As businesses focus on growth and evolution, it’s easy to become complacent with IT outsourcing providers. Often, service providers become so entrenched that it can be difficult to measure their effectiveness. Don’t let this complacency stop you from taking an objective view of your IT partnerships and evaluating them critically.

This type of IT service and cost analysis ensures alignment with current operational requirements and guarantees the organization is getting the best possible value and service in an ever-changing technological landscape. Here’s what a thorough evaluation of an incumbent IT outsourcing partner should look like.

Cost and service analysis

During an audit of your current contracts and invoices, the first metrics to quantify are cost and service. A comprehensive analysis in this area not only provides clarity on your financial commitments but also confirms you’re receiving service that aligns with those costs consistently. Begin your evaluation with the following elements:

• IT Service quality evaluation: Evaluate the quality of services provided by your outsourcing partner. Examine existing service levels, responsiveness, and problem-solving effectiveness. Analyze whether the services are customized to meet your specific business needs and whether they correlate with the cost.
• Comparative IT cost assessment: Thoroughly assess the financial aspects of your outsourcing agreement. Compare your current costs with industry standards to determine whether you’re receiving a fair deal. Windsor Group highly recommends getting outside bids to ensure an apples-to-apples comparison. Analyze the breakdown of IT costs to identify potential areas for expense optimization.
• Competitor comparison: Compare your outsourcing partner’s services with those of competitors in the industry. Consider factors like technological advancements, service scope, and customer satisfaction metrics to determine where your provider stands. Score them objectively and quantify the assessment.

Relationship and trust

The qualitative elements of the relationship between your organization and your outsourcing partner are pivotal in the success of the partnership. These assessments should be measured in operational efficiencies, outcomes, and interactions, including the following:

• Communication: Assess the frequency and effectiveness of communication between your organization and the provider. Evaluate how responsive your outsourcing partner is to your needs and concerns and the fluidity at which they operate within your environment.
• Transparency: Transparency should involve clear reporting, open discussions, and an understanding of the provider’s efforts. Do you know what your current IT partner does for you, how they do it, and which outcomes are attributable to their efforts? Do they give you a thorough explanation of their cost factors and ways to reduce costs?
• Strategic impact: Consider how the relationship impacts strategic planning, crisis management, and long-term business goals. A trusted partner is more likely to be integrated into your strategic initiatives and viewed as an asset, not an obstacle.
• Pain points: Identify both real and perceived pain points in the relationship. These points can be issues related to communication, service quality, or alignment with business goals. Are they addressable? If so, is there dialog around them?

Experience and expertise

Experience and expertise are key factors in the success of a partnership. While you might feel well apprised of your current providers’ abilities, it’s important to analyze your IT services and their costs from an objective standpoint. Consider the following aspects:

• Track record: Analyze the provider’s track record, focusing on their experience with other companies or within your industry. Understand their success outside the context of services you’re familiar with.
• Technology trends: Evaluate your partner’s efforts to incorporate emerging technology into your operations, and determine whether they provide solutions that enhance your business. Common areas to investigate include applications for artificial intelligence (AI), machine learning, generative AI, cybersecurity, and experience level management.

• Innovative solutions: Assess your provider’s capability to offer innovative solutions that align with your business objectives. Are they capable of bringing comprehensive solutions to the table or mapping out new IT imperatives to support your business?
• Adaptability: Gauge your provider’s ability to adapt to market trends. Are they nimble? Do they empower you to evolve quickly? A partner who can adjust their services and strategies in response to changing industry dynamics is more likely to contribute to your long-term success.

Incumbent IT providers demand scrutiny

While an internal assessment of IT outsourcing partnerships can be valuable, there’s always concern about the complexity of an audit and the potential for inherent bias. Here, an IT advisory partner is indispensable. Working with an external advisor provides a fresh perspective, uncolored by existing relationships or internal politics. These experts know the latest industry trends and opportunities, plus do the legwork in evaluating your IT outsourcing arrangements thoroughly. It’s an investment that could bring you new technologies and better service while saving you millions.

Assessment complete; now what?

You have several choices once the assessment of your incumbent is complete:

1. Everything is good. No action is required.
2. Need improvements? Renegotiate with the incumbent.
3. Significant gaps? Go out to bid.

Your advisory partner can help you with the latter two alternatives.

For help analyzing your IT services and costs, contact Windsor Group at windzr.com.