IT Outsourcing Performance Study 2017 › lehrstuehle... · The study results show that the respondents’ primary objective of IT outsourcing is the improvement of customer satisfaction

© Horváth & Partners

Michael Gschwendtner

Stephan Kahl

Nils Urbach

IT Outsourcing Performance Study 2017

Report of Results

Bayreuth / Munich, July 2017


IntroductionIT Outsourcing Performance Study 2017

2

Despite decades of experience in outsourcing of IT services, the

successful realization of IT outsourcing projects is not a matter of

course for companies and IT service providers. Even 28 years after the

first major IT outsourcing project, we observe a high variance of success

in practice. Some companies fully achieve their IT outsourcing objectives,

others would rather reverse the contract and insource their IT again.

Sustainable success in a volatile environment can only be achieved if the

IT organization is able to “breathe” with the business and technological

innovations. Therefore, successful IT managers are constantly searching

for opportunities to improve the manageability and scalability of their

organization. One lever is the optimal design and implementation of the

sourcing landscape. Today, outsourcing is an integral part of the IT

operating model in many companies. Hence, it is critical for the

functioning of the entire organization.

This area of conflict is the starting point of the “IT Outsourcing

Performance Study 2017”, conducted by the professorship of Business

Information Systems and Strategic IT Management at the University of

Bayreuth and Horváth & Partners Management Consultants. The aim of

the study is to identify reasons and influencing factors for the large

variances of success of IT outsourcing projects.

Report of Results – IT Outsourcing Satisfaction Survey 2017

This study is the new edition of our “IT Outsourcing Satisfaction Survey

2014”. By using a similar survey structure and partly congruent questions,

we are aiming to compare the results of both studies and to analyze

trends and developments over time. In doing so, it needs to be

considered that different results cannot only be explained by different

points in time, but also by the different participants in the studies.

In this study, we include an outlook on the interdependencies between a

selected focus topic and the success of IT outsourcing projects as well.

In the new edition, the old topic “Cloud Computing” has been replaced by

“Digitalization” as we consider it to be of far higher relevance at the

moment.

We are pleased to present the results of our study in the following

document. We hope to provide valuable impulses for CIO’s, IT managers

and scientists with regard to the sustainable and successful realization of

IT outsourcing projects.

Bayreuth/Munich, July 2017

Prof. Dr. Nils UrbachStephan KahlMichael Gschwendtner


Management Summary (1/2)

3

This study explores indicators for the high variance of success in IT outsourcing projects which exist

even 28 years after the first major project has been conducted: 24% of 77 surveyed IT managers state

that they have satisfactorily achieved all of their IT outsourcing targets. 29% of the respondents have

missed at least one IT outsourcing objective

Expenditures on IT outsourcing are very low compared to the proportion of outsourcing: on average,

respondents spend only 24% of their IT budget on IT outsourcing, while an average of 46% of the IT

services are outsourced

The study results show that the respondents’ primary objective of IT outsourcing is the improvement of

customer satisfaction (75%), followed by IT modernization (72%) and cost reduction (68%)

By reaching the IT outsourcing objectives, the increase of service quality is reached most often (61%),

while cost reduction has been achieved satisfactorily by 53% and improvement of customer

satisfaction by 48% of the respondents

Support from external partners is particularly beneficial for achieving the IT outsourcing objectives of

cost reduction and IT modernization. Through external support, the respondents were able to improve

the realization of their objectives by an average of 10%

Outlook: according to the surveyed firms, there is no positive correlation between the development of a

digitalization strategy and IT outsourcing at the moment



Management Summary (2/2)

4

The responses of the 77 surveyed firms show the following interrelationships:

Firms with ambitious cost reduction objectives often miss these objectives: many firms (36%) aim to achieve a cost reduction objective of more than 10%. However, cost reduction is most successfully achieved (82%) when pursuing an objective of less than 10%. Cost reduction objectives of more than 10% have only been realized by 48% of the surveyed firms

Moreover, ambitious cost reduction objectives are detrimental to IT modernization and increases in service quality: respondents with high cost reduction objectives fail 11% and 23% more frequently when it comes to service quality and IT modernization compared to firms with lower cost reduction objectives

The analyzed cases show an interdependency between IT sourcing strategy and achievement of objectives. Furthermore, outsourcing frequency influences the achievement of the set objectives. 1st generation IT outsourcing tends to achieve higher cost reductions. Other objectives are reached more successfully during repeated outsourcing

