Share This Article:

Qualifying and Quantifying IT Services Added Values in Outsourcing Assignments—Service Value Agreement

Abstract Full-Text HTML Download Download as PDF (Size:199KB) PP. 318-330
DOI: 10.4236/jssm.2012.54038    3,346 Downloads   5,908 Views   Citations

ABSTRACT

Traditionally, a Service Level Agreement (SLA) including service level metrics is used as an appendix in IT Service Management agreements to define the terms and conditions of delivery and set expectations. However, SLA neither implies nor guarantees the added values that are expected by the customer. Besides, due to the nature of IT services, there always exists uncertainty about the agreed services due to which the perceived risk for both customer and provider is high. Moreover, the quality and quantity of delivered values are mostly hidden by hazy marketing slogans. In order to guarantee the values of an offered service, the deliverable added values should be characterized properly, quantified by means of measurable metrics, and agreed upon between the two parties. Such comprehensive material, including the deliverable added values along with their measurable metrics, is called Service Value Agreement (SVA). This research proposes a platform for IT service offerings based on added values by identifying, as well as quantifying, an organization’s objectives in purchasing Application Management (AM) services from a provider firm.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

M. Ziyarazavi, C. Magnusson and T. Tergesten, "Qualifying and Quantifying IT Services Added Values in Outsourcing Assignments—Service Value Agreement," Journal of Service Science and Management, Vol. 5 No. 4, 2012, pp. 318-330. doi: 10.4236/jssm.2012.54038.

