5 Keys to a Successful Outsourcing Renewal

Renewing your outsourcing contract?

Leverage the expertise of R3P to negotiate a better deal.

By Grant Geminiuc

Outsourcing to external IT vendors has increasingly become the norm for Information Technology departments. In fact, a recent CORE/IDC 2014 study shows that greater than 70% of these existing deals are renewed.  However, what it does not tell you is how many of these deals are not being renewed as is.

So when your existing outsourcing contract is coming up for renewal, it is an ideal opportunity to renegotiate price and service improvements; as well as adjustments to the scope of your outsourcing contract to align with operational changes, or if your organization has new requirements or business expectations.

Depending upon how long ago you set up your contract, and given all of the improvements in technology price/performance, you can most likely negotiate a more advantageous arrangement. At R3P Consulting, we strongly believe that the lowest price alone is not the complete solution. We’ve identified five key factors to consider when negotiating your outsourcing contract.

 Five keys to a successful outsourcing renewal from R3P Consulting.

1. Ensure best price for service for CEO/CFO.
2. Remove scope ambiguity between client and outsourcer.
3. Ensure cost transparency for business units.
4. Ensure service levels for IT consumers.
5. Improve effectiveness of governance.

A good starting point is to do a comprehensive assessment of the market. How does the cost of your current contract compare to other contracts for similar services? Are you receiving an acceptable level of service quality? Is your external IT provider efficient and consistently meeting your requirements? How satisfied are you with the legal protection awarded to your company?

Here’s how you can leverage the expertise of R3P to negotiate the most advantageous outsourcing contract for your organization.

IT Service Optimization:

R3P has Big 5 IT Management Consultants specialized in all of the IT infrastructure service towers.  We have extensive experience in IT service model design. We advise on ideal service demarcation between entities and optimizations (self-service, tiered service, depot model, swap program, cloud delivery, LEAN, and global delivery) to achieve improved service, turnaround, up-time and pricing.

Price Benchmarking & RFPs:

We will assist with choosing a benchmark firm/database with appropriate peer representation. We also assist in interpretation and matching to service optimizations required to achieve lower price. We have extensive experience, templates and samples for outsourcing RFPs.

Service Description Narrative + RACI: 

Use our library of Service Description narrative and RACI charts to help create a “new” set of SOWs or improve an existing set of SOWs.

Client-Outsourcer Interaction Models:

Our library of ITILv3 compliant interaction models clarifies client and outsourcer demarcation of responsibility for enterprise infrastructure.

IT Service Catalog & IT Chargeback:  

We have experience and working models for Service Catalog / IT cost chargeback models. We refine the IT cost model to balance simplicity with direct cost accuracy, influence good behavior, and be viewed as value-add rather then a burden.  We combine experience from the infrastructure operational side with financial acumen to design, develop and implement a solution.

IT Service Management Tools:

The ITSM tools and process are fundamental to process standardization and measurement of the service. We are experienced in planning, business case development, selection, design and implementation of IT service management tools to achieve stated goal.

SLA Design and Optimization:

We are experienced in the creation, reduction and optimization of SLAs and KPIs, specifically for enterprise infrastructure based on numerous engagements.

Outsourcing Governance Optimization:

We understand how “gaps’ and “misalignment” in governance can cause missed opportunities and lead to a festering backlog of issues.  We are experienced in dealing with both the one-time backlog of issues and the governance improvements required to insure no repeats.

At R3P Consulting, we leverage our toolsets, methodology and collective experience to achieve better results for our clients while saving millions. Our thought leadership approach leads to IT outsourcing solutions that save money, reduce risk, and improve service. Contact us to discuss how to get the most out of your IT providers when renewing your outsourcing contract.