IT outsourcing volume and success appear to be in opposite directions: while most of the firms with an IT outsourcing volume less than EUR 5 m reach their objectives satisfactorily, larger volumes lead to lower success rates

The results support our view that success regarding IT outsourcing significantly depends on the quality

of the operational implementation. Accordingly, in order to outsource IT services successfully,

processes and approaches need to be established allowing the selection of the right outsourcing

partner which can be contracted strongly and steered effectively



Contents

5 Report of Results – IT Outsourcing Satisfaction Survey 2017

Objective

Survey methodology and database

Survey results

Key findings and implementation support

Contacts


This study examines factors explaining the high variance of success in IT outsourcing projects


Outsourcing of IT services has been an established strategic

option for IT service procurement since the first major IT

outsourcing project by Eastman Kodak in 1989

IT outsourcing is the basis for the powerful IT service provider

industry with global revenues of USD 288 bn

Despite the expected maturity of the procurement option “IT

outsourcing”, companies continue to notice great differences in

the success of IT outsourcing projects

This study investigates factors that potentially influence the

success of IT outsourcing projects in order to identify explanations

for the observed variance

In the second part of the study, success or lack of success within

classical IT outsourcing is put in context with the affinity of the

organizations surveyed with the topic “digitalization”

Objective


Contents


Objective


Survey results


Contact


The study is based on the results of an online survey of 77 experts within the IT outsourcing environment


Survey methodology

Our research results are based on the responses of 77 experts within the IT outsourcing environment who participated

in an online survey conducted in 2016

The questionnaire covers the categories sourcing strategy, assessment of outsourced IT services, satisfaction with the

IT outsourcing providers and IT outsourcing objectives as well as digitalization. The questionnaire contains 25

content-related and 5 demographic questions

The responses have been analyzed by using descriptive statistics. Thus, the results describe the statements of the

sample. Generally valid conclusions require inferential statistical procedures on a larger data basis

The sample size varies between the different analyses, as not all respondents of the survey rated every single or

combined aspect/dimension

By surveying experts from business practice, we were able to collect the current “state of the art” of the object of

investigation and to achieve practical research results

Business

practiceScience

Expert survey

Practical research findings


Number of employees

Industry classification of respondents

n = 77, data in %

The survey participants are predominantly IT controllers and cover a wide range of industries and company sizes


Characterization of participants

< 500 m

EUR

9%

> 500 m

EUR

4%

n.a.

10%14%

< 100 m

EUR

< 50 m

EUR

40%

< 5 m

EUR

23%

n = 77

Roles of respondents

n = 77

n = 52

Total annual IT budget

2%4%10%

59%

25%

>200.000 <200.000<50.000<1.000 <10.000

CIO/ CTO/ Head of IT 5%

CxO 4%

IT Management Provider 3%

Others 18%

Middle Mgmt. (bus.)

48%

16%

IT Controlling

6%

Middle IT Mgmt.

Healthcare8

3 6

Public Sector

3

Service firms

Financial Industries

13

Transportation

20

Others

14

Automotive

4

6

Chemicals/Oil/Pharma

4Education

3

Consumer Industries

10

Utilities

6

Real estate

Media/Telecommunications


IT outsourcing expenses in percentage of the total IT budget

Experience with regard to IT outsourcing

The level of experience with regard to IT outsourcing as well as the preferred IT sourcing strategy is diversified


IT sourcing strategy

Characterization of participants

Best provider for each single IT service

Few providers for most IT services

One preferred provider for most IT services

e.g. „selective sourcing“ or „minimum amount of IT outsourcing as possible”

n = 77

n.a.

