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Dec 2017 - IDC Perspective - Doc # US43316417

Rationalizing and Modernizing Outsourced Services: A Four-Step Process

Authors: Dr. Ron Babin, Aaron Polikaitis

Abstract

This IDC Perspective discusses the challenges related to rationalizing complex outsourced IT in enterprises that are moving to a digital business model. Digital transformation requires the evaluation and streamlining of vendor-managed technologies and applications along with rationalization of internal infrastructure; however, the process of rationalizing outsourced IT poses challenges that must be carefully addressed.

Often, legacy applications have been outsourced, and the provider may be reluctant to replace or refurbish the systems that operate at low cost and perhaps high margin. Nonetheless, buyers must engage outsource providers and thoughtfully plan the rationalization of legacy systems — with or without the support of the incumbent outsource provider.

"Enterprises are taking a hard look at legacy platforms and applications used by their outsourcers to make sure they don't have a negative impact on digital transformation initiatives," says Aaron Polikaitis, vice president of IDC's Vendor Sourcing and Management practice. Rationalization of legacy IT, both applications and infrastructure, is often a critical prerequisite for successful digital transformation. "With careful planning, rationalization and modernization of outsourced services can accelerate digital transformation plans; lack of planning can lead to significant problems," adds Ron Babin, adjunct analyst with IDC's IT Executive Programs (IEP).

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