The worldwide financial crisis continues to make headlines. Chief financial officers are looking for any opportunity to squeeze additional general and administrative cost out of their financials in order to impact the next quarter and beyond. Theyre looking to their chief information officers to slash their budgets and renegotiate third-party contracts for everything from hardware maintenance to offsite records storage. In addition, CIOs are being asked to delay discretionary technology projects and cut back on the use of contractors. Certainly those are valid actions and should yield some short-term relief. Most CFOs plan to be in business a few quarters out, so what may be missing in their playbook today is the opportunity to impact future quarters beyond the next one.

IT Outsourcing (ITO) can yield some fairly hefty savings (30 percent or more, depending on the amount and type of information technology that is outsourced. Labor arbitrage leveraging resources at a lower labor rate through offshoring has been in existence for years and is still the mainstay for many who wish to benefit in the cost category. In addition, significant gains can also be made in the areas of process maturity improvement, greater standardization, technology upgrades, service level performance and utilization of industry best practices (e.g., Information Technology Infrastructure Library, Capability Maturity Model) most of which can also have a positive financial impact on the bottom line.

So, how long does it take to start saving through outsourcing? The standard consultant answer is, It depends. It depends on the answers to these questions:

• Can we dedicate the necessary resources to focus on developing a quick Cost-Benefit Analysis (CBA) in a few weeks?
  
• Do we have any issues with offshoring our work to India, Latin America, Eastern Europe or China?
  
• How mature is our business in being able to embrace and adapt to a new way of delivering IT services?
  
• How great is the pressure to reduce our IT cost? When do we need to show real economic benefit?
  

We could go on and on, but the main themes here are timing, cost savings and company culture.

We recently finished an engagement for a client who was hit hard by the current financial market crisis. Their ability to borrow money became nearly non-existent. They needed a solution that provided them with a prudent yet aggressive plan coupled with appropriate due diligence and a timetable that would allow them to conclude an $80 million outsourcing project from start to savings within two quarters (inclusive). To do this, the CIO agreed to a fast- track process:

Phase: Feasibility & Strategy | Description: Accelerated Cost-Benefit Analysis
Phase: Solution Design & RFP | Description: Scope of Work with pre-defined market-based Terms & Conditions, Service Level Metrics, Cross Functional Statement of Work
Phase: Provider Selection | Description: Quick evaluation of providers, including visits to offshore sites
Phase: Negotiations | Description: Market-based Master Service Agreement (MSA), Statement of Work (SOW) and Service Level Agreements (SLAs) with minimal changes
Phase: Transition | Description: Knowledge transfer, training, testing, communications, work shadowing
Phase: Stabilization & Optimization | Description: Service level metrics in effect; savings begin

Additional steps to accelerate the process include:

• Educate Your Management: Bring your senior management into the planning process; communicate your expectations and continue to communicate often. Get approval for a threshold that you are authorized to negotiate to in order to keep the momentum and to avoid delays.
  
• Workshop Scope: Invest the time internally to quickly determine what is in scope and begin crafting your near final Statements Of Work (SOW).
  
• Leverage Market Documentation: Start with what is generally acceptable in the marketplace and do not get sidetracked by the legal departments less strategic redlines that have little material value to the contract overall.
  
• Collaborate Early: Provide the chosen provider with controlled access to your team at the highest levels.
  
• Get Good Advice: Good advisors know the providers and their capabilities. Use their experience to help you get the best price with the best contract (balance here is very important).
  

In this case, the client evaluated five providers that all included a strong offshore component in their solution. The client was especially interested in how each provider would address geo-political risk and asked for detailed plans from each to demonstrate their ability to shift resources if such an event occurred. The client conducted site visits, which played a major role in the final evaluation. The client went on to select a single provider in days versus weeks and negotiations began shortly after notification.

Now, fast forward one quarter. The client is currently on track to deliver substantial savings back to the business within the next quarter. The CFO has already started the next round of budget adjustments based on the potential savings promised by the CIO.

The old adage plan your work and work your plan really applies here. Given the current financial crisis, the window of opportunity is open.