13%

76-100

3%

51-75

9%

26-50

17%

11-25

31%

0-10

27%

n = 77

*

**

***

**** n = 77

Single vendor***

6%

12%

Competition** 32%

Best of Breed* 34%

Others**** 16%

No IT outsourcing

18%

25%

X generation

ITO**

17%

10%

2nd generation

ITO*

n.a.Never before1st time ITO*

30%

*

**

First IT outsourcing project *** Second IT outsourcing project

More than two IT outsourcing projects

% of total


Table of contents

11

Objective


Survey results


Contacts



The study covers four central aspects


Relevance of IT Outsourcing1

Objectives and objective achievement2

Explanatory Approaches 3

Outlook: Digitalization4


Development of the last IT sourcing strategy

According to the majority of the surveyed firms, the development of an IT outsourcing strategy is of high significance


n = 76

More than

5 years ago

Between 3

and 5 years

4%

13%

30%

Between 1

and 3 years

1 year ago

12%

Never

41%

88% of the surveyed firms already developed an IT sourcing strategy; 71% even during the last three years

86% of the surveyed firms ensured to align their IT sourcing strategy with their IT outsourcing projects

1 Relevance of IT Outsourcing

Alignment of IT outsourcing strategy and IT outsourcing

projects

n = 63, data in %

14

86

Yes

No


Contract period with the largest IT outsourcing provider

Conclusion of the last IT outsourcing contract

Almost 70% of the surveyed firms signed an IT outsourcing contract within the last three years


68% of the surveyed firms signed

a new IT outsourcing contract

within the last three years

Only 17% have not yet

outsourced any IT services

Currently, the contract terms with

the largest IT outsourcing service

provider usually run for two to five

years


32%

2-3 years

8%

4-5 years

44%

1 year

10%6%

6-7 years ≥ 8 years

Between 1

and 3 years

36%

More than

5 years ago

6%

1 year ago

32%

Between 3

and 5 years

9%

Never

17%

n = 69

n = 62


Planned IT outsourcing expenses in percentage of the total IT budget for

the next three years

n = 77

Sourcing percentage per IT service

The sourcing share per IT service

of the surveyed firms reaches an

average of 46%

The IT services „application

development“ and „Wide Area

Network“ (WAN) are outsourced

frequently

On the contrary, the IT services

„voice“ and „client“ are

outsourced the least

Compared to the share of IT

services outsourced, the share of

IT outsourcing expenses with

regard to the total IT budget is

very low at an average of 26%

The surveyed firms rate IT outsourcing as an important option with regard to procurement of IT services


n = 77


Outsourcing No outsourcing n.a.

60 51 51 48 48 43 43 40 35

2127 26 30 26 32 30 38 39

19 22 23 22 26 25 27 22 26

PrintingApplication

support

Data

center

WAN ClientVoice

(Mobile)

Helpdesk

100%

Voice

(Landline)

Application

development

% of total

n.a.

12%

76-100

4%

51-75

12%

26-50

19%

11-25

35%

0-10

18%


Outsourcing percentage per IT service over time

In the current study, the proportion of outsourcing per IT service is far lower compared to the study results in 2014


n= varies

Across all IT services, the participants of the current study generally outsource a lower share compared to the

participants in 2014

The decline is highest regarding the outsourcing of the IT services “WAN” and “Data center” with a difference of 23,

respectively 20, percentage points compared to 2014


43%

35%

58%

51%

48%

40%

48%

49%

43%

Voice (Landline)

56%

49%

Client

WAN

Application support

47%

Voice (Mobile)

Data center

Application development 61%

Helpdesk

Printing 58%

69%

60%

56%

74%

-12

-6

-16

-8

-10

-17

-3

-20

-23

∆2014 2017


Only about one quarter of the surveyed firms achieve more than 80% of their set IT outsourcing objectives satisfactorily

17 Ergebnisbericht – IT-Outsourcing-Performance-Studie 2017


21%

41-60%21-40%

10%

0-20% 81-100%61-80%

29%

16%

24%

n = 62; Angaben in %

Aggregated objective achievement across all IT outsourcing objectives

24% of the surveyed firms state that they achieved 81-100% of their set IT outsourcing objectives very satisfactorily

or satisfactorily

About one third of all firms only achieved up to 20% of their set IT outsourcing objectives as desired

Percentage of achieved goals

n= 63


Satisfaction regarding the collaboration with the largest ITO provider

The collaboration between IT

outsourcing providers and firms is

perceived positively by most

surveyed firms

This is also reflected by the high

satisfaction regarding the work of

IT outsourcing providers

The positive results can be

explained by the increasing

professionalization of IT

outsourcing providers, as they

have gained more experience

over the years

Satisfaction regarding the work of the largest ITO provider

Over half of the surveyed firms are satisfied or very satisfied with their IT outsourcing provider