References

[1] J. J. M. Trienekens, J. J. Bouman and M. V. D. Zwan, “Specification of Service Level Agreements: Problems, Principles and Practices,” Software Quality Journal, Vol. 12, No. 1, 2004, pp. 43-57. doi:10.1023/B:SQJO.0000013358.61395.96
[2] K. Krishnamurthy, D. Jegen and B. Brownell, “Strategic Out-Tasking: Creating ‘Win-Win’ Outsourcing Partnerships,” Information and Management, Vol. 46, No. 1, 2009, pp. 42-51. doi:10.1016/j.im.2008.11.004
[3] M. C. Lacity, S. A. Khan and L. P. Willcocks, “A Review of the IT Outsourcing Literature: Insights for Practice,” Journal of Strategic Information Systems, Vol. 18, 2009, pp. 130-146. doi:10.1016/j.jsis.2009.06.002
[4] W. L. Tate, L. M. Ellram, L. Bals and E. Hartmann, “Offshore Outsourcing of Services: An Evolutionary Perspective,” International Journal of Production Economics, Vol. 120, No. 2, 2009, pp. 512-524. doi:10.1016/j.ijpe.2009.04.005
[5] I. Oshri, J. Kotlarsky and P. Willcocks, “Outsourcing Global Services,” Palgrave Macmillan, New York, 2008,
[6] R. Dossani and M. Kenney, “The Next Wave of Globalization: Relocating Service Provision to India,” World Development, Vol. 35, No. 5, 2007, pp. 772-791. doi:10.1016/j.worlddev.2006.09.014
[7] J. Spohrer and P. P. Maglio, “The Emergence of Service Science: Toward Systematic Service Innovations to Accelerate Co-Creation of Value,” Production and Operations Management, Vol. 17, No. 3, 2008, pp. 238-246. doi:10.3401/poms.1080.0027
[8] IBM, “IBM Reports 2011 Fourth-Quarter and Full-Year Results”, 2011. http://www.ibm.com/investor/4q11/press.phtml
[9] I. S. Hayes, “Metrics for IT Outsourcing Service Level Agreement,” Clarity Consulting INC, White Paper, 2004.
[10] E. Gummesson, “Practical Value of Adequate Marketing Management Theory,” European Journal of Marketing, Vol. 36, No. 3, 2002, pp. 325-351. doi:10.1108/03090560210417156
[11] E. Gummesson, “Relationship Marketing and a New Economy: It’s Time for De-Programming,” Journal of Services Marketing, Vol. 16 No. 7, 2002, pp. 585-590. doi:10.1108/08876040210447315
[12] R. A. Rennekamp and M. A. Nall, “Using Focus Groups in Program Development and Evaluation,” University of Kentucky Cooperative Extension, Lexington. http://www.ca.uky.edu/AgPSD/Focus.pdf
[13] J. M. Barnett, ”Focus Group Tips for Beginners,” Texas Center for Adult Literacy & Learning, Texas, 2002. http://www-tcall.tamu.edu/orp/orp1.htm
[14] J. Goo, R. Kishore, H. R. Rao and K. Nam, “The Role of Service Level Agreement in Relational Management of Information Technology Outsourcing: An Empirical Study,” MIS Quarterly, Vol. 33, No. 1, 2009, pp. 119-145.
[15] K. D. Larson, “The Role of Service Level Agreement in IT Service Delivery,” Information Management and Computer Security, Vol. 6, No. 3, pp. 128-132.
[16] Office of Government Commerce, “ITIL Service Strategy”, TSO, London, 2007.
[17] K. Wüllenweber, D. Beimborn, T. Weitzel and W. K?nig, “The Impact of Process Industrialization on Business Process Outsourcing Success,” Information Systems Frontiers, Vol. 10, No. 2, 2008, pp. 211-224. doi:10.1007/s10796-008-9063-x
[18] A. Dagenhardt, A. Godard and F. P. Rauch, “Top 10 Pitfalls of Application Management Services,” Siemens IT Solutions and Services, White Paper, Munich, 2010.
[19] P. Matthyssens and K. Vandenbempt, “Moving from Basic Offering to Value-Added Solutions: Strategies and Alignment,” Industrial Marketing Management, Vol. 37, No. 3, 2008, pp. 316-328. doi:10.1016/j.indmarman.2007.07.008
[20] E. K. Macdonald, H. Wilson, V. Martinez and A. Toosi, “Assessing Value-in-Use: A Conceptual Framework and Exploratory Study,” Industrial Marketing Management, Vol. 40, No. 5, 2011, pp. 671-682. doi:10.1016/j.indmarman.2011.05.006
[21] E. Brynolfsson and S. Yang, “Information Technology and Productivity: A Review of the Literature,” Advances in Computers, Vol. 43, 1996, pp. 179-214. doi:10.1016/S0065-2458(08)60644-0
[22] W. Ulaga and A. Eggert, “Value-Based Differentiation in Business Relationships: Gaining and Sustaining Key Supplier Status,” Journal of Marketing, Vol. 70, No. 1, 2006, pp. 119-136. doi:10.1509/jmkg.2006.70.1.119
[23] S. L. Vargo, P. P. Maglio and M. A. Akaka, “On Value and Value Co-Creation: A Service Systems and Service Logic Perspective,” European Management Journal, Vol. 26, No. 3, 2008, pp. 145-152. doi:10.1016/j.emj.2008.04.003
[24] K. Moyle, “Total Cost of Ownership and Total Value of Ownership,” In: J. Voogt and G. Knezek, Eds., International Handbook of Information Technology in Primary and Secondary Education, Springer Science and Business Media, Berlin, 2008, pp. 615-631. doi:10.1007/978-0-387-73315-9_36
[25] K. M?ller, “Role of Competence in Creating Customer Value: A Value-Creation Logic Approach,” Industrial Marketing Management, Vol. 35, No. 8, 2006, pp. 913924. doi:10.1016/j.indmarman.2006.04.005
[26] K. Hurkens and F. Wynstra, “The Concept ‘Total Value of Ownership’: A Case Study Approach,” Erasmus Research Institute of Management, Rotterdam, 2004, pp. 5162.
[27] Office of Government Commerce, “ITIL Service Operation,” TSO, London, 2007.
[28] K. C. So and J. S. Song, “Theory and Methodology: Price, Delivery Time Guarantees and Capacity Selection,” European Journal of Operational Research, Vol. 111, No. 1, 1998, pp. 28-49. doi:10.1016/S0377-2217(97)00314-7
[29] C. Bozarth, R. Handfield and A. Das, “Stages of Global Sourcing Strategy Evolution: An Exploratory Study,” Journal of Operations Management, Vol. 16, No. 2-3, 1998, pp. 241-255. doi:10.1016/S0272-6963(97)00040-5
[30] M. Smith, “The Gartner Business Value Model: A Framework for Measuring Business Performance,” Gartner Inc, Stamford, 2010.
[31] C. Rosenkranz, S. Seidel, J. Mendling, M. Schaefermeyer and J. Recker, “Toward a Framework for Business Process Standardization,” 5th International Workshop in Business Process Design, Springer, Berlin, 2010, pp. 43-53.
[32] M. Sch?fermeyer and C. Rosenkranz, “To Standardize or Not to Standardize? Understanding the Effect of Business Process Complexity on Business Process Standardization,” 19th European Conference on Information Systems (ECIS2011), Helsinki, 9-11 June 2011.
[33] H. V. Leijen, “The Role of Contextuality in Process Standardization,” In: W. Baets, Ed., Knowledge Management and Management Learning: Extending the Horizons of Knowledge-Based Management (Integrated Series in Information Systems), Springer Science and Business Media, Berlin, 2005, pp. 251-286.
[34] R. S. Kaplan and D. P. Norton, “Measuring the Strategic Readiness of Intangible Assets,” Harvard Business Review, Vol. 82, No. 2, 2004, pp. 52-63.
[35] B. Martorelli, E. Rose and C. F. Ross, “Application Outsourcing Clients are Satisfied, but Want More,” Forrester, Cambridge, 2010.
[36] ISACA, “COBIT 5: The Framework”, ISACA, Rolling Meadows, 2011.
[37] Tieto, “Service Governance—Our Key to Sourcing Relationship”, Internal Documentations, Stockholm, 2012.
[38] D. A. Griffith, N. Harmancioglu and C. Droge, “Governance Decisions for the Offshore Outsourcing of New Product Development in Technology Intensive Market,” Journal of World Business, Vol. 44, 2009, pp. 217-224. doi:10.1016/j.jwb.2008.08.007
[39] Z. Shadid, G. Boyd and R. Brisebois, “What Is IT Governance? And Why Is It Important for the IS Auditor?” INTO IT, Toronto, 2008.
[40] A. Paschke and E. Schnappinger-Gerull, “A Categorization Scheme for SLA metrics,” Internet-Based Information Systems, Passau, 2006, pp. 25-40.
[41] Accenture, “Business Process Automation Excellence with Pegasystems Technology,” 2012. http://www.accenture.com/us-en/Pages/service-automation-excellence-pegasystems-technology.aspx
[42] Office of Government Commerce, “ITIL Service Transition,” TSO, London, 2007.

  
comments powered by Disqus

Copyright © 2018 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.