Lottery corporations are state sponsored entities that have the ability to deliver lottery services to the state’s jurisdiction. Private organizations such as casinos can also operate separately in the jurisdiction but both need to comply with the gaming regulator of the state.
Lottery corporations have been integrating and providing lottery gaming vendor solutions throughout their existence and the employees of the lottery corporation are between the public and private sector. In Canada, the lottery corporations are “Crown” Corporations or an agency of the provincial government. With the disruptive internet offerings and trends in the private industries, outsourcing non-core capabilities of the lottery corporation are appearing to be more attractive; especially with the rising costs of employee benefits, salaries, pension and increasing revenue expectations of the state.
While outsourcing appears to offer benefits such as cost savings, focus on core lottery corporation competencies, enable variable capacity of skilled resources, mitigate risks and allow for more process re-engineering options; outsourcing also presents risks and if not carefully considered can result in failure to meet expectations.
Organizations outsource processes and need to define the touch-points affected by the process and how they will be affected. To illustrate this point, take the example of taking your vehicle to a garage for servicing. Servicing a modern car today takes more than mechanical know-how and requires expertise in using specialized tools, computers and understanding complicated systems. Instead of acquiring such tools, education and practical experience, most car owners take their vehicles to a garage when their vehicle needs servicing; especially for more complicated jobs such as engine and transmission repair. This process is well defined, you bring your vehicle to the garage, you let the mechanic or service representative know what ails your vehicle, they run a diagnostic and determine what the problem is. When the problem(s) is identified, they let you know what work needs to be done, how long it will take and the cost to perform the repair and service. When it comes to IT outsourcing, many companies that make this decision do not understand what they are getting into.
Just like you would not bring your fridge to a garage, companies that outsource their IT services often expect all existing services and processes to function as they have in the past. Poorly defined IT processes often leads to the client and service provider to point fingers at each other when services are not rendered as expected. For example, if an organization does not define processes and standards for the frequency and how routine maintenance (and what these services are) and patching of their applications and infrastructure is performed, the service provider will not have much to follow and can therefore claim they performed the services as instructed.
Another source of conflicts results in what is considered “routine” by the service contract and “enhancements” to the service delivery. This is especially apparent when an organization has no baseline or formed any expectation of how much operational and enhancement work is done, let alone any well-defined standards that outline requirements. As an example, a project to expand a gaming network in which the original solution designs that were agreed to when IT was internal may later be considered by the client to be too risky or expensive to implement. Such projects would stall and require significant rework and increased costs. So how can such problems be avoided and identified up-front to make an outsourced transition successful?
Enterprise architecture can provide valuable insight into the decision to outsource. Enterprise architecture (EA) defines, develops and exploits the boundary-less information flow capabilities in order to achieve the Enterprise’s Strategic Intent. EA is not just about TECHNOLOGY and addresses the following domains:
- Business architecture: outlines the company’s most important business processes;
- Information architecture: identifies where important blocks of information, such as a customer record, are kept and how one typically accesses them;
- Application system architecture: a map of the relationships of software applications to one another;
- Infrastructure technology architecture: a blueprint for the hardware, storage systems, and networks
One of the most widely used frameworks used for EA is defined by the Open Group, for more information, lookup TOGAF®.
It is becoming more common for companies to outsource their infrastructure technology but many companies with a weak EA practice have a higher risk of failed outsourcing than those with a good understanding of their Enterprise Architecture. EA is a practice that is strategic to an organization and is more than technology; it drives organizational decisions to meet their strategic goals. Large consulting firms offer EA services but a true EA practice should reside within the organization. For this reason, smaller boutique firms that do not have ambitions to take over large parts of the organization can often provide value to organizations contemplating important enterprise decisions such as outsourcing.
Outsourcing can be advantageous even for an industry that has not readily embraced the concept but most organizations under-estimate the amount of work and readiness that needs to be undertaken. If your organization is considering outsourcing or if you have questions about what you need to do to prepare for an outsourcing agreement, please do get in touch with us.
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