Very dissatisfied

3%

Dissatisfied

8%

Moderate

28%

Satisfied

48%

Very satisfied

13%

Moderate

28%

Satisfied

57%

Very dissatisfied

0%

Dissatisfied

10%

Very satisfied

5%

Objectives and objective achievement 2

n = 60

n = 61


Less than half of the surveyed firms are satisfied with the outsourcing of application support and development


n = varies, data in %


24

7 9

18 18 21

8

46

67 6150 51

6341

38

31

24 19 24 2923

15 29

4351

7

10

6 11 9

76

65100%

Application

development

2

Application

support

Helpdesk

3

ClientWAN

3

Data center

3

Voice

(Mobile)

33

Voice

(Landline)

Printing

33

Satisfaction regarding the outsourced IT services

Very satisfied Satisfied Moderate Dissatisfied Very dissatisfied


Sourcing share and satisfaction regarding the outsourced IT services

Die Teilnehmer der aktuellen Studie haben über alle IT-Services hinweg einen geringeren Outsourcing-Anteil je IT-

Service als die Teilnehmer der Studie im Jahr 2014

Beim Outsourcing des WAN und Rechenzentrums ist der Rückgang der Outsourcing-Anteile mit 23 Prozent-

punkten am größten

In many cases, the sourcing share and satisfaction regarding the outsourced IT services are often not aligned



Application

development

58%

38%

Application

support

48%46%

Helpdesk

43%

57%

Client

40%

64%

WAN

51%

67%

Data center

49%

68%

Voice (Landline)

35%

70%

Voice (Mobile)

43%

70%

Printing

48%

70%

Sourcing percentageSatisfactionn = varies

Considering the sourcing share and IT outsourcing satisfaction per IT service, a reverse trend is observed among

the surveyed companies

It is particularly noticeable that the surveyed firms outsource „application support“ and „application development“

quite frequently despite being at least satisfied with the outsourcing of this IT service


IT outsourcing objectives

3934

3023 25

3638

3843

31

1819 26 26

25

6

10

5 61

Promoting

new business

models

100%

43

Increase of

service quality

3

Cost reduction

3 1

IT

modernization/

innovation

3

High customer

satisfaction

4

The primary objective of the survey firms is the increase of customer satisfaction



n = 77, data in %

Very important Important Moderate Less important n.a.Unimportant

For three quarters of the firms,

the increase of customer

satisfaction is the most important

or important objective, followed

by IT modernization/ innovation

The contribution to the

development of new business

models is considered to be a very

important or important objective

by around half of the participants


The IT outsourcing objective cost reduction has gained more relevance over the time period 2014 to 2017, followed

by the increase of service quality

IT modernization supported by IT outsourcing has already been a comparably important objective in 2014 and

remains almost on the same level

IT outsourcing objectives over time

Especially, the outsourcing objective cost reduction has gained more relevance compared to the study results of 2014



66

94 91 9279

91

6

925

1279

2017

3

2014

5

2014 2014

32

2017

5

2017

1

Cost reduction IT modernization Increase of service quality

*Response option „moderate“ (see p.20) is considered to be an objective

Objective* No objective n.a.n = varies, data in %

100% 100% 100%


Most difficulties are faced by realizing IT modernization and promoting new business models


2 Objectives and objective achievement

Increase of service

quality

10 43 423

2

7 41 38 9 5Increase of customer

satisfaction

Cost reduction

5 56 24 10 5

Achievement of IT outsourcing objectives in detail


IT modernization

Promoting new

business models

4 31 41 13 11

3 22 42 17 16

Very dissatisfied

Dissatisfied

Moderate

Satisfied

Very satisfied

Regarding the set objectives, an

increase of service quality has

been achieved best

Only every second company is

very satisfied or satisfied

regarding the realization of cost

reduction and the increase of

customer satisfaction

The promotion of new business

models is only achieved

satisfactorily by one quarter of the

surveyed firms

100%


The surveyed firms achieve all of their ITO objectives more satisfactorily than the participants in 2014



