Blog of Chinh Tran

There's little question that multi-sourcing -- parceling out the IT services portfolio among a number of vendors -- is the new normal for IT outsourcing. But what happens when things go wrong and there's no proverbial single throat to choke? "Multi-vendor outsourcing arrangements are more complicated because services can very rarely be performed in isolation from other services," says Lois Coatney, partner with outsourcing consultancy Information Services Group (ISG). "Because of this risk, providers will use commercial language to 'carve out' where they will not be held accountable." "There are no market norms for these liability issues," says Shawn Helms, partner in the outsourcing and technology transactions practice of K&L Gates. "These are service providers that are fierce competitors and getting everyone to agree to the same exact terms is a herculean task that takes significant time and effort." Even in the best ci

In June 2000, Nestlé SA signed a much publicized $200 million contract with SAP and threw in an additional $80 million for consulting and maintenance to install an ERP system for its global enterprise. The Switzerland-based consumer goods giant intends to use the SAP system to help centralize a conglomerate that owns 200 operating companies and subsidiaries in 80 countries. Not surprisingly, a move of this magnitude sparked skepticism. Anne Alexandre, an analyst who covers Nestlé for HSBC Securities in London (the company is traded only in Europe), downgraded her recommendation on Nestlé stock a year after the project was announced. While she says that the ERP system will likely have long-term benefits, she is wary of what the project will do to the company along the way. "It touches the corporate culture, which is decentralized, and tries to centralize it," she says. "That’s risky. It’s always a risk when you touch the corporate culture." It is a risk tha