Most IT professionals have been in the situation where they have purchased a product or service at a specific price point and then during the implementation phase or even during on-going maintenance the costs continue to creep up.
According to a report by Info-Tech Research Group, “IT leaders report that hidden costs in outsourcing add an average of 25% to the price of the engagement.” That is significant for a company of any size. In the research firm’s report “Discover the Hidden Costs of Outsourcing”, they lay out seven costs that IT professionals need to make sure they are aware of before they sign on the dotted line:
- Adapting to submissions standards: Define the process improvements you will need to work with each potential vendors.
- Training costs for vendor staff: Reduce training costs by keeping the same vendor staff on all of your projects.
- Carefully review each proposed statement of work to identify and reduce extra fees. Understand why extra fees occur in the SLA, the contract, and the proposed statement of work and take steps to protect yourself and the vendor.
- Direct management of vendor staff: Avoid excessive management costs by definig a two-tier management structure on both sides of the engagement.
- Time spent resolving disputes: Avoid prolonged resolution costs by defining terms of divorce for the engagement up-front.
- Unanticipated requirements: Use a two-stage process to define requirements, starting with business people and then with review by technical staff.
- Integration with existing systems: Obtain a commitment from vendors that deliverables will conform to standards at points of integration with your systems.