Better than

plannedAs planned

Worse than

planned

5%5%

80%56%

15%

39%

4%3%

72%55%

24%

42%

2017

10%

2014

0%

2017

85%

2014

81%

5%

2017

19%

2014

Increase of

service quality

IT

modernization

Cost reduction

In the current study, the surveyed

firms achieve their set IT

outsourcing objectives better,

despite being less experienced in

the field of IT outsourcing

This implies a higher experience

of IT outsourcing providers in

general as well as more available

knowledge regarding IT

outsourcing

Less experienced companies can

benefit from the wealth of

experience from skilled providers

and external partners in order to

achieve their set objectives

Achievement of set IT outsourcing objectives in detail

n = varies


Kostenreduktionsziel

Achievement of cost reduction depending on the objective

Over one third of the surveyed

firms set a cost reduction

objective higher than 10%

However, cost reduction is

achieved best with a set cost

reduction objective between 5%

and 10%

The cost reduction objectives are

achieved completely or partly by

the majority of the surveyed firms,

regardless the set objective

The majority of respondents are aiming to reduce costs by more than 10%, which is only achieved by half of the firms


n = 48, data in %


n = 77

48

82

43

48

18

50

4

7

100%

Stable costs

>5%

>10%

37%

>10%

16%

>5% Costs are

no objective

6%

n.a.

19%19%

Stable costs

3%

Additional

costs

Cost reduction objective

not achieved


partly achieved


achieved



Respondents aiming for high cost reduction often miss their other IT outsourcing objectives


Explanatory Approaches3

n = 50, data in %

(Companies with at least the two objectives „cost

reduction“ and „service quality“)

22

46

52

27

26

27

100%

55

63

28

26

17

11

100%

Cost

reduction

<10%

Cost

reduction

>10%

Satisfied UnsatisfiedPartly satisfied

Service quality IT modernization

Achievement of IT outsourcing objectives depending on the cost reduction objective

n = 55, data in %

(Companies with at least the two objectives „cost

reduction“ and „service quality“)

Only every second firm aiming for higher cost reduction (>10%) through IT outsourcing achieves the objective of increasing service quality. In comparison, two thirds of the firms aiming for less cost reduction (<10%) achieve their quality objective

The firms surveyed with lower cost reduction objectives achieve their IT modernization objective twice as likely as firms with moderate cost reduction objectives


The achievement of a firms’ set objectives are influenced by the prioritization of the IT outsourcing objectives


3 Explanatory Approaches

65

51

50

22

36

13

13

50

100%

Cost

reduction

54

56

35

46

33

33 32

Moderate

priority

100%

Low

priority

High

priority

11

53

42

36

33

11

25

100%

100

23

37

41

41

36

22

100%

100

37

34

25

43

33

25

20

33

50

100%

Increase of

service quality

Increase of customer

satisfaction

IT

modernization

Objectives with high or moderate priority tend to be better achieved

It is therefor important to devote sufficient commitment and resources to the set objectives

Objective not achieved Objective partly achieved Objective achieved n = varies; data in %

Achievement of set IT outsourcing objectives depending on the prioritization

Promoting new

business models


13

7

13

54

29

33

23

64

54

5

51st

generation

2nd

generation

X

generation

100%

8

7

49

23

44

21

21

22

7

77

21

100%

29

36

40

42

7

337

57

19

20

100%

10 33

54

29

38

15

21

19

77

31

36

100%

5 5 17

25

33

50

30

33

25

30

17

3010

100%

Outsourcing experience plays an important role regarding the achievement of set objectives



Very dissatisfiedVery satisfied Satisfied Moderate Not satisfied

Companies conducting 1st generation outsourcing are significantly more satisfied regarding the achievement of their cost objectives than companies conducting 2nd and X generation outsourcing

However, an increase of service quality and customer satisfaction as well as promoting new business models are better realized during repeated outsourcing

The achievement of the IT modernization objective is independent of the IT outsourcing experience

Satisfaction regarding the achievement of IT outsourcing objectives depending on IT the outsourcing experience

Cost

reduction

Increase of

service quality

IT

modernization

Promoting new

business models

n = varies; data in %


satisfaction


The cost reduction objective is best achieved by employing a single vendor strategy, to increase service quality a

best of breed strategy suits best whereas the increase of customer satisfaction is best achieved by employing a

competition strategy

The results show that the sourcing strategy is irrelevant regarding the achievement of IT modernization and

promotion of new business models

Achievement of objectives depending on the employed sourcing strategy

Depending on the set objective, a different sourcing strategy appears to lead to greater success



