I was recently asked about the classic price vs service argument by a consultant who advises on IT outsourcing. I replied that I am surprised there is still a debate over this. You can compare IT supplier based on the quality of what they do and then compare equally competent suppliers on price, but price is not a primary variable that should be used to compare companies.
After all, if the service delivered does not work then how much have you saved? The price debate reminds me of where IT outsourcing was a decade ago – it was surprising to be asked about this in 2015 when most organisations have a far more mature approach to finding expert partners.
I looked at CIO magazine to see what they considered the key trends in IT outsourcing would be this year. They published a good summary at the beginning of the year and never once mentioned that price would be an important comparison point.
Several of the trends they identified are very important though and I don’t feel that they are being given enough focus in the business and technology media:
1. A focus on outcomes: outcome based pricing has been around for years, but is often focused on BPO outsourcing where specific business processes can be priced. A focus on the outcome rather than process of delivering IT will be how many projects are charged in future.
2. The business ordering direct. The CIO used to manage all information systems, but now the business units are doing far more ordering direct because many solutions can be delivered using apps or the cloud, therefore not impacting on the infrastructure managed by the CIO. This means that suppliers need to develop new relationships and change their sales strategy.
3. Analytics taking over. In areas such as CRM and customer service technology systems data is all that matters now. This approach to data-led decision-making is affecting many business functions including the more creative ones such as sales and marketing.
The IT outsourcing trends are changing and developing as the IT services space develops, but sometimes it seems that the advisors cannot escape some of the old debates.