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Because there is very little contact between the parties during the RFP and proposal stages of the traditional approach, it is difficult for an outsourcer to provide useful service levels. The definition of service levels requires the outsourcer to have a view of the organization's business and its needs. Generally, the traditional approach does not enable this to happen until the agreement phase: the organization and the outsourcer operate at arm's length until then. With a more interactive approach, the outsourcers work with the organization earlier.

As an example, I plan to outsource my IT function, including all current mainframes, servers, workstations and PCs. New developments will also be undertaken by the outsourcer.

Defining the reasons

Reaching a definition of the reasons for outsourcing is a consultative process. The organization should develop its reasons for outsourcing independently of any outsourcer, involving as many of the senior management team as appropriate.

The reasons for outsourcing must be examined to ensure that they are valid and sustainable.

A firm list of reasons for outsourcing can then be documented.

For my outsourcing project, my reasons are

1. to concentrate on the core business
2. to have access to world-class capabilities
3. to have access to resources not available internally.

Here's an exercise that you may find useful.

1. Select a business process within your organization for outsourcing.
2. List your reasons for outsourcing.
3. List your view of senior management's reasons for outsourcing.
4. Compare the two lists and decide on the arguments that you would use to change the second list.

Defining the services

The services that the organization requires must be associated with the reasons for outsourcing.

This is done by

1. considering what it is that the outsourcer will need to do and provide
2. associating each service with one or more of the organization's reasons for outsourcing
3. considering whether, where a service does not match a reason, to reject the service or to add another reason.

Again, this should be done in consultation with senior management.

is important that the services and the reasons are associated, so that the outsourcer can identify the real business needs that lie behind each of the services. It may be that an outsourcer can suggest an alternative way of delivering a service or its outputs that will continue to meet the business needs.

The services that I require from my outsourcer are

1. to provide all information technology and services, freeing me to concentrate on the core business
2. to provide recommendations for improvements to IS, through the use of world-class capabilities and specialist resources
3. to provide all new systems developments and enhancements, supporting the core business through use of the outsourcer's resources.

Describing the expected quality

If one of the organization's reasons was improvement of its focus, resource usage, capital expenditure or operating costs, it is helpful to state the required quality in terms of an amount of improvement over a period of time. The amount of improvement may be in absolute terms or expressed as a percentage.

Consideration should be given to all of the qualities that the service will be expected to provide.

The expected qualities of service delivery can be listed. Wherever possible, each quality should be described in terms of an amount and a timing.

My quality measures will be

1. all [quantity] current information technology and services will be provided [quality] within six months [timing]
2. recommendations for future information technology and services will be provided [quality] on an ongoing basis [quantity], with a review each month [timing]
3. all future [quantity & timing] developments and enhancements will be provided on a basis of proven, current methods and techniques [quality]
4. all future [quantity & timing] developments and enhancements will provide support to the core business [first quality], and will provide world-class capability [second quality]

Analysing the constraints

The next step is to develop a list of the constraints of the achievement of quality service and to analyse their likely impacts.

Some the constraints that will need to examined are

• level of management involvement
• formal and informal reporting structures
• execution, monitoring and decision-making structures
• information content and flows
• impacts on other processes and tasks
• impacts on other business units.

In my organization, the constraints are centred on the following.

1. The finance director is sponsoring the outsourcing project, and will be focused on cost reduction rather than enhanced service quality.
2. Current reporting on development projects is highly formalized and frequent.
3. Current reporting on computer operations and support is informal and infrequent.
4. The IS manager is only nominally a decision-maker; all decisions are effectively made by the finance director.
5. Current management reporting tends to be by the systems presenting data in a form that can be used in spreadsheets; we believe that an executive information system would be more useful.
6. None of the applications is critical to the business. Our only danger would be in our inability to produce customer invoices on time, and we could probably do that manually.
7. The systems in our production and planning departments will not be outsourced.