Objective achieved Objective partly achieved Objective not achieved

76

63

32

12

26

68

12Single

vendor

100%

Competition

Best of

breed11

50

72

59

17

32

50

11

9

100%

30

23

59

41

56

32

29

21

9

100%

25

35

38

50

29

43

25

35

19

100%

34

34

20

33

22

53

33

44

27

100%

Cost

reduction

Increase of

service quality

IT

modernization

Promoting new

business models

n = varies; data in %


satisfaction


IT outsourcing volume and IT outsourcing success appear to be contrary

Only the objective of promoting new business models can be better achieved with a larger IT outsourcing volume

Achievement of objectives depending on the IT outsourcing volume

Companies with higher IT outsourcing volumes are less likely to achieve their IT outsourcing objectives completely



63

41

43

31

53

57

100%

> 50 m

EUR

5 - 50 m

EUR6

< 5 m

EUR 6 75

37

33

19

19

67

44

100%

6 61

29

29

33

36

71

35

100%

6 50

19

29

38

38

44

12

43

27

100%

29

15

50

50

31

50

21

54

100%

Cost

reduction

Increase of

service quality

IT

modernization

Promoting new

business models

n = varies; data in % Objective achieved Objective partly achieved Objective not achieved


satisfaction


2524

Yes No

External support regarding the sourcing strategy supports the achievement of several IT outsourcing objectives


17%

33%

46%

0%

4%

n = 49


Moderate

Dissatisfied

Very dissatisfied

Very satisfied

Satisfied

15%

0%

15%

25%

45% 39%

35%

13%

9%

4%

46%

Moderate

Dissatisfied

8%

Very satisfied0%

Satisfied4%

Very dissatisfied

42%

The objectives cost

reduction and IT

modernization were

achieved much better with

external support

Approximately half of the

surveyed firms received

external support in order

to develop an IT sourcing

strategy

Satisfaction regarding cost reduction

Satisfaction regarding IT modernization

External support regarding the sourcing strategy


Some objectives are not positively influenced by external support regarding the sourcing strategy


4%

17%

33%

42%

4%

n = 49


Very dissatisfied22%

Dissatisfied11%

Moderate33%

Satisfied22%

Very satisfied12%

13%

20%

40%

27%

0%

Very dissatisfied5%

Dissatisfied9%

Moderate24%

Satisfied53%

Very satisfied9%

According to the surveyed

firms, external support

does not impact the

objectives increase of

service quality and

promotion of new

business





strategy

Satisfaction regarding increase of service quality


Satisfaction regarding the promotion of new business models

2524

Yes No

© Horváth & Partners33 Report of Results – IT Outsourcing Satisfaction Survey 2017

4%

9%

43%

39%

5%

n = 49


Very dissatisfied4%

Dissatisfied13%

Moderate43%

Satisfied26%

Very satisfied14%

According to the surveyed

firms, external support

does not impact the

objective increase of

customer satisfaction





strategy


Satisfaction regarding customer satisfaction

Some objectives are not positively influenced by external support regarding the sourcing strategy

2524

Yes No


Accordance of sourcing and digitalization strategy

Most of the surveyed firms state that both strategies are not in line or not existent

We assume however, that this observation will change according to the increasing digitalization initiatives and will

therefore be of higher interest in the future

Existence of a digitalization strategy

The sourcing and digitalization strategy is aligned at around every sixth company


Digitalization4

n = 77 n = 77

18%

No sourcing-

or digitalization

strategy

34%

No

31%

Yes

17%

n.a.

16%

No

49%

Yes

35%

n.a.


Impacts of a digitalization strategy on IT sourcing

Strategic partnerships with technology companies in particular benefit from a digitalization strategy



Digitalization4

8 8 712

43

4132

2427

18

22

2335

2823

34

1018

10

2530

17

17 16 15 16 18 19

Higher innovative

capability

More provider

2

Strategic

partnerships with

tech companies

More focus

on application

outsourcing

100%

Shorter contractual

periods

2

Increased utilization

of freelancer

Very much agree Agree Neither…nor Disagree Very much disagree


The surveyed firms tend to be

more satisfied regarding the

achievement of IT outsourcing

objectives without the existence

of a digitalization strategy

Digitalization strategy and IT outsourcing do not appear to correlate positively


Digitalization4

n = 61

Achievement of IT outsourcing objectives considering the existence of a

digitalization strategy

8

17

35

29

26

11

23

236

8

14

100%

No existent

digitalization strategy

Digitalization strategy

exists

0%20%40%60%80%100%


Achievement of objectives:


