Article 2 of 3
The second article of this small series concentrates on the results of the study “Ardour Sourcing Pulse Check” which was released several months ago by Ardour Consulting Group (www.ardour.de). Whereas the first article dealt with the problems within an outsourcing relationship, the most widely used pricing models and the selection of the right outsourcing strategy, the focus of this second article is on the average contract term as well as on identified success factors.
In the coming months it is expected that the volume of the outsourcing contracts will continue to grow in Germany. 63% of the organisations, which participated in the study, indicated that they expect an increase of their outsourcing activities within the next 12 months. We therefore can expect that the different IT outsourcing services such as software development or data hosting as well as indirect services such as contract management or it consulting continue to become more and more popular. One of the many reasons certainly is the increasing shortage of skilled professionals in Germany.
Analysing the results of the study it is conspicuous that the majority of contracts (approximately 90%) do not run longer than five years. About 40% do only run between one and three years. If we consider the additional effort that is required within the supplier selection and the contract negotiations to fulfil this continuous change of providers or at least the renegotiation of old contracts, the importance of an efficient, fast and high quality selection process becomes apparent.
Furthermore, 80% of the respondents of the study stated that the selection of the IT service provider is of special significance for the success of all outsourcing projects, independent from the corresponding type of the outsourced task. As you can see in figure 2 this value represents the peak of all given answers.
Both aspects, the relatively short contract term with the resulting negotiation cycles and the importance of an efficient identification of the right service provider confirm our experiences. These show that an efficient and at the same time careful selection of suppliers is significantly related to the success of an outsourcing project. To support this process pliXos developed and introduced a free B2B Marketplace, which connects companies being interested in outsourcing, regardless of the size, with service providers from all over the world. Due to the fact that every service provider is reviewed before the registration on the B2B Marketplace is finished pliXos can ensure that all providers are qualified to a certain extend and are able to deliver high quality services. Especially organisations which have no experience in outsourcing can benefit through this pre-selection. Since all necessary functions of the marketplace are free of charge and all relevant aspects are covered, it is possible to decrease the costs of the tendering process significantly. The B2B Marketplace serves small and medium sized enterprises as well as large corporations looking for specific expertise. All important characteristics of an outsourcing project (Nearshoring vs. Offshoring, single sourcing vs. multi sourcing etc.) are covered. In conjunction with the process standardisation through the marketplace time and effort needed for an individual project can be decreased significantly.
An innovative provider rating based on a scientific project will be launched in the near future. This will enable the customers to get an overview plus further insights into the performance and quality of individual providers at one glance. In general the rating can be divided into two different parts. The first part of the rating is carried out by pliXos and represents an independent evaluation of the service provider. It is mainly based on the information from selected reference customers. The second part of the provider rating is directly based on the evaluations of the customers. After a project which has been executed with the help of the marketplace the customers get the chance to rate the individual performance of the provider. All in all both ratings in combination enables customers to identify the potential service providers which should be considered a good fit and to accelerate the overall tender process.
After article which one concentrated on management and monitoring issues and article two which dealt with the selection of the service provider, article three will be focused mainly on findings regarding the customer satisfaction, the achievement of targets and the reasons of outsourcing.
pliXos sees itself as a specialist in IT Outsourcing, especially for outsourced software development (offshore/nearshore). We are not only offering services as a classical service provider does or expected from a pure consulting company, but instead further enrich these offerings with innovative online products throughout the project life cycle of an outsourcing project to be most effective. Our offers include "tool-assisted" evaluation and analysis of global sourcing projects, the optimized control of such projects as well as consulting and the assumption of overall responsibility for individual projects. pliXos is supported by private investors as well as the “High-Tech Gruenderfonds” (www.htgf.de) and “Bayern Kapital” (www.bayernkapital.de).