Glum IT bosses oversee client-supplier mismatch

More than half of UK IT directors’ spending with outsourcing suppliers is focused on cutting the cost of technology, rather than achieving business benefits, research shows.

This is despite the fact that only about a fifth of the directors said cost reduction was the area that their outsourcing supplier’s use was the most critical, found the study into 160 IT bosses.

In fact, revenue generation and growth are the most important reasons to use their outsourcer, said 48% of the directors, compared to 21% who say it is to cost-cut.    

But when asked about their budgets, 52% of the IT bosses said they were currently geared towards making IT less costly, not towards bringing gains for the business.

As to the mismatch, seven in ten of the directors said the expectations within their outfit were “not aligned” with what the outsourcing suppliers perceived they were contracted to deliver.

These issues can be traced back to transaction-based service level agreements (SLAs), claims George Davies of Mood International, which commissioned the research.

Indeed, more than three-quarters of suppliers were found to pitch about ‘business benefits,’ but 64% of their contracts were entirely or mainly measured on transaction based SLAs.

“SLAs are outdated and should be thrown on the scrapheap; the outsourcing world has progressed,” said Mr Davies.

Elsewhere in the research, IT directors were found to be under pressure. On the one hand, almost 6 in 10 admitted it was harder for their suppliers to deliver within the agreed budget.

But on the other, and also over the last year or so, about a third of the directors believe that satisfaction rates from their employer – the supplier’s end-client – have declined.

Meanwhile the directors themselves feel that their own role is becoming more complex, harder to manage and, ultimately, less enjoyable.

Specifically, almost 60% of them spoke of their IT directorship being more challenging than it was a year ago, with 46% of them feeling ‘slightly’ or ‘significantly’ less job satisfaction.