Contents


Objective


Survey results


Contacts


Although almost all companies use IT outsourcing, the IT outsourcing objectives are often only partly achieved


Key findings Conclusions

Key Findings and Conclusions

Only 24% of the 77 surveyed IT managers state that

they achieved all of their IT outsourcing objectives

The increase of customer satisfaction is the primary

objective of IT outsourcing, followed by IT

modernization and cost reduction

In reaching the objectives of IT outsourcing, the goal of

increasing service quality is realized most often

Ambitious cost reduction objectives often come at the

expense of IT modernization and increases in service

quality

Support from external partners promotes the

achievement of the IT outsourcing objectives cost

reduction and IT modernization. Across all objectives,

target achievement improved by an average of 10%

According to the respondents, the development of a

digitalization strategy and IT sourcing do not show any

positive dependency

Despite the expected maturity of IT outsourcing, there

are major differences in the success of IT outsourcing

projects

The expertise of external partners has increased over

the years which influences the success of outsourcing

projects positively

To ensure the success of IT outsourcing, processes

and procedures need to be established which enable

– the development of a targeted sourcing strategy

– the assurance of the outsourcing ability

– the selection of the right outsourcing partner

– strong contracting and effective steering

According to the current findings, no relationship

between the sourcing and digitalization strategy has

been observed. However, in terms of increasing

digitalization initiatives, this will be of higher interest in

the future


The IT sourcing strategy by Horváth & Partners is developed in four steps


Implementation assistance

Identification of strategic

objectives of IT

Definition of a target

sourcing design

Implementation planning of

the target sourcing design

Definition of the sourcing

scope and target setting

Role of IT

IT business model

Vision, mission, strategic

objectives and future role of IT

As/Is comparison of the IT

business model & outsourcing

readiness check

IT sourcing targets

Sourcing scope

Definition of motivation and

target setting of the IT

sourcing strategy

IT Service portfolio with

service descriptions, costs

and service levels

Sourcing cluster

Sourcing scenarios

Creation of clusters in order to

achieve bundling effects

Definition of sourcing target

designs in the form of

scenarios (incl. cost case)

Measures

Sourcing roadmap

Identification of gaps between

actual situation and target

scenario

Prioritization of measures and

phasing of implementation


Provider

ContractSteering

Success

An excellent implementation of sourcing decisions is based on the coherence of provider, contract and control system




„Sourcing funnel“ – outsourcing of the right services to a suitable provider and establishment of a long-term partnership


* Best and final offer

Outsourcing roadmap „sourcing funnel“

Tobias neues

Layout und

Zeitstrahl einfügen

Ein *

Ausschreib-

ungs-

vorbereitung

Tender and change management

Provider steering

Signing of

contract Service

start Hand-over

Day 1

Sourcing

strategy

Assessment

method

RFI

Master

agreement

Performance

specification

RFP

Q&A phase

Site visits

Offer I

Down select I

Due diligence

Offer II

Down select II

Negotiation

BAFO*

1 supplier 1 supplier

6-8 RFP-

candidates

Baselining

Sourcing

roadmap

Provider selection Transition



Master framework

Table of contents

Industry specific characteristics– e.g. Financial industries

Performance specification

Price model & volume

Service level model

End User

ComputingPrinting

Network Voice

Data CenterApplication

Management

Templates for all IT service areas

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12

%

Months

SLA-Erreichung Durchschnittswert

Zielwert (erwartet) Zielwert (Minimum)

If the yearly average value lies on or

over the expected service level, a

“neglect” is assigned

SLA neglects because of lower

deviation of the minimum target

value are not “assigned”

Consumption-based billing

Gain Sharing

PoC-based billing

OpenBook

CostPlus

Current price models regarding outsourcing

Reference contract – Use of well-established contract mechanisms and experiences of other IT outsourcing provider



SLA attainment

Target value (expect.)

