Joe Hogan sees "a continued high amount of interest in outsourcing." The Worldwide Marketing Principal of Compaq Managed Services says companies explored outsourcing options last year seeking a "broad set of capabilities," including superior resources, innovation and flexibility. This year cost was a critical element of the outsourcing equation, says the executive, who is based in Littleton, Massachusetts.
Hogan says Compaq's customers in 2001 wanted a supplier who was both experienced and flexible. "They wanted to innovate, implement new business processes and offer new products and services. They needed our help to move them from A to B," he says.
These demands allowed Compaq Managed Services to grow even faster than the outsourcing market in 2001, Hogan says.
Looking At The Bigger Picture In 2002
At the end of last year Compaq said efficiency and cost were primary in buyers' minds. Today customers still discuss cost, but now they are looking at the bigger picture. They want to outsource to improve their IT operations and overall business processes so they can remain competitive in their marketplaces. "They want to know how we can add value within a particular business process," says Hogan.
This new IT viewpoint is transforming the traditional service level agreements, which concentrate on service performance, to service value agreements, which link outsourcing results to a business impact, the Compaq executive explains. For example, a service value agreement can concentrate on improving the close cycle in a finance and accounting contract.
"This year buyers want to measure the return on investment of IT, not only the cost," explains Hogan. For that reason, Compaq is aligning its IT managed services offerings around business processes.
New Services Like 'Computing on Demand'
This trend has led Compaq to offer new services like "Computing on Demand." This concept makes IT hardware and services into a simple, flexible package with leasing that transforms capital outlays into operating expenses. "Our buyers can throttle their capacity up or down depending on their needs," says Hogan.
Hogan says Computing on Demand has been successful during the current downturn because everyone is operating within a certain level of uncertainty. "No one knows if the economy has hit bottom. Computing on Demand allows us to share the economic risk with our customers," he explains.
Finally, the events of September 11 have created an increased interest in IT security, availability and continuity. "Companies are asking us, 'How can we build solutions so we have continuous service?'" reports Hogan.
Lessons from the Outsourcing Journal:
- Customers turn to IT outsourcing to help them transform their business.
- Service level agreements are moving to service value agreements to concentrate on improving a business process.
- After September 11, buyers are more concerned about security, availability and continuity of their IT processes.
- Companies are looking to suppliers to help simplify how they acquire, support and manage IT.