the outsourcing market.
CEO and Owner at *instinctools
The media likes to talk about successful IT projects, start-ups and new technology IPOs, but are the majority of projects actually successful?
Alexej Spas: According to polls in the IT industry, only 10% of companies are getting return on investment with most of their products and actually reaching financial goals. Every day, a huge number of innovations are happening in this area, but the economic success of these is questionable. This reminds me of Titanic: it looks promising, but in the depths we discover some deadly holes
Why do you think this is?
Alexej Spas: The key here is specialization. Product launch, development and promotion are a set of complex tasks. Successful execution requires expertise in many areas – from marketing through to the product development and customer support. Not many companies have all these competencies at a sufficient level. As a result of trying to do everything on their own, companies end up drowning in the details and missing the targets. The non-core functions can, and should, be delegated to professionals who perform this function more efficiently.
Do you think it’s enough just to give non-core functions to external contractors and believe everything will be fine?
Alexej Spas: Delegating does not mean excluding yourself. My experience with companies of all sizes shows that the product or project becomes successful only with the active participation of specialists from the subject matter domain on the customer side, as well as the presence of open partnerships between the customer and supplier.
Are there any other reasons that contribute towards these failures?
Alexej Spas: Yes. One of them is slow time to market. The market for IT products is usually very competitive. We see how companies are trying hard to be the first to market with their products. But, for this, they often do not have enough of their own resources. Domestic resources are either missing or expensive. And this leads to losing market position.
So, companies are looking for resources elsewhere; the latest outsourcing reports show that 50% of companies developing their IT solutions in-house reported plans to start outsourcing their IT/development in 2013–14.
Your company has a remarkably low project failure rate. How is this possible?
Alexej Spas: When working with our customers on outsourcing projects, we follow several important rules, and can recommend those for others:
- Focus on what we do best. We have invested more than 14 years in improving our production processes, focusing on optimization, and now we can offer this approach to our customers.
- Look for a partner that is two to three time zones away. You’ll save a lot of valuable time.
- Pay attention to good reputation and references of your partner.
- Search for solutions together with your partner. Explain the context of the problem. Include them as much as possible in decision making process.
- Find a partner from your league, as well as one that is similar in size and possibilities.
Why is choosing a partner of similar size important?
Alexej Spas: Part of our strategy is to find clients of a similar size. In this way, we can better understand each other’s problems and easily find a common language. Overall, the results of the UK Development Survey 2012 suggest that ITO is yet to be discovered by more small to mid-sized UK organizations in the near future.
But, your list of clients includes such giants as Daimler, Fujitsu and SAP. How does this fit into your recommendation of selecting a partner of similar size?
Alexej Spas: When dealing with these companies, we work with specific departments within them. They are like a smaller company inside of the larger one. So, we solve tasks within these specific departments where our rule around size applies perfectly.
How else could you advise our readers with regard to finding outsourcing partners and avoiding getting on the Titanic?
Alexej Spas: It sounds trivial, but I want to emphasize getting offers from multiple vendors – many companies neglect this. Compare them in terms of price, depth of requirement analysis, quality and level of communication. Professional ITO companies offer the possibility of a preliminary or detailed estimation of your project, as well as running pilot projects. For example, on our company website, you can order an estimation of your project directly through an online form. By comparing estimates from different vendors, you can identify the risky parts of your project and focus on these from the start of the project.
Companies need to concentrate on their strengths, and find reliable partners that can help them get to where they need to go. In this way, you can easily benchmark your existing ITO partner. And, of course, we will be happy to be your winning ship, if you chose to step on it.
The article is originally published on zmags.com.