Average value Target value (minimum)


1

2

3

4

5

6

Steering model – On the basis of established reference processes, a strong “retained organization” can be built quickly


Demand Management

Requirement specification

Specification of service catalogue

Project management

Contract Management

Communication and archiving

Contract based change requests

Receivable management

Communication Management

Communication and archiving

Contract based change requests

Receivable management

Risk Management

Risk evaluation

Risk minimization

Risk communication and -control

Performance Management

SLA-management

Capacity management

Audit

Service Improvement

Benchmarking

Controlling of applied measures


Academic publication: Urbach, Nils und Würz, Tobias (2012) Effektives Steuern von IT-Outsourcing-Dienstleistern – Entwicklung und Überprüfung eines

Referenzmodells für Steuerungsprozesse im IT-Outsourcing, in: WIRTSCHAFTSINFORMATIK, 54 (2012), 5, Seite 237-250


Contents


Objective


Survey results


Contacts


Horváth & Partner GmbH

Ganghoferstraße 39

80339 Munich

Phone +49 162 2886090

E-mail [email protected]

Stephan KahlHorváth & Partners

Managing Consultant, BU CIO & Project

Advisory - Manufacturing Industries

ContactsIT Outsourcing Satisfaction Survey


Horváth & Partner GmbH

Ganghoferstraße 39

80339 Munich

Phone +49 162 2786352

E-mail mgschwendtner@horvath-

partners.com

Michael GschwendtnerHorváth & Partners

Principal, Leiter BU CIO & Project

Advisory - Manufacturing Industries

Universität Bayreuth

Universitätsstraße 30

95447 Bayreuth

Phone +49 921 55 4712

E-mail [email protected]

Prof. Dr. Nils UrbachUniversity of Bayreuth

Professor for Business Information

Science, Strategic IT-Management &

Fraunhofer FIT


Horváth & Partners: Steering Business Successfully

46 May 2017 – Corporate Presentation Horváth & Partners

Competence

Corporate Performance Management and

Performance Optimization

Clients

Large and medium-sized companies from the

industry, service and retailing sectors, as well

as public organizations

Industries

Automotive, Chemicals, Consumer Goods,

Financial Industries, High Tech, Industrial

Goods, Logistics, Media, Oil, Pharma-

ceuticals, Public Sector, Retail, Telecom,

Transportation, Travel, Utilities

Employees

Over 700

Offices

Abu Dhabi, Berlin, Budapest, Bucharest,

Düsseldorf, Frankfurt, Hamburg, Jeddah,

Munich, Riyadh, Stuttgart, Vienna, Zurich

International alliance

Global delivery competence

in the Cordence Worldwide Alliance

© Horváth & Partners47

IT outsourcing management is one of the key solutions of the competence centers „IT Management and Transformation“

IT Management and Transformation

Ergebnisbericht – IT-Outsourcing-Performance-Studie 2017

Business-driven

IT transformation

Transformation target

statement

Transformation blueprints

Managing transformation

Transformation design

Transformation execution

(program & project

management, program

office, business case

management)

Enterprise architecture

management

Architecture definition

Architecture management

IT transformation

management

IT strategy

IT strategy development

IT strategy

operationalization

IT target operating model

IT efficiency, effectiveness

and alignment

Contract & business model

IT demand steering

IT governance

IT organization & processes

Legal & regulatory

requirements

IT outsourcing management

IT sourcing strategy

IT sourcing steering

IT provider selection

IT transition management

IT provider management

und retained organization

IT strategy &

target operating model

IT performance culture

IT performance assessment

IT business- & steering

model

IT product- & market

concept

IT management control

Strategic IT planning

IT planning & forecast

IT performance reporting

IT project portfolio

management

IT value chain control

IT product catalogue

IT cost-/performance-

calculation

IT accounting

IT cost optimization

IT project controlling

IT performance

management

Digital platform

Establishment of a digital

platform for digitizing and

automatizing E2E- business

processes

Robotics

Automation und

optimization of business

processes by use of

robotics (e.g. RPA, artificial

intelligence, machine

learning)

Integrated operations

management

Digital process- and service

architecture

Modularization of the

procedural landscape and

decoupling of technical- and

IT architecture to set the

base for the use of robots

Process digitization &

robotics


The Chair of Business Information Systems and Strategic IT Management at the University of Bayreuth


Strategic IT management

& digital transformation

Digital strategy

& governance

Project (portfolio)

management

Quantitative-empirical methods, case study research, interviews, action research

IT sourcing &

service management

Digital innovation

& collaboration

Design-oriented research

Reference models for processes, organizations and governance

Behavior-oriented research

Acceptance and success of information systems

and managerial practices

Documents

IT Outsourcing Performance Study 2017 › lehrstuehle... · The study results show that the respondents’ primary objective of IT outsourcing is the improvement of customer satisfaction