ENTERPRISE MANAGEMENT ASSOCIATES®
by Lisa Erickson-Harris, Research Director, EMA
Many companies are already saving money by outsourcing their IT service desk and even more are considering doing so. The best outsourcing arrangements result when both the enterprise and its outsourcing service provider have taken the time to evaluate and agree upon key performance metrics. Early planning can be time-consuming but will result in a more meaningful business relationship and higher-quality services. Additionally, early planning can also result in stronger business processes and an easier time quantifying short and long-term financial results.
So, you have taken the plunge and outsourced the company’s IT service desk. Whether it’s been weeks, months, or years a regularly scheduled assessment of the service level agreement should be completed and appropriate adjustments made. Change may be necessary in the company’s business processes, expectations, or points-of-interface with the service provider. Or, adjustments may be needed in the level or type of service that is being delivered by the service provider. Baseline measures of operational performance and financial metrics are critical at this stage of the business partnership in order to evaluate actual performance and to continuously challenge the cost/performance ratio.
During the period of establishing a relationship with an outsourcing vendor, there are often a few bumps in the road. Sometimes the outsourcer’s personnel receive inadequate training and orientation to the corporate culture, philosophy, or infrastructure and more training is needed. In other situations, the particular service provider is not appropriate for the type of clientele the company supports. For instance, the outsourcer may be geographically oriented creating a bias that slows down service resolution. Or, the outsourcer may simply not be in a position to relate service issues to the core business of the enterprise. These types of challenges can be managed; enterprises must be tuned into user and customer experiences by querying them about satisfaction levels with the service desk before and after outsourcing. Call volume, time-to-resolve issues, and other metrics that are meaningful quantifiers of services should be known. Doing so enables executives to determine when performance is on par or better than it was prior to outsourcing.
The service desk—especially front-line personnel—represents the image of your company internally and externally. If customers are not satisfied with service, then renewing a contract with an existing outsourcer is out of the question. Customer satisfaction is the number one priority. No one wants lost revenue and, even worse, lost customers due to a negative experience resolving a technology issue. The best way to guarantee customer satisfaction is by requesting a double-blind confirmation of satisfaction. If a third party is brought in to calculate customer satisfaction, then neither the enterprise nor the outsourcing vendor can bias the results.
Also, corporate satisfaction needs to exist. Developing the cultural/corporate fit between the company and the outsourcing vendor often requires new thinking from both sides. The companies that spend time defining what their roles should be and the processes and measure results carefully across the business are often rewarded with a successful outsourcing experience. It may seem overly simplistic to consider that a common understanding of the business relationship and shared goals would be important with successful outsourcing, but it has again and again cropped up in the discussion with large-name firms that have undertaken outsourcing.
Devising key performance indicators that create accountability for both the provider and the recipient of service is the best means for documenting and tracking service performance. Some companies utilize penalty clauses in their contracts that become applicable in situations where an outsourcing vendor is not able to deliver on certain pre-defined performance indicators. These clauses are useful tools in re-structuring and sometimes exiting business relationships that are not working. In addition to penalty clauses, it is useful to establish a consistent set of questions that must be asked and answered in order to measure progress and prove that outsourcing staff can handle the complexity of the calls with pre-designated levels of accuracy. The process of establishing these measures takes time. Once established, some companies conduct quarterly assessments or monthly steering meetings to evaluate performance.
The business of outsourcing any corporate function—including the service desk—is complex. It’s best to determine the business outsourcing strategy and readiness, assess and identify real internal costs, and determine requirements for service quality before entering into any outsourcing agreement. Once this has been accomplished, use the resulting tally sheet to track and reassess short and long-term financial impact, customer satisfaction, and quality results on a regular basis afterwards.
Advantages can only be maintained through continued monitoring of service quality and customer satisfaction. To that end, performance metrics must be established and monitored. Enterprises must stay alert to changes in skill-sets and staffing on the part of the outsourcing vendor. These skills may be slipping as the outsourcing vendor experiences employee turnover or they may be maturing and provide an opportunity for the enterprise to further capitalize on services provided by the outsourcing vendor (i.e., perhaps the outsourcing vendor has increased its expertise and can handle many level two calls in addition to level one calls). Changes such as these offer opportunities for improvement and sometimes expansion of services.
Understanding business processes and business culture in both the outsourcing vendor organization as well as the enterprise are “soft deliverables” that are difficult to quantify. Smoothing the edges between organizations is often critical to a successful and long-term outsourcing arrangement. Succeeding in these areas is all about up-front planning and ongoing cultivation of the partnership. Making the wrong choices in the arena of outsourcing can be very costly. The investment in tracking key indicators over time and working toward a net positive balance on the tally sheet will help to ensure that you are receiving the value you expect. Tending to the “intangibles” is equally important.
Why outsource the service desk?
- Reduce labor costs and headcount
This is not necessarily to eliminate all staff, but minimize first-level support costs
- Improved service levels
Service providers can sometimes take advantage of the economies of scale by serving many customers with similar needs
- Not a core competency
Investments in routine service desk service can be a distraction from more strategic corporate initiatives
- Increased flexibility
Staff can be re-focused as needed with the benefit of front-line support handled
- Leverage outsourcing vendor’s expertise
Enterprises may not need to invest in certain types of intellectual capital, but rather depend on an outside firm to meet that need