The document outlines 12 critical success factors for outsourcing IT projects to managed hosting or cloud services, emphasizing the importance of clear problem definition, measurable goals, and effective communication. It stresses the need for competent project managers, appropriate executive sponsorship, and the establishment of relevant metrics to ensure the project's success. Best practices include creating vendor scorecards and conducting scheduled post-mortems to learn from each project experience.

1. Outsourcing IT Projects to Managed
Hosting or the Cloud
12 Critical Success Factors

2. Our Definition of Outsourcing IT
Moving an application or workload from
your data center to a 3rd-party
managed service or cloud service.
www.rackspace.com 2
out·sourc·ing
/out, sôrs, iNG/

3. 3
Why Businesses Outsource IT
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• Move costs from CapEx to OpEx
• Eliminate mundane IT chores
• Reallocate staff to more strategic projects
• Preserve governance

4. What Factors Make Projects Successful?
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5. • Involve all departmental and executive stakeholders whose
budgets will be affected by the effort
• Create a statement of the problem that is specific, quantifiable
and properly scoped
• Understand effective use cases for outsourcing IT, including
– Reducing high IT costs, especially for CapEx
– Improving response to user requests for new apps or new workloads
– Increasing data center capacity
– Eliminating mundane IT chores that distract from strategic projects
• Realize when outsourcing IT is not a good fit
– Solving an irritating or non-mission critical challenge
5
#1: Clear Definition of the Problem
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6. • Begin with the end in mind
• Make goals quantifiable and
measurable, such as
– Increased revenues – How much extra
revenue do you want to generate, and in what
timeframe?
– Cost savings – How much can you save on
infrastructure by turning in-house IT functions
over to an outsource provider? How long will
this take to achieve?
– Reduced time-to-market – How long will it
take to put your outsourced IT into production
compared with today?
• Set quantifiable goals and review them
periodically to increase outsourcing
success
6
#2: Quantifiable Criteria for Success
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7. “An engaged executive sponsor—with a vested
business interest in the project from kickoff to close—
can mean the difference between
success and failure.”
- Project Management Institute
8
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8. • An executive sponsor for an outsourcing project
should have
– Enough authority to see the project through
– A vested interest in achieving the stated goals
– Control of resources required for the project
– A willingness to be actively involved, but comfortable
delegating day-to-day authority to the project manager
9
#3: Appropriate Executive Sponsor
Executive Sponsor
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Vice President
Director
Manager

9. • Role
– Add outsourced IT as a new project in the PM’s workload
– Make PM final decision-maker and accountable for overall project success
• Responsibilities
– Serve as single point of contact for partner and internal resources
– Oversee day-to-day decisions without constant approval from the executive sponsor
10
#4: Competent, Empowered Project Manager
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10. “Every negative issue encountered boiled down to poor
communication.”
- Six managers who led 16 IT outsourcing projects over an eight-year
period in a University of Portsmouth (UK) research study
11
Alessio Ishizaka and Rebecca Blakiston, “The 18C’s model for a
successful long-term outsourcing arrangement”, Industrial Marketing
Management, 41(7), 2012, pages 1071–1080, section 4.3.1
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11. • Change happens
• Create an escalation process – a systematic way for
any changes to be handled by the PM
• Keep communications open, clear, systematic and
unhindered
12
#5: Clear Channels of Communication
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12. • Identify clear phases
• Organize the effort required during each stage
• Three-stage Unisys Transitional Methodology*, an example
– Planning – Define objectives, evaluate application or workload, assign roles and engage partner
– Knowledge transfer – Familiarize partner with internal team, workload to be outsourced, and expected results
– Responsibility transfer - Bring outsourced IT into production (partner)
13
#6: Identified Phases of the Project
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Planning
Knowledge
Transfer
Responsibility
Transfer

13. • Flow milestones naturally from project phases
– Agree on them with partner
– Make them visible to all interested parties
• Meet weekly to evaluate progress
• Balance accountability and flexibility, especially as milestones get closer
• Stay engaged with the service provider throughout
14
#7: Clear Project Milestones
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Milestone 1 Milestone 2 Milestone 3 Milestone 4

14. • Listen to your outsourcing partner’s ideas
– They know how to avoid issues that threaten success
– They can suggest smart course corrections that save time or effort
– They have experience on their side
15
#8: An Open Mind
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15. • SLA with a service provider will likely include these
metrics:
– Network uptime
– Incident response time
– Hardware replacement response time
• It should also include metrics that matter most to the
project champion:
– Business-unit satisfaction levels
– Results against criteria set up when you defined the problem
• Best practice – discuss metrics monthly with line-of-business
managers, executive sponsor and outsourcing
partner
16
#9: Metrics that Matter
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45
40
35
30
25
20
15
10
5
0
Hardware
Replacement Time
Incident Response
Time
Overall
Response
Time

16. • Record the work the provider has done (or will do) and any
issues encountered during implementation
• Pay particular attention to transitions**
– Asset ownership or transfer
– Data protection and retention
– Rights for departments or new contractors (e.g. gaining access to
information, accounts, physical locations, etc.)
– Labor termination and compensation
• Create documentation templates to save time during future
projects
17
#10: Adequate Documentation
**Government of Hong Kong Efficiency Unit, “A General Guide to Outsourcing, March 2008, page 12, retrieved 21 May 2014 from www.rackspace.com
http://www.eu.gov.hk/english/psi/psi_guides/psi_guides_ppgpop/files/guide_to_outsourcing_200803.pdf

17. • High project success rate is correlated to companies
using scorecards
• Focus scorecards on your needs as a customer, not
the provider’s capabilities
• Set performance targets
• Retain scorecards as part of the project record
19
#11: Vendor Scorecards
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18. • Contract Management*** magazine suggests including:
– System outages – The acceptable number of outages over a period of several months (“no more than two monthly outages
in any given six-month timeframe”)
– System interruptions – How long an interruption lasts (“no more than two interruptions of service lasting longer than 10
minutes each between the hours of 8:00 AM to 5:00 PM weekdays”)
– Time to resolution – How long it takes to fix any issues that require a skilled technician or developer (“95% of priority #1
escalations will be fixed and deployed in no longer than 72 hours”)
20
What to Include in a Vendor Scorecard?
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19. 21
#12: Scheduled Post-Mortem
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• Focus discussion on what happened, not on
assigning blame
• Cover issues such as
– What worked well?
– What didn’t work as well as it could have (or perhaps not at
all)?
– What painful processes could have been avoided?
– What did you learn about working with this particular
vendor?
– What opportunities do you see to implement the successful
points in future projects?

20. IT Project Management Literature Review of Success Factors
Source: International Journal of Project Management 24 (2006) 53–65
Total number of publications analyzed: 63
16
31
51
34
7
13
10
10
12
29
15
9
Post-Mortem
Vendor scorecards
Adequate documentation
Metrics that matter
Open mind
Clear milestones
Identified phases
Clear Communication
Competent PM
Appropriate executive sponsor
Quantifiable criteria for success
Clear Definition of problem
Times Cited in
Recent
Literature

21. Need help outsourcing IT workloads?
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22. 24
Next Steps...
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Rackspace consultants have years of experience
helping businesses move applications and
workloads off-premises.
Contact Rackspace or read more at
Outsourcing IT Projects to Managed Hosting or the Cloud – White Paper
Call Rackspace at 800-961-2888 to talk to an expert.

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About Rackspace
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