Outsourcing failures carry a heavy cost. From the £7.6bn overspend on NHS IT (involving EDS, Fujitsu, CSC and Capital Care Alliance) to the recent failings of G4S at the Olympics; you can understand why so many people are doubtful about outsourcing.
On top of this, vendors seem to be doing little to remedy the situation, leaving many customers to feel their outsourcers are leaving them in the dark.
In reality the issue is not outsourcing: we all know it can actually help fill difficult gaps in IT services. Instead, it’s confusion about negotiated terms and conditions, a lack of transparency and inadequate integration between cost and usage reporting.
This can all cause costs to spiral out of control and ultimately cause rifts between customer and vendor.
So, how can you be sure that you have got what you have paid for?
To start with, most customers are unaware their outsourcing agreements often include usage limits, much like a mobile phone contract. If you go over your contracted minutes, you are going to be seriously overcharged – the same applies with outsourcing. If you go over your monthly server usage allowance, you risk an unpleasant surprise when the bill arrives.
Next look for ways to marry technology data with usage statistics, using the following steps:
• Get the most out of your hardware – Make sure you have access to information about your servers, including detailed metrics of how the servers are being used. This will give you a better understanding of which resources are being consumed and how much it is costing to consume them. Armed with this you can make decisions on which resources you use regularly and which you aren’t using at all.
• Understand the total cost of ownership of your IT – Work out the cost and business consumption of your IT services. Don’t forget to include your internal IT costs as well so you can compare the cost of outsourcing versus internal IT services.
• Negotiate – Contracts often contain clauses allowing you to renegotiate as your requirements change so do not be afraid to push for a reduction if you feel you are paying for resources you no longer need.
• Look for immediate cost savings – Running a quick analysis of your metrics can uncover quick savings such as opting from a gold to a bronze level of service on systems you infrequently use
• Use IT to change the business rather than run it – Bring together all your data on performance, cost and usage so you can understand how to use more of the budget investing in resources that can drive revenue and margins.
In short, it’s easy to put an end to all the uncertainties in your outsourcing contracts. Take a collaborative approach to finding the answers you need. Knowledge is power.
Colin Rowland is VP EMEA of Apptio, a provider of on-demand technology business management solutions.