Before any outsource contacts are made with vendors you must know your functional unit.  This knowledge requires in depth understanding of staff skills, training levels, staff performance levels, individual's knowledge of the business and possible knowledge of trade secrets or other special one of a kind knowledge, equipment inventories (yes everyone has one it just isn't accurate), software and software licensing inventories, and facility locations (owned, leased, joint ventured).  The key piece of knowledge to be acquired is the effect of this functional unit on our business!   Then document, document, document to provide a clear blue print of interactions needed between the unit and other company units which would remain after the outsource was completed.  Then the most important step develop a list of measures stated in business (not technical jargon) measures which will define the success or failure of this functional unit.  Remember that once a decision is taken to seriously consider outsourcing there will be major communication issues within your organization.  One of the key communication stumbling blocks comes in geographically dispersed environments where a central group makes an outsource decision that becomes binding on autonomous or semiautonomous business units...frequently missed communications with these business units leads to buyer's remorse.

IT Vendor negotiations and selections:  The first point to consider is vendors like IBM Global Services, EDS, CSC, Perot Systems and Unisys approach an outsource prospect with a professional team which does negotiation of outsource agreements full time.  This means that many businesses are at a severe disadvantage in negotiations since outsourcing a function is a one time issue for the organization.  The point to start building a team for the customer side of the negotiation is before vendor contact is made.  If your business is in negotiation  already you may be at a severe disadvantage.  Remember that agreements struck often cover 10 years in duration and millions of dollars per year.

Buyer's remorse:  IT Outsourcing Agreements tend to have long durations.  This is reasonable  based upon the economics of the agreement but not reasonable from customer perspective when faced with a changing marketplace.  The other key factor leading to dissatisfaction with outsource agreements is the lack of clear business oriented performance objectives that are fully understood within all of your business units.  Internal client dissatisfaction drives beliefs of poor performance when, in fact, the vendor is meeting the Service Level Agreements established in the contract.  Remember SLAs are often viewed by a customer as the minimum which will be delivered while the vendor view may well be that the SLA is the maximum which must be delivered (the vendor will always give lip service to exceeding SLAs even after instructing their delivery management to prepare cost benefit reviews of the effect on the contract net profit if they intentionally staff in a way that they would miss SLAs...this really happens).