We think many outsourced IT providers are on a different planet when it comes to helping you get the best return from every pound you spend. Sadly, most outsourced IT providers simply see you as a monthly billing opportunity that they need to maximise for the duration of the contract. They have no desire to make sure you are getting the maximum value out of every penny you spend with them.
This article focuses on the frustrations we’ve heard from newly onboarded clients who’ve moved to Bedroq after bad experiences with other providers. We’ve summarised the top three things to watch out for here.
Step 1: Make sure your IT outsourcer has water tight processes
For one energy firm, it kicked off when their new CFO started and found that their IT outsourcer was billing them for 50 laptops in their London office where they only had 25 consultants.
The CFO commented “the feedback from the outsourcer was that the 25 laptops must have been stolen and that it was our problem. I was disappointed in the attitude of our so-called partner.”
“When I challenged them to prove this it transpired that the partner was taking kit off-site without anyone signing for it; they were billing us for new starters that hadn’t started and continuing to bill us for people who had left the business long ago”.
At first glance it looked like out and out fraud, but it was just incompetence and sloppiness.
Step 2: Incentivise your partner to reduce your IT spend
For a global sales and marketing organisation, the contract for one particular 100 megabyte internet line had expired two years ago, but the provider never went out to tender to see if they could get a cheaper or faster alternative.
The Chief Operating Officer stated, “although only a small example, this in my eyes, is sloppy and disrespectful of the money we are spending with them”.
Adding “nobody said to me hang on a minute, this is up for renewal, we can go out, and we can see whether we can get in a new contract and save you a few hundred pounds a month. If you scale that to the many lines we have under contract with this partner we could have realised sizeable monthly savings. And that is just one small element of the service we have with them”.
Step 3: Make sure your billing reflects how you run the business.
One Finance Director had a real bugbear with billing from his then outsourced IT provider. He explained,
“since we signed with them, we had changed how we report profit and loss. After switching to reporting on a business unit model, we needed invoicing broken down to reflect this. Unfortunately, with our old IT partner we only got a global invoice for the total service agreement for the quarter.”
He added, “it all kicked off when we had a big dip in numbers of agents in our New York office, but our IT costs were continuing to rise across the whole business. I couldn’t unpack their global invoice and had no visibility of where the costs were coming from”.
“So I pressed the reset button and got the partner to audit every business unit to understand the kit we had so that I could compare that with what they were charging us for versus our budget.
For us, it’s visibility, both in terms of being able to look at it from a cost per user basis, a fixed versus variable split, and the whole piece around, the cost for each particular business unit.
With this level of transparency, we were able to start understanding why IT cost £120 per user per month in New York compared to £150 in London; allowing us to ask the question what are we doing in London that we are not doing in New York”.
How do you make sure you don’t make the same mistakes?
Every business can get smarter in how it spends money on IT. Unfortunately, in most cases, your IT outsourcer simply sees you as a monthly billing opportunity they need to maximise for the duration of the contract.
Ask yourself – do you believe your business is getting good value from its spend on IT? Do you feel in control of the costs involved? Do you have full visibility of the costs of your outsourced services? Is your partner always looking at how they could eliminate waste, overcapacity and duplication?
Ultimately, you want to feel like your IT provider has your best interest at heart but if you feel this isn’t the case, then like any long-term relationship, you’ll end up regretting ever hitching up with them.
So, if I were to recommend just one thing, it would be to include a service wrapper into your contract that incentivises the partner to reduce, over time, spend on IT. Then, for the duration of the partnership, the dialogue is focused on delivering cost savings based on an agreed set of cost reduction initiatives and tracking hard ROI saving for any new IT projects.
What next?
In my previous two posts, “Three ways to guarantee you get great service”, and “Three ways to tell whether your IT provider is a strategic partner”, I mused on some of the frustrations I’ve encountered recently. In this piece I hope I’ve shown that lack of incentive and partnership can be a breeding ground for escalating costs, poor return on investment and even fraud in extreme cases.
We see ourselves as an IT Performance Management business, we review the current performance of IT in our clients’ businesses and provide clear steps to improve it. Investment alignment is just one of the Eight Rocks we believe are fundamental to having a robust technology framework.
If you’re in any doubt as to what you should be spending per head and what you should be getting back from that investment, then let us run a short diagnostic to identify areas of improvement.
Get in touch with Mark Flynn, [email protected]; 07948 611697