‘Time to bin SLAs’ as IT buyers focus on costs over benefits ⁰

More than half of the UK’s technology buyers claim that their main focus when procuring IT services is on keeping down costs rather than achieving specific benefits for their business, according to a report from technology company MooD International. The report, based on a study of just 160 IT directors and managers, also claims that revenue generation and growth are named as the most important initiatives by the remaining 48 percent. Over three quarters (76 percent) of respondents said that their firm’s expectations are not aligned with what suppliers believe they are contracted to deliver. The report claims this mismatch can be traced back to service level agreements (SLAs). While 77 per cent of suppliers focus on business benefits to a great or reasonable extent, 64 per cent of contracts are either entirely or mainly measured on transaction based SLAs.

Respondents also said they are feeling the pinch from both sides with fifty-eight per cent claiming the it has become more difficult for suppliers to deliver services within the agreed budget. Given this it’s perhaps not surprising that nearly a third (30 percent) believe their internal clients’ satisfaction rates have declined over the last year.

IT directors and managers also feel their role is becoming more complex and difficult to manage. Fifty-seven per cent said that their role has become much or slightly more difficult over the past year or so. And this is impacting on their job satisfaction, with 46 per cent saying their satisfaction with their job has declined slightly or significantly.

George Davies, CEO, MooD International, comments: “SLAs are outdated and should be thrown on the scrapheap; the outsourcing world has progressed. Suppliers need to move on from two-dimensional management of service performance to a third dimension – the ability to clearly understand the business impact and achievement of business outcomes. Automation and digitisation should be the driving force behind activity and transformation as they will improve processes, drive out cost and importantly, accelerate innovation and line-of-sight to business value.”

“IT directors and managers are getting pressure from multiple directions when it comes to outsourcing. On one side they’re facing pressure from their internal clients to show clear business value, whilst driving out costs and demonstrating innovation. On the other side they have suppliers who are trying to make a fair profit in an increasingly complex role. Outsourcing can bring benefits that are felt at all levels of a business, from the data centre right up to the CIO, but if these benefits are not communicated properly then the improvements being made can be missed. There needs to be a common view which joins up all the parts of the supply chain and can identify gaps – and resource-wasting overlaps – ensuring there is transparency across the business and not inefficient silos.”