Micro Focus Advises Enterprises on How To Avoid the IT Outsourcing “Black Hole” 

Outlines key steps to achieve a truly cooperative alliance

NEWBURY, England, July 29, 2008 — Micro Focus® (LSE.MCRO.L), the leading provider of enterprise application management and modernization solutions, is advising global enterprises on how to avoid the IT outsourcing “Black Hole” and solve common cost and quality control issues associated with IT outsourcing projects. For example, due to language and cultural barriers and a lack of application knowledge, different perceptions are often applied to the same criteria of outsourcing goals. This results in increased outages, miscommunication and inefficiency, which over time leads to key information being lost in a “Black Hole.” Micro Focus is calling for an automated, transparent approach to outsourcing management that addresses these issues and provides enterprises with a reliable tracking method and the agility to avoid being “locked in” with any one vendor. 

Currently, enterprises depend on outsourcers to relay all contract information including projected costs, activity progress, code changes and real costs. To manage this information, companies are using tools such as spreadsheets to track what is essentially “old data” by the time the document is updated. This results in a lack of quality measures against the outsourced project, no cost-control and a loss of intellectual property (IP) knowledge around the application that is being utilized or changed.

Micro Focus recognizes that in order to begin an enterprise-contractor relationship with consistent expectations and to ensure transparency during the project, key steps must be taken by enterprises before an outsourced contract is signed. Micro Focus urges enterprises to practice the following steps for a successful outsourcing:

1. Understand what you own – before entering an agreement, be 100 percent confident that you have thorough documentation and understanding of the critical applications you already own.

2. Find out which applications are the right ones to outsource – after taking inventory of your IT environment, take the time to understand the value of all your applications, not just the ones you most often use. With this type of information, it is easy to identify the applications that are best to outsource or to extend to a service oriented architecture (SOA).

3. Create an automated approach to outsource management – do not depend on a contractor to supply crucial information about your agreement with them. Instead, track changes through an automated dashboard that will also, measure the quality of the work and maintainability of the applications being worked on, in a near real-time basis. This allows you to retain the IP in one stored repository that you own. With this, you can move freely from contractor to contractor as desired and avoid ever being locked in to one vendor.

This repository can act as a Service Level Agreement (SLA) management tool that holds outsourcing companies accountable to their reported results and it can be leveraged for better negotiations with other vendors moving forward and in a multi-outsourced environment multiple vendors can be benchmarked against each other. Additionally, by bringing this historical record of data to a new vendor, ramp-up time for a new project can be reduced by as much as 80 percent.

“The way many enterprises are managing outsourced contracts today does not showcase the true value, quality or IP ownership of these critical applications. Instead, we see two versions of the truth: the information relayed by the contractor and the data gathered by the purchasing company. Between these two versions, intellectual property and application changes fall through the cracks or into a ‘Black Hole’ from which there is no escape,” said Scott Stricklin, Portfolio Management Specialist, at Micro Focus. “Whether developed internally or outsourced, all applications are crucial to a company’s bottom line. Poorly managed outsourced projects inevitably lead to an enterprise failing its customer base and its shareholders.”

The goal of outsourcing should go beyond solely cutting costs to deliver innovation. Micro Focus makes this shift in outsource expectations possible with tools that provide accurate means for rapid knowledge transfer and analyze the changes made to an application and the subsequent level of quality and maintainability of the changed application

Micro Focus offers Application Portfolio Management solutions that provide an accurate and timely dashboard of the entire IT application portfolio, outlining where value to the business is coming from and provides a solid foundation upon which to base critical decision around IT expenditure, including outsourcing.

About Micro Focus

Micro Focus, a member of the FTSE 250, provides innovative software that allows companies to dramatically improve the business value of their enterprise applications. Micro Focus Enterprise Application Modernization and Management software enables customers’ business applications to respond rapidly to market changes and embrace modern architectures with reduced cost and risk. For additional information please visit www.microfocus.com

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