How can you include IT outsourcing cost analysis in your IT governance?

1 Define your outsourcing objectives

Before you outsource any IT function, you need to have a clear vision of what you want to achieve and how you will measure success. This will help you set realistic expectations, identify the scope of work, and negotiate the terms and conditions of the outsourcing contract. You should also define your outsourcing objectives in relation to your IT governance framework, such as how the outsourcing will support your business strategy, comply with your policies and standards, and mitigate your risks.

2 Establish cost analysis criteria

Once you have defined your outsourcing objectives, you need to establish criteria for analyzing the costs and benefits of outsourcing. This should involve both quantitative and qualitative factors, such as the total cost of ownership (TCO), return on investment (ROI), and value for money (VFM). TCO includes direct fees and expenses, as well as indirect and hidden costs, such as transition, management, communication, quality, and security. ROI measures the financial value and impact of outsourcing on your business performance, such as revenue, profitability, productivity, and customer satisfaction. VFM compares the quality and effectiveness of the outsourcing service with the cost and risk involved. This includes service level agreements (SLAs), key performance indicators (KPIs), and best practices.

4 Adjust your outsourcing strategy

Finally, you need to adjust your outsourcing strategy based on the results and insights of your cost analysis reviews. This may involve renegotiating or terminating the outsourcing contract, changing the scope or level of outsourcing, or switching to a different outsourcing partner. You should also align your outsourcing strategy with your IT governance objectives, and ensure that your outsourcing partner is aware of and compliant with your policies, standards, and expectations.

IT outsourcing cost analysis is a vital part of IT governance that can help you maximize the value and minimize the risk of outsourcing. By following these tips, you can include IT outsourcing cost analysis in your IT governance and achieve your outsourcing goals.

5 Here’s what else to consider

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