According to Gartner analyst Lorrie Scardino, CIOs often neglect to do the research needed to understand what services they really need from a third party. "Lack of adequate baselines going into an outsourcing deal is a very common mistake," says Scardino. "Take data center outsourcing. Without adequate benchmarks of the current service levels and the levels expected from the outsourcer, the deal tends to focus on cutting costs. But the company may have further expectations, and those arent included as part of the deal structure." The result, says Scardino: The company feels its getting subpar service.
To avoid this, make sure you detail your companys needs in a carefully thought-out contract that ties service levels to penalties and incentives. Scardino says there are two levels to SLAs: the technical nuts and bolts that tie the IT services together, and a further framework for tying those service levels to the business. "Often, the IT shop and the outsourcer believe they are doing a good job in meeting service levels, yet business units are frustrated because they feel they are not getting good service," she says. "The business units want applications to be available when they need them. They want to know how much its going to cost to make a change, and how long its going to take."
Not even an ironclad SLA will save you if you dont manage the process, notes Lucas of the Leukemia Society. "These outsourcers say they have this or that special management process, but its their methodology, their view of the world, and they dont walk around to the other side of the table." To make sure his goals are met, Lucas often brings outsourcing staff in-house, where they can be managed directly.
SchlumbergerSemas Stanhope requires outsourcers to undergo the same reporting methodology as in-house projects to make sure they are being completed on time and on budget. "We expect status reports, and we work through a standard set of metrics that we get monthly," she says. For the help desk, for example, reports include details on the number of calls per site, frequency and severity of incidents, and average time to resolve.
Heres the key: Just because youre outsourcing a project doesnt mean its no longer your responsibility. "Outsourcers dont perform magic," says Bill Shickolovich, CIO for Tufts-New England Medical Center. "People think outsourcers are going to wave a magic wand and make problems go away, but theyre not. At the end of the day, it comes down to which organization you feel comfortable doing business with, because these are the people you are going to have to work with and manage every day. If theyre not interested in your success, youre setting yourself up for failure."