IT departments should set outsourcing suppliers service
targets that measure the genuine impact of IT to the business,
rather than focus on technical performance such as availability of
IT systems and helpdesk response times, Gartner said last
week.
Delegates at the
analyst firm's IT and outsourcing summit
heard that organisations fail to reap the full benefit of
outsourcing because they inundate suppliers with performance
metrics, but fail to identify which ones are genuinely important
to their business.
Gartner research director Gianluca Tramacere said businesses
often used service level agreements (SLAs) to lock down every
aspect of an outsourcing contract, but sometimes lost sight of what
was really important to the business.
"The problem we have is that organisations tend to have too many
SLAs. And apart from having too many, they tend to use them in an
ongoing way without reviewing them," he said.
"They do not look at whether they are measuring the right
things."
Tramacere cited the example of a luxury car manufacturer that
consistently failed to meet its product targets because of IT
problems.
It solved the problem by replacing a complex array of SLAs with
two requirements: the production line should not stop for more than
15 minutes at a time or more than 120 minutes in a month.
But Gartner warned it was a mistake for organisations to view
penalties as a way to squeeze cash from suppliers. "The idea is to
drive behaviour, not to get your money back for poor service" said
Tramacere.
"If the fault was in March but the supplier continues to perform
in May, June or July, let them earn half of the money back. If they
continue to perform let them have the other half. At the end of the
process you have an improved service and you have spent no extra
money."
Gartner said that about 20% of the annual contract value was the
right level for any penalty. It said it might be cheaper for
suppliers to absorb smaller penalties rather than fix a problem,
but said penalties any higher than 20% would damage the outsourcing
relationship.
Six steps to managing service level
agreements
- Many organisations often leave defining and managing service
level agreements to the IT department, but it is essential all
affected parts of an organisation be involved
- Define your key business processes
- Measure the activities that are critical to supporting the
business
- Examine the measured results to identify problems and root
causes
- Make the necessary corrections
- Continuously monitor and improve your process to maintain your
gains
Source: Gartner
Outsourcing 'derailed'
by focus on ROI >>
Most companies have SLAs for data protection >>
More on
outsourcing >>
Gartner website >>
Gartner Outsourcing Summit
Gartner Outsourcing & IT Services
Summit
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