Posted: May 11, 2010 at 1:31 am

IT Outsourcing: 3 Reasons Your Vendor Won’t Innovate

Once you’ve figured out what innovation means to you, seek out providers that line up with your definition

Internal IT organizations choose to outsource for any number of reasons: to cut costs, improve service, increase efficiency. Increasingly, they’re seeking innovation from their IT outsourcing partners, even though many don’t have a clear picture of what innovation means in the context of outsourcing. Consequently, those IT departments are not getting much innovation from their service providers.

According to a 2009 Forrester Research survey, 38 percent of IT outsourcing customers said lack of innovation or continuous improvement was their greatest challenge with existing vendors–up from 33 percent the previous year. (Also see CIO’s Exclusive Outsourcing and Innovation Survey.)

"Clients expect more from their service providers than just a cost reduction and reliable service," says Forrester Senior Analyst Chris Andrews. "In many cases they want their supplier to be aligned with their own business concerns, and that implies some level of evolution in the supplier’s capabilities."

Leading IT outsourcing providers recognize that innovation is integral to their survival. "None of the service providers I have ever spoken with is unwilling to engage in an innovation discussion," says Andrews, who recently interviewed ten technology service providers to figure out the disconnect between customer expectations for and outsourcer delivery of innovation.

So what’s the problem? In a word–it’s you. Andrews says IT outsourcing customers make the following three seemingly basic, yet critical mistakes in attempting to procure innovation from their external partners. He recommends ways they can address these mistakes to obtain the innovation they seek from their vendors.

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Mike Hanes
ProVisionTech

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