By Dr. P. K. Mukherji and Amit Singh

How Can the Risks in RIM be Managed?

Though the trend of delivering RIM services from an offshore location is being embraced by organizations at a very fast pace, not all initiatives have been successful and met the business objectives that were planned. This is the result of lack of appreciation of risks with such initiatives, and the way to manage these. Some of the common risks  are:

Inadequate readiness of outsourcing organization

It is important that the pros and cons of the initiative are well understood by the leadership and communicated across the organization. This helps in setting the right expectations. Managers need to have a handle on delivery processes and the outsourcing readiness of the organization. Having a solid process foundation helps ensure outsourcing success. But some firms go down the outsourcing path because of the opposite reason — for not having implemented strong service management.

Lack of a clear strategy

It is important that adequate effort is spent on developing an effective strategy. Organization must analyze their portfolio to establish which functions are right for global sourcing what is the right business model for implementing the strategy.

Wrong choice of service provider

It is important to go through a rigorous sourcing process to select the right partner, who has required skills and capabilities. Customers need to perform due diligence, specifically around infrastructure capabilities. It is essential to develop a partnership with selected provider and work jointly to develop best practices and optimized service delivery processes.

Lack of sourcing competency

Organizations that use outsourcing as a pillar of business strategy must invest in advanced competencies to manage multiple providers. For example, even with a sound sourcing strategy and best-in-class sourcing management, contracts will be hard to manage without the right people that understand outsourcing dynamics, and can structure the right terms and conditions.

Challenge of knowledge retention

The attrition level of employees within service provider organization in low-cost geographies could be as high as 15 to 20 percent. The risk of losing key resources having deep knowledge of the client’s infrastructure is high. It is essential to make sure that the following are achieved:

·Partner with service providers to put in place the right HR processes and provide
·work environment, which helps in reducing attrition
·Have an effective knowledge-transfer plan during transition and document
the knowledge, so that knowledge loss is minimized.

Cultural and communication issues

It is essential to invest management effort in understanding the work culture in the service provider geographies. Challenges with working with a partner organization located in a very different time zone can be very challenging. Not being able to effectively communicate with the service provider may mean the early demise of the initiative.

Security and disaster recovery/business-continuity plan issues

Security breaches and discontinuity in service because of inadequate disaster recovery/business-continuity plan planning have at time resulted in failure of RIM initiative. It is important that the service contract clearly define this requirement and a strong governance structure is put in place to oversee the implementation of the processes.

Compliance issues

Regulatory compliances are constantly changing and becoming all inclusive. Two areas of importance are:

·Sarbanes-Oxley Act and the Patriot Act for Electronic Record Management
·European Union Data Protection Directive (EUDPD) and ISO 17799:2005 Code of Practice for Information Security Management (ISO 17799) for Electronic Data Usage and Protection Codes.

There is also other industry specific compliance like HIPPA and Payment Card Industry standards. Service provider must demonstrate capability to adhere to such regulatory requirement.

As the industry has matured, risk mitigation methods have evolved to manage these risks. It is better to seek expert advice in undertaking careful planning, provider selection, and transition and governance management to effectively manage the risks and realize the business benefits. Most importantly commitment from executive leadership is critical to the success of a strategic RIM initiative.

OffshoreAbility of Various Infrastructure services
Operations function	Offshoreability	Comments
Facilities management	Low	Clearly the majority of tasks associated with data-center administration require a local presence, and the primary offshore market today – India — is still a relatively high-risk market for such services.
Production support	Low	Production support (job scheduling, JCL support, file management, etc.) is not easily sent offshore as it assumes a good knowledge of applications, not just generic technologies. Even tier-1 outsourcers can only support this by hiring experienced staff from the customer.
Server and storage administration	Moderate	Remote server and storage administration is technically viable and the tasks are standard across organizations, making offshore support possible. However, since some administration tasks require physical access, many organizations are reluctant to split responsibilities.
Technical support	High	Technical support is well-suited for remote support, offshore or otherwise. It requires high skill levels, but standard product areas (Windows, Unix, z/OS, Oracle, etc.) are supportable.
Performance monitoring and capacity planning	High	Well-suited to offshore support, as these tasks, though very important, are not typically real-time. Organizations outsourcing in this area should assume they will have to retain responsiblity for forward-looking business growth aspects of capacity planning.
Database administration	High	Very similar characteristics to technical support above-mostly well suited to remote/offshore support, but crises management/ recovers can be more difficult.
Network operations	High	By definition, a remote support function and well-suited to outsourcing.
Helpdesk	High	Technically well-suited to remote/offshore outsourcing for commodity technology and OTS applications.
Source: Forrester Research