No. 3: Gold-plated service level agreements
Whether it's for help desk services, web hosting or server uptime guarantees, too many IT organisations are paying for Lexus-level service when a Toyota Camry SLA is more than adequate.
"Most sourcing agreements for IT services include amazingly high service levels," says Matthew H. Podowitz, independent IT consultant and author of The IT Value Challenge blog. "But how many businesses really require 99.999 uptime 24 hours a day, 7 days a week?"
That five nines uptime agreement may mean your site or servers will only be unavailable for perhaps 15 minutes per year, he adds. "But if you paid for only 98.5 percent uptime, and your systems went down for maybe a dozen hours a year, so what?"
Unless that downtime puts you at a competitive disadvantage or causes revenue to slip through the cracks, it probably won't make a difference, he says. There are exceptions of course. If you're a county government, you don't want to reduce the uptime for your 911 emergency service, but your accounting data probably doesn't need to be accessible 24/7/365.
Even IT departments where labour and outsourcing budgets have been trimmed to the bone can still save money by taking a hard look at their service level agreements, especially in the area of help desk support, says John Baschab, senior vice president for technology solutions and staffing firm Technisource.
"Overserving particular areas is a big source of overspending in the operating budget," he says. "A hard look at benchmarks and numbers will help here. One specific area that should be evaluated is the help desk or incident management area. Companies would often like to move to a prevention model (e.g., end-user self service) instead of a cure model, but it can be difficult if you don't already have effective SLA measures in place because as you change models it is hard to tell if you have actually reduced the incidents. The worst case is investing in a preventative model but not cutting down on the total incidents."
The hardest part, says Baschab? Deciding what services are essential and which are merely optional.
"The most difficult part is separating the needed services vs. the 'fat' that can creep in over time," he adds. "This requires careful analysis and considerable experience in benchmarking, IT demand management, service level setting and governance."