Origina Survey finds that 73.3% of companies do not use formal methodologies when managing the costs of outsourcing contracts

The use of formal methodologies to actively monitor the costs and benefits of IT projects in a quantifiable manner has had little uptake amongst Irish organisations.   
 

Key Findings:

• 45.5% of companies surveyed only consider the initial capital and implementation costs and not the full life-cycle costs of a project.
• 43.3% of business surveyed did not use any formal appraisal methods for providing feedback from the IT department to the organisation during the course of a project.
• Less than 30% of respondents believed that the majority of projects they worked on involving third parties met their business goals.
• Less than 20% or respondents worked with business sponsors that provided defined business benefits and then actively measured the progress of projects against these definitions

Origina, a leading Irish IT services company, today published the results of a survey conducted with 30 senior management Irish executives, to determine how prevalent the use of formal methodologies are within Irish organisations to derive value from IT projects. With the emergence of cloud computing and other managed service offerings, the outsourcing of the implementation and management of IT infrastructure is becoming more common place.

The results of the survey provided an interesting insight into current practices within the IT community in Ireland both in how projects are accounted for, how benefits and costs are communicated with the business and also in the perceived success rate of IT outsourcing projects. The use of formal frameworks for identifying and managing costs when using third parties for IT infrastructure provisioning or management is currently not very common. Due to this, it is apparent that the costs and benefits, both tangible and intangible, are not identified and quantified which is leaving companies unable to ensure that value is achieved throughout the full life-cycle from these investments. For example, only 29.2% or respondents believed that more that 75% of the projects that they were involved in achieved the business goals identified during the planning phase. This is a similar to the number who believed that less than 25% of projects met their goals.

Origina conducted the survey online in April 2011. Respondents were primarily in management positions in IT departments and from Irish organisations of all sizes and sectors.  

Origina’s commentary on the results:

Sean McCarthy, Technical Consultant in Origina commented, “The introduction of a formal framework such as Val IT can provide the mechanism for managing the value associated with IT investments. Such a framework provides a company with management processes which can be utilised to ensure that an organisation’s individual IT-enabled investments contribute to optimal value for the business as a whole. The benefit of introducing these methods is to increase a company’s understanding of costs, increase the probability of selecting the project with the highest expected return on investment and to improve the likelihood that selected projects will meet or exceed these expectations.”

McCarthy added “While the management of SLAs can be provided through the use of a framework such as ITIL or COBIT, these methodologies do not provide the mechanism to quantify the benefits and costs associated with a project. A framework such as VAL IT which is developed specifically for managing costs and deriving value from an IT project or investment should be utilised. Val IT uses of a continually updated business case as an operational tool that is used to support the implementation and execution of a project including the realisation of the proposed benefits throughout the economic life of an investment”

Origina have been helping clients successfully outsource IT services and select the right IT service partner.  With our independent view of the Irish managed services and outsourcing Market, Origina is well placed to help organisations understand what is important to their business users and select a service partner who can deliver real business benefits.

The Origina "IT benchmarking" service helps both clients and partners understand what IT services are important and the measurable benefits a managed service partner can bring to our clients.  If you are thinking of engaging with a 3rd party service provider or wish to review your current arrangements, contact Origina and we will help you with an independent assessment. Origina conducted the survey online in April 2011. Respondents were primarily in management positions in IT departments and from Irish organisations of all sizes and sectors.

 

For further information please email info@origina.ie.