Back in 1995, when Computing was first reporting a massive upsurge in public and private sector outsourcing deals, we also revealed that UK businesses such as The Body Shop and Sainsbury's were using a web address for commercial objectives. Today it would be anathema for UK companies not to use an internet site to help sell their services and products. But 10 years ago many organisations signing long-term outsourcing deals would have struggled to visualise the web's potential.
Such information revolutions can cause problems for IT directors, particularly for those who have tied themselves - both in price and responsibility - to a specific supplier. For a start, prices change as technology demands and requirements alter over the period of a contract, says Neil Barton, vice president for benchmarking and measurement at Meta Group.
'When you sign a deal for seven or 10 years, you have an issue of pricing,' he says. 'There was a big peak for companies keen to outsource elements of their IT services, and executives need to be sure that they're obtaining a competitive market price.'
IT directors would be well advised to write in a benchmarking clause during the term of a contract.
A benchmarking clause allows businesses to analyse market prices and make use of the latest trends. It also allows companies to undertake a thorough health check on service levels.
'After two to three years of a contract, it's unlikely to be true that all the roles and responsibilities are as expected,' says Barton.
Almost 80 per cent of outsourcing contracts will be renegotiated at some stage, according to Gartner.
The analyst says that half of technology leaders believe lack of flexibility to be the biggest issue leading to contract arbitration. Improving the customer/supplier relationship and the need for cost reduction were also identified as key areas for improvement. Two-fifths of IT managers believe they pay too much for outsourced services.
'Because businesses are trying to save money, the price is often too expensive and they find service level agreements are not appropriate - and not even defined,' says Gartner analyst Gianluca Tramacere.
'Benchmarking should be agreed before you sign. Select the referee and share the cost with the service provider.'
Travel company Thomas Cook works with a variety of external service suppliers, such as PinkRoccade, Accenture and Syntel.
Thomas Cook's IT director, Carl Dawson says benchmarking is vital for the user and the supplier, who can use such agreements to track market pricing. 'There's an incentive for the provider, too - but make sure it's built into your contract,' he says.
Successful benchmarking for the user is a matter of concentrating on the finer details, says John Grieve, IS client manager at the Highland Council (see below).
'It's about how you measure and how you're going to get value, but you really have to think of yourself as an external service provider,' he says.
Case study - Highland Council
The Highland Council has put mechanisms in place to make the most of a technology outsourcing contract.
Formed from the amalgamation of nine smaller councils in the mid-1990s, the unitary authority is responsible for a range of local public sector issues in the Scottish Highlands, including education, social work, housing and transport.
John Grieve, IS client manager at the Highland Council, says the authority recognised quickly that modern computer systems would be essential. 'We then needed to think about how we would be best placed to achieve our aims,' he says.
In 1997, the council brought in consultant KPMG to undertake a benchmarking exercise. KPMG's analysis of the existing IT capability revealed that the authority's mainframes were running at a reasonable level, but its distributed computing and networking provision was inadequate.
Grieve's response was immediate. Suppliers were invited to bid for an outsourcing contract covering all IT systems, including desktops, networks, mainframes, service desk and applications support.
The Highland Council evaluated bidding companies on quality of service and cost, and in 1998 selected Fujitsu Services as its outsourcing supplier.
'We wanted someone that was prepared to take on our staff and keep them in the Highlands,' says Grieve.
The contract provides IT to 4,000 users in 500 sites, and services up to 400 different applications.
The original KPMG benchmarking exercise was used to provide Grieve and his team with an awareness of expected service levels and system costs. 'We were looking for continual improvement,' he says.
In years four and seven of the 10-year contract with Fujitsu, the council made use of an external benchmarking review by local government user group Socitm.
The review provides a comparison with similar unitary authorities. It allows the council to check value and process delivery, and allows Fujitsu to change its prices in response to the market.
Grieve is happy for the benchmarking process to be in place. 'Fujitsu knows it has to justify its costs,' he says. 'Benchmarking is very easy to put in place, and conceptually simple. We've learned to be smarter and sharper.'
Even so, Grieve advises other IT managers to pay attention to the fine details when benchmarking.
'You have to be sure you're comparing like with like,' he says. 'We know where prices need to be constantly looked at, such as desktops. That's where we need to be vigilant.'
Fujitsu started installing the council's key corporate systems, including email, financial and payroll applications, in 1998.
From 2002 - and in partnership with Fujitsu - the council implemented the Digital Highland Programme, a scheme that allows for egovernment initiatives to be piloted.
'The programme is a series of projects that aims to change the way we do business,' says Grieve.
The outcome of the pilots means that ease of access has been increased for customers, and that one contact can now deal with the majority of requests without having to refer it on. This allows more effective resourcing of council staff to deliver better service to customers.
The council has an extensive network of one-stop shops, and has installed a service centre backed up with a customer relationship management system. Grieve says the council is also working on a new internet and intranet site.
'We can deliver technology out of the box in 90 days: it's about configuring IT so that businesses can make the most of it,' he says.
Autor: Mark Samuels
Quelle: VNUNet., 12.05.2005
