In an IT-Outsourcing the outsourcer and the service provider (the company that takes over the tasks and hardware) need to establish a common understanding of 1. The scope of the ousourcing (existing Hardware and Software landscape) and 2. The service levels for providing the services. Whereas the IT Landscape can be collected in an IT Due Diligence, the Service Levels for defining the quality of the services need to be negotiated. The basis for this discussion could be based on the ITIL principles which are divided in the following service categories (excerpt):

Availability Management, Incident Management, Release Management, It asset management, Service desk, Capacity and Performance Management, Monitoring, Change Management, Continuity Management, etc

If a company decides to outsource its IT-hardware and software, it targets these topics in general:

  • Consolidation of the IT infrastructure
  • Central application support
  • IT cost transparency
  • Contract Management for applications/licenses
  • Sale and leaseback of existing hardware
  • Better security over the next years
  • Normalization of upcoming IT investments

The outsourcer has to be aware that the benefits of an outsourcing are depending heavily on the reliability and quality of the services provided by the service provider.

IT Due Diligence Data:

Basic data to be collected in an IT Due Diligence:

  • Overview of IT organisation.
  • Overview of IT landscape
  • Contracts
  • Terms
  • Residual terms
  • Notice periods
  • Contract volume
  • Description of the contents of the contract
  • CAPEX/OPEX of IT
  • Hardware

Any material documents or other information related to lease (including lease agreements, which are still in force) or purchase (including purchases of computer or data processing equipment), or any third party’s provision of computer data processing services,

  • Software (List of material software agreements essential for business operations)
    • Cloud applications
    • IaaS (Infrastructure as a Service)
    • PaaS (Platform as a Service)
    • SaaS (Software as a Service)
    • Applications
    • Interfaces
  • Authorizations

IT Service Levels:

The Service provider and its Call Center can be measured by the tables listed below – all figures mentioned below are examples only. The Service Provider and the Outsourcer have to agree on these Key Performance Indicators (SLAs):

Performance characteristics (service level examples)

Time slotDefinitionDescription
Operating timeMon – Sun 00:00 – 24:00The systems are available to users with the exception of maintenance periods
Standard Service timeMon – Fri. 08:00 – 18:00The service time covers the main working time of the users and serves as the basis for the calculation of the monthly availability targets.
Maintenance timeSat 20:00 – Sun 06:00During maintenance time the systems are not available to the users and have to be charged in the calculation of the monthly availability line.

Priority classes

ClassPriorityDefinitionImpact
1CriticalMalfunctions that prevent the use of an entire system or central parts of itBusiness Critical
2Highmalfunctions that severely hinder the use of essential parts of a system without reasonable alternative solutions being availableSignificant impact on business operations
3NormalMalfunctions that hinder the use of an essential part of the system, for which reasonable alternative solutions are available.Medium influence on business operations
4LowOther faults and problems without significant impairment of operationLittle impact on business operations
5Very LowAny malfunction or problem without interfering with operationNo influence on business operations

Response times (examples)

During the service time, the following response times apply, within depending on the class

ActionClass 1Class 2Class 3Class 4Grade 5
1st feedback to end-users15 min15 min1 hr4 hrs.NBD
Start of intervention period15 min15 min2 hrs.8 hrs.NBD
Status report to end user1 hr.2 hrs.8 hrs.2. ATNBD
Information / Status Report PO2 hrs.4 hrs.2. AT
Reporting of eventsIndividual ReportMonthly reportMonthly reportMonthly reportMonthly report

Intervention and recovery times

ActionClass 1Class 2Class 3Class 4Grade 5
Intervention within service time – Remote intervention – Onsite intervention  15 min 1 hr  15 min 1 hr  1 hr TBD  4 hrs. TBD  NBD TBD
Intervention outside service time – Remote intervention – Onsite intervention  2 hrs. 4 hrs.  2 hrs. 8 hrs.  N/A N/A  N/A N/A  N/A N/A
Remedy of the incident within service time from the time the incident is reported by the end user  4 hrs.  4 hrs.  8 hrs.  TBD  TBD

Service desk (examples)

Service componentservice levelMeasuring method
Accessibility95%90% of all calls are answered within 30 seconds during service hours. Measured per month / service time
Response time80% within 30 sec80% of all calls are answered within 30 seconds during service hours. Measured per month / service time
LanguagesEN (possibly DE) 
Number of calls included1 call per monthPer user ID
Solution rate60%60% of incidents are solved immediately by Service Desk

Directory services (examples)

The service includes one Windows Active Directory user account per user ID, the necessary administrative activities, access to defined group directories, virus protection and backup of the data stored on the user home directory.

Service componentService level Measuring method / Note
Availability> 99.9 %Measured per month of operation during service time Mission Critical – The availability of the Directory Services is a prerequisite for the proper functioning of the other back-office services.
Number of orders Unlimited
Maintenance user identification1 dayWithin 1 working day after release the order will be executed

File & Storage Services (examples)

Service componentService level Measuring method / Note
Availability> 99.5 %Measured per month during service time
disk spaceXY GB per user IDFor all customer data an average of XY GB is available per user ID (subdivision Standard or VIP User)

Print services (examples)

Service componentService level Measuring method / Note
Availability> 99.5 %Measured per month during service time
Printer Queue Maintenance 1 dayWithin 1 working day after release the order will be executed

Mail services (examples)

Service componentService level Measuring method / Note
Availability> 99.9 %Measured per month during service time
disk spaceXY GB / MailboxAn average of XY GB per mailbox is available for all customer data (subdivision into standard and VIP users).

Back-up & Business Continuity Management  (examples)

Service componentService level Measuring method / Note
ImplementationDailyMeasured per month during service time
Storage5x 12x 5x5 generations for weeks Save 12 Generations for Months Save 7 x generations for year Save
Restore< 4 hoursStart restore job after release. Fixed only when all files are restored

Application Services (examples)

ClassPriorityDefinitionImpact
1CriticalMalfunctions that prevent the use of an entire system or central parts of itBusiness Critical
2HighMalfunctions that severely hinder the use of essential parts of a system without reasonable alternative solutions being availableSignificant impact on business operations
3NormalMalfunctions that hinder the use of an essential part of the system, for which reasonable alternative solutions are available.Medium influence on business operations
4LowOther faults and problems without significant impairment of operationLittle impact on business operations
5Very LowAny malfunction or problem without interfering with operationNo influence on business operations

Conclusio

An IT outsourcing is a comprehensive task, which needs to be planned and coordinated in a proper way. The analysis of the IT-Landscape is only the first step. The definition of service levels and tasks of the service provider is the most important topic, besides the negotiation about the prices. If you’re planning an IT Outsourcing or want to transfer your IT-landscape to a public cloud, contact us.

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Georg Tichy

Georg Tichy is a management consultant in Europe, focusing on top-management consultancy, projectmanagement, corporate reporting and fundingsupport. Dr. Georg Tichy is also trainer, lecturer at university and advisor on current economic issues. Contact me or Book a Meeting