Outsourcers and Clients: Cultivating Common Ground with Metrics
At a customer site the other day we saw the Data Center Manager walking down the corridor looking exhausted. We stopped to ask him if he was OK. He looked at us, shook his head and told us he was on his way to a meeting with his outsourcer. He went on to explain that these meetings were typically stressful. No one was on the same page and he felt tired before even entering the room. We looked over and saw a group of people with the same looks on their faces approaching the same meeting room. We guessed they were employees of the outsourcer and that they too felt the same stress. It seemed unpleasant for all involved and we wished we could help.
Why does this situation exist?
Here is the Data Center manager’s perspective: he has engaged with the outsourcer to run some or all of their IT operation. He wants the outsourcer to increase data center efficiencies, drive continued innovation, as well as run the daily business at the lowest possible price.
And the outsourcer? They want to sell services by maintaining and increasing the retention of their clients while protecting their margins.
At first glance their goals seem miles apart: one wants to decrease staffing costs and the other wants to sell staffing. So, what is the common ground? Well, from both perspectives, if the goals are efficiencies, innovation and unparalleled service, then we can turn this situation into one of harmony.
Too Much Left to Perception
Market share is key in the outsourcing business. However, clients strategically negotiate Information Technology Outsourcing (ITO) contracts to drive down pricing, transform existing IT infrastructures or gain new relationship benefits that put a squeeze on market share.
With this has come a glut of aggressive outsourcing competitors determined to accelerate growth strategies and new win rates of clients. At the same time, clients are showing no loyalty to any one provider. In fact, they will change providers quickly if necessary, especially if they don’t have demonstrable proof of a strong ROI. In the absence of proof, the client understandably draws his own conclusions. This begs the question: why would an outsourcer let the fate of their business hinge on the client’s subjective interpretation of its value? In today’s ultra-competitive business environment, it’s always in the outsourcer’s best interest to collect metrics that capture how their services provide value.
Turning the Subjective into the Objective
The foundation of providing objective data is measurement and representation. Today, representation is usually in the form of a dashboard visualizing KPI’s. These dashboards are based on product usage statistics representing technology usage. KPI’s show you where you are, but we also want to know what efficiencies and innovations are possible to satisfy a client’s need to see value. This is where the level of detail of data capture becomes important. We want to have enough data to be able to make recommendations, and in turn, demonstrate the impact of these recommendations. Many ITO customers today favor a provider that can provide this detail demonstrating delivery excellence.
Metrics Beneficial Regardless of the Contract Type
If we look at the actual contracts, many times the infrastructure is outsourced. This means the outsourcer manages the installation and maintenance of all the hardware decisions and often the software decisions as well.
Another model is when the client is actually the decision maker on all software decisions. Items like application development are left to the client, with the outsourcer providing the technical installation and implementation of the technology.
Both models have an interest in increasing technology usage and value along with increasing efficiencies. Even where the client is the decision maker on technology, the outsourcer can provide suggestions to improve the customer’s productivity, thereby strengthening their position as an ITO leader. This ultimately leads to an increase in outsourcing engagements or better positioning to fend off a replacement.
Finally, a Program to Bridge the Gaps
The Compuware Value Improvement Program, a.k.a. the VIP, can help bridge the gaps between the client and the outsourcer. Through powerful, built-in analytics, detailed product usage statistics, and elegant visualizations, customers have a full understanding of staff utilization, detailed function usage, and hence efficiencies that can potentially be gained through best practices. Ultimately the ITO provider is recognized by the client as a valuable partner in the service delivery and enablement of the client and their business. So, next time the meeting will be productive and stress free.
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