IT outsourcing as we know it is more than 15 years old, yet service quality remains a big concern for CIOs. The results of the 2011 IDG Enterprise Outsourcing and Service Providers Survey bear that out: While 44 percent of the 1,176 IT leaders who responded to the online survey said their service-level agreements (SLAs) were tighter than they were three years ago, they cited poor-quality service as the top risk of IT outsourcing-ahead of security, loss of internal knowledge and hidden costs. Lax internal governance and an overreliance on contractual obligations may be to blame.
When Barr Snyderwine took over as CIO of trade show and special events company Hargrove in 2009, he thought he had a solid outsourcing strategy in place-a network-management deal with a reputable provider, offshore and domestic application-development outsourcing, and a business-process outsourcing (BPO) agreement in India. He crafted seemingly solid contracts and SLAs for each provider. The BPO work was straightforward. The time difference occasionally posed a challenge, but service was decent and the costs were low. Outsourced IT was a different story. “If the server is down, they’re responsive and they’ll have someone here in four hours. But it’s still four hours,” he says. “And when someone [leaves the provider], we’re left with a lack of knowledge of our network.”
On the application-development front, service quality has been variable. “When we weren’t clear enough with our requirements, it was a never-ending money pit,” Snyderwine says of one offshore outsourcing relationship.
While strong SLAs may be adequate for some work, they’re woefully insufficient for managing outsourced services. “If you’re buying a box or replacing a drive, SLAs work great,” says Snyderwine. “But when you’re outsourcing services, it’s still all about people. Governance is key.”