The maelstrom of the oil price crisis, is forcing oil and gas companies to scrutinise every facet of their operation like never before.  According to Wood Mackenzie, cost cutting will be one of the five major themes for the oil and gas sector in 2015.  Likewise, a recent PWC report cited that firms will need to be able to operate in an environment where oil averages $50 per barrel to be sustainable and should pay close attention to divesting from non-core activities.  With such a close eye on cost, some oil and gas companies are looking to outsource elements, or indeed all of their IT provision to specialist providers in the hunt for greater savings.

For some time, outsourcing of IT functions like helpdesk have been relatively commonplace in the sector.  The premise of getting better value, is on the surface, well founded; work with a specialist provider who maintains a breadth and depth of resource across multiple clients and share in the economies of scale they offer.  Pretty straightforward….

However, as a long-term provider in this space, we’d strongly advocate that the traditional approach to outsourced IT provision, is no longer in step with the demands of the industry.   As someone who regularly responds to tenders to provide these types of service, we believe there is a fundamental flaw – the client always tries to specify the inputs to the service; dictating the number of staff needed, where they should be located, hours worked and so forth.  In doing so, ownership of the service by the provider is considerably watered down, eroding their ability to properly manage the service, because the client is dictating how it should be built.  Despite the existence of service level agreements in the vast majority of contracts, few organisations pull the supplier up on service quality, meaning the provider gets paid, irrespective of whether they do their job well or poorly.  Other than retaining custom there is really no incentive for the provider to do a better job.

Tell us what you want, not how to do it!

The alternative is simple, but requires breaking the connection between the cost of the people delivering the service and the fee’s we charge.  Rather than outsourcing, we believe the opportunity to achieve long-term sustained efficiencies and value for money is in managed services.  The single biggest difference between the two in our eyes, is that outsourcing specifies the inputs whereas a managed service is defined by the outputs.  Our approach is to ask our clients what the most desirable outcomes of the service should be.  This could range from visibility required, reporting frequency, out of hours support, needs to support certain people or groups of people differently or any number of other important outcomes.  The approach is the polar opposite to traditional provision but delivers important benefits.

Everything is measured and delivered as a per unit cost.  Whether that’s per user helpdesk support at the front-end or per device support in the back-end.  It therefore doesn’t matter how much the clients business contracts or expands, the service can be scaled and changed to match the climate of the organisation.  With a traditional outsourced approach this simply isn’t the case.  When edicts come down to cut headcount, outsourced manpower is frequently factored into this consideration with little concern for the fact that the infrastructure and applications that require managing have not changed at all.  This is a massive headache for IT, but with our managed service, this predicament is quite literally removed as it is reconfigured based on business needs at the time, whilst still maintaining all the same outcomes.

Our focus is always on the service and outcomes, not a dedicated amount of resource and never at the expense of feeling like it belongs to you.  For example, on occasion we rotate people working with you, so there is resilience in the provision of the service to combat personnel attrition; one of the biggest frustrations of the outsourced ‘manpower’ model.  However, we still ensure familiarity and consistency.  We achieve this, by dedicating a wider number of resources across the various functions of service delivery such as on site desk side support, telephone support, and out of hours emergency support so our people never become faceless names or voices, whilst at the same time spreading knowledge of your business more evenly amongst these people.  Of course, in an outcome-based approach much of the service might not actually need delivering from a client’s own location, instead a mix of resources may be accessed remotely from our UK servicedesk or systems monitored from our operations centre.  Again, this should not matter as long as the outcomes desired are being upheld and staff feel like the support they receive is of high quality.

Form a coalition

The key ingredients to success in an outcome-driven approach is to view the service provider/client relationship as a coalition.  It’s not just about selection either, this collaborative approach needs to exist all through the contract, in execution as well.  The client needs to be focussed on outcomes to get exactly what they want whilst we’re focussed on making it happen.  It’s a symbiotic relationship where, done properly, we profit from continually optimising the service to the clients needs and the client profits by having a service that delivers precisely the outcomes the business needs for its IT.

 

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Why listening to the Spice Girls will help E&P companies save money on ICT