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Outsourcing: finding the shared interest of customer and provider

The past two years in the Slovak Republic can be typified by large outsourcing projects. With these types of contracts, both involved parties all too often focus excessively on costs and so lose track of the very point of such long-term co-operation: the shared interest of the customer and the provider.

At first sight, with the type of contract that strictly follows a costs target, the shared interest is lost. The customer is trying to save money, while the provider is trying to make it. If the shared interest is lost, then the relationship on both sides becomes unbalanced: a “cash cow” on one hand and a sort of „protection money“ on the other. Both the customer and the provider can find themselves occupying such an unflattering role. The outcome will essentially be the same. So let’s look at ways to help prevent negative impacts.

Lies, bigger lies, statistics

The typical shortcomings that we can encounter when it comes to outsourced projects include an absence or inappropriate structure of statistics of the organisation that wants to outsource. Figures are the basic requirement for effective management of services and for a balanced relationship.

Even nowadays with version three of the best management practice system ITIL® available, companies still lack service catalogues, which represent the main source of content for the interpretation of reports. The simple categorisation of incidents, work orders and requests without a link to specific services, or at least configuration entries, does not provide a sufficient picture of the tasks that have to be allocated. A risk is posed by wrongly estimating the involved work, price, and by then not meeting the agreed SLA parameters.

Meaningful statistics are founded on the structure of services, or at least configuration entries, and managers use them to monitor the qualitative (satisfaction, success of solution), quantitative (events, incidents, problems, changes, etc) and time values (meeting solution deadlines, the duration of processes, measured availability and so on).

Use of available work capacity

A year ago we published a practical article on these pages (IW 6-7/2012) about what is probably the most fundamental component of TCO, i.e. the cost of labour. We looked at the issue of setting the cost of time. Very few customers evaluate the cost of time comprehensively, and this then produces the risk that unreal expectations of savings are communicated by the provider.

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Michal BróskaMichal Bróska Director of Product management michal.broska@posam.sk

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