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The global IT outsourcing market isn’t growing as fast as it has in the past. Still, an IDC report published last year predicted that it will expand at a five-year CAGR of 2.9 percent, reaching $128.4 billion in 2014.
The slowness probably results from the prolonged economic distress and the growth of options such us cloud computing and software as a service (which are basically forms of outsourcing too). Eventually most organizations will use some level of IT outsourcing in one form or another.
When you do, be aware that the metrics that the outsourcing vendor offers can be a highly valuable management tool. “The measurements help customers in better designing, planning, and deploying their IT investments,” says Rodrigo dos Santos, senior managed services manager with CPM Braxis Capgemini, a leading IT outsourcing firm.
But the benefits extend beyond IT decision-making. Your vendor should be able to provide metrics that can help you manage the business itself.
IT outsourcing is a highly measurable service. The trick is to whittle down the abundance of IT system and application measurements to a handful of key performance indicators (KPIs). These you can use to craft effective and fair service level agreements (SLAs) and then enforce them. At the same time, you can use the metrics to gain insight into the state of your business processes themselves.
Start by looking at the IT basics: the everyday stuff of incidents, events, changes, problems resolved, problems escalated. Here are five key IT metrics to start with (feel free to add your own):
Then take it to the next level. A good outsourcing vendor can, when authorized, look at the applications that are running on the IT systems that it manages. You can monitor applications to track business-process-related metrics, such as new contracts opened, payables collected and posted, and time to open and close customer service requests.
CPM Braxis’ dos Santos adds three more business process metrics that you may want to monitor in this way: number of orders delivered, number of customer service calls, and number of credit requests approved. And these are just a start.
By this point, you’ve moved from a narrow focus on IT to the realm of business operations and tactics. This is information that can be interpreted and used to shape business strategy execution. Almost any business process can be measured by correlating and monitoring the IT components and activities that support it.
Every competent outsourcing provider tracks and monitors a variety of metrics. But not all providers readily share those measurements with their clients. When you’re selecting a provider, it pays to look closely at the metrics it captures and, just as importantly, at the metrics and KPIs it shares with clients.
Also look at examples of its reports and analysis, as well as how KPIs are benchmarked against industry standards and market trends.
In the end, what you know about the performance of your IT infrastructure can also tell you a lot about your business.