Outsourcing value for money

John Parker, director of improvement services at The Corporate IT Forum

Companies spend significant proportions of their IT budgets on outsourced and offshored service providers.

It might therefore surprise many firms that technology directors participating in user group The Corporate IT Forum still struggle to find out if they are receiving true value from their contracts compared with other large businesses.

When it comes to benchmarking outsourced contracts, companies are usually trying to find out one of two things: whether their existing contract is still good value for money ­ businesses commonly set review or break points to assess performance ­ or how a potential outsourced partner actually performs against the market, compared with their claims.

IT users want to be able to cut through any supplier hype, gain objective information and understand if they are receiving value for money. It sounds simple, but unfortunately it is often anything but.

Technology leaders find it very difficult to gather the evidence they require to discover whether or not their outsourced contracts are truly competitive.

Benchmarking supplier performance has traditionally been a lengthy and expensive process.

Either it is carried out by a consultancy firm, which produces a static report detailing a company’s rank compared with other businesses, or the supplier has offered to undertake an evaluation.

With this in mind, IT chiefs participating in The Corporate IT Forum ­ an organisation formed from more than 150 large businesses ­ said they wanted a new way to contrast their outsourced contracts against their corporate peers.

They said they wanted a different approach to benchmarking, one that was simple to carry out, cost-effective, reliable and, above all, independent. They also told us that they wanted more control over the results.

Users wanted to be able to probe the benchmark results further and ask questions about their suppliers and their performance in specific areas of service delivery.

It was for these reasons that two years ago, six Corporate IT Forum members joined forces to design, develop, finance and finally pilot a new peer-to-peer outsourced contract benchmarking service ­ a service that is now offered to the wider corporate IT community.

Continuous Performance Improvement for Outsourced IT Services (CPI OS) offers an independent method for IT users to compare and benchmark areas of their outsourced IT estate.

All participants are large corporate users of IT, and the benchmarking comparison takes place between organisations that have outsourcing contracts of a similar size, scale, scope and complexity.

CPI OS uses the same established process as the wider CPI Enterprise service, which for the past seven years has been helping users to assess how IT is being delivered to their business.

The Forum expects that CPI OS will encourage the market to be far more transparent, and hopes it will
mark an important step change in the relationships between users and suppliers of outsourcing services.

John Parker is director of improvement services at The Corporate IT Forum. For more on Continuous Performance Improvement for Outsourced IT Services, visit: www.cpi-forum.com