Five Metrics for Managing IT Outsourcing

IT takes on a new role when the organization turns to cloud, SaaS, and outsourcing. Instead of being managed, IT finds itself in the role of manager, of being the group charged with enforcing SLAs and governance policies as well as integrating the results with the systems and data remaining in-house and, ultimately, ensuring the expected business outcome.

The IT outsourcing market growth has slowed recently but expect outsourcing in one form or another to be a part of almost every organization’s IT strategy going forward. IDC predicts the global IT outsourcing market will grow at a five-year CAGR of 2.9%, reaching $128.4 billion in 2014, more if you include other forms of outsourcing—cloud, SaaS, PaaS, IaaS—too.

The key to managing these providers is metrics. The business school truism—you can’t manage what you can’t measure—holds equally true for IT outsourcing.

And the measurements with which you will manage the outsourcing vendors come from the vendors. The metrics they provide can be a critical management tool for managing both IT and the business itself. “Our metrics and measurements help customers in better designing, planning, and deploying their IT investments,” says Rodrigo dos Santos, Senior Managed Services Manager, CPM Braxis Capgemini, a leading remote infrastructure management outsourcing (RIMO) firm.

IT outsourcing is a highly measurable service where the right metrics can be used to manage not only IT but the business itself. 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 SLAs and enforce them. At the same time, you can use the metrics to gain insight into the state of the business processes themselves, not just the systems.

Start by looking at the basics: number of service requests, incidents, events, response times, changes, problems resolved, problems escalated, and time to resolve. For application outsourcing you can look at function points, lines of code, coding policy violations, and such.

Even with a RIMO provider you can monitor applications by looking at the performance of the systems on which they run and infer business process-related metrics, such as new contracts opened, payables collected, time to close customer service requests, the number of service installations scheduled, and more. A good outsourcing vendor can, when authorized, see into the applications running on the IT systems it is managing. Almost any business process can be measured by correlating and monitoring the IT components that support it.

Five key IT metrics to start with:

  1. Number of service requests
  2. Service response time
  3. Time to resolution
  4. Length of system downtime (impacts customers, productivity, opportunities)
  5. Frequency of system downtime

From here dos Santos suggests you can interpolate a wide range of business process metrics. These might include number of new contracts signed, volume of customer service calls completed, or the number of credit requests approved. These and more tell you not only about the state of the systems but of the related business processes too.

Every competent cloud, SaaS, and outsourcing provider should track and monitor a variety of metrics. When selecting a provider look closely at the metrics it captures and shares with the client. Also look at examples of its reports and analysis as well as how KPIs are benchmarked against industry norms. In the end, what you know about the performance of your IT infrastructure can also tell you much about your business.

 

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