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6 IT outsourcing lessons learned from's troubled launch

Stephanie Overby | Oct. 16, 2013
The federal government's recent launch of is a stunning example of outsourced IT gone wrong. The multi-contractor project has been riddled with issues and should serve as a reminder to any IT outsourcing customer regarding steps to take to ensure a smooth rollout.

The troubled launch of the U.S. federal government's healthcare information exchange is a high-profile example of outsourced IT gone wrong. The $400 million project, which was supposed to be a one-stop online shop for Americans seeking health insurance, made headlines for its bugs and glitches.

The initiative was endorsed by the highest executive in the world, had plenty of lead time, and had a relatively straightforward mandate. But, as a recent New York Times article pointed out, deadline after deadline was missed on the multi-contractor project for a variety of reasons — from government agencies slow to issue their specifications to last minute changes to the's primary features.

It's not surprising that the project was problematic, says Peter Bendor-Samuel, CEO of outsourcing consultancy and research firm Everest Group. "When you make such a huge change all at once and you're trying to implement systems and processes for the first time, the unintended consequences that cascade are enormous," Bendor-Samuel says. "We see this all the time in business, albeit on a smaller scale. The only surprise to me is that it worked at all."

"It's important to keep in mind the experience of the user when designing systems like A big takeaway is to try to simplify processes and keep in mind the user's experience . Healthcare is complex enough, why do these guys need to add more complexity?" — Adam Luciano, principal analyst with sourcing analyst firm HfS Research.

The rocky start, however, serves as a reminder of several steps any IT outsourcing customer should take to ensure a smooth rollout.

1. Conduct robust capacity planning. "Start by gathering feedback from subject matter experts and key stakeholders across all teams to design a solution with the capacity for planned usage profiles as well as the elasticity to meet unexpected levels of demand," advises Craig Wright, principal with outsourcing consultancy Pace Harmon.

"Ensure that outsourcing agreements include meaningful expectations around agile service delivery performance structures and relevant provisions to hold service providers responsible for quickly responding to changing needs, aggregating their services into an ecosystem-wide, seamless, end-to-end service experience for users," Wright says

Insurance providers should keep this in mind in the coming months as well. "The federal government won't be able to tell insurers how many people signed up for their plans until November, so it will be a huge processing month," says Al Denis, director at outsourcing consultancy Information Services Group (ISG). "Few firms are likely to be prepared."

2. Avoid the Big Bang. "When you're coming up for the first time with a brand new economic system, process and structures — along with the technology to support it — it's going to take a while to work the kinks out," says Bendor-Samuel. "This is like any CIO that launches a big project without appropriate testing. It's impossible to believe it would go well."


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