Share Your Business Case

Do you know your TCO for outsourced services?

21st September 17

Explaining the total cost of ownership of IT services to the CIO has never been easy. 

Apart from the obvious line items such as OPEX and CAPEX costs the three major sources of hidden costs can be:

Non Standard Change Request Changes: Your service provider may include some standard changes and provide some standard pricing for others, however the ones that can sneak up from behind are the "special changes". Service Providers usually charge time and material (T&M) rates for such changes. These "uncontrolled costs" can add up to significant amounts.

Billing Errors: This might not be intentional, but Service Providers can and will make mistakes in their billing. Most of the time these can be rectified but someone has to take the time and effort to reconcile accounts against agreed upon tariffs. 

Internal Service Provider Support Costs: You may think outsourcing cost equates to what your Service Provider charges you. The reality could be that you are not taking into account how much time your own personnel are spending in hand holding, monitoring and chasing your service provider. We have known situations where an enterprise department has 3 workers for every 10 service provider workers. 

Content Categories

Know More

Brought to you by the Service Industry experts, ZENATICS is a product by ZENeSYS Consulting. Please contact us for a demo at +1.781.325.1774 or email or visit

Most Popular

Answers for Vendor Management Issues

Lets face it. Your service providers are telling you they are doing a great job. You know the reality could be far from it. As someone put it to me recently. "It's like letting the students grade their own papers" Gartner and other analyst firms are already talking about the importance of a dedicated Vendor Management Team. If you are outsourcing more than 50% of your IT services, you need it.

Here are some vendor management answers that are not worth burying.

  1. Pay attention to the Service Level Agreements in your Contract: This is often overlooked in the excitement of big benefits of SaaS, PaaS, aka "The Cloud". Please make sure you ask your supplier for some basics such as percentage uptime guarantee, penalties for making changes, resolution times for incidents etc. You may want to have your own standards on how you may want to define some KPIs across different suppliers. More on this in the last paragraph. 
  2. Mind The Service Interdependencies: You may find out that one supplier's service is dependent upon another's. For example, your SAP supplier has dependencies on your network supplier. In such cases you need to align your SLAs so it makes sense. For example a 99.999% uptime on SAP is a waste if your Network to reach that SAP on the cloud has an uptime guarantee of only 98%. 
  3. Technology Improvement Assurance: Moore's law says technology improves by 100% every two to three years. So this means that you should not get locked into a contract without demanding efficiency improvements on a year-on-year basis.This will lead to significant cost savings and ensure you are not lagging in the latest and greatest features that your competitor may be enjoying. 
  4. Ensuring Vendor Mobility: Also known as "vendor lock-in". The way to avoid this is to keep your requirements as industry standard as possible. Ask your supplier to keep hardware and software configuration and the support knowledge base up to date. Insist on your supplier in sharing it with you. This will make the transition to a new supplier not just easier, but actually feasible. Else it will be like Hotel California... "You can check out anytime but you can never leave!"
  5. Adequate Security: What you need for security will often be exceeded by your supplier. This is good news. But it is always a good practice to make sure that your supplier meets the minimum security you need. Another tricky situation is when two suppliers have a split responsibility e.g. your network is with vendor A and the firewalls are being managed by a vendor B. 
  6. Too Many Providers: When you will get beyond three service providers, you will realize that managing each one with differing contractual terms and pricing mechanisms will become a management nightmare. When this happens, give us a call. Our XaaS management platform ZENATICS has a common denominator framework to automate vendor management. Oops sorry! No plug-ins in blogs! I forgot. Here is the answer. Create an internal SLA policy in your vendor management function. It will serve as a common standard for all your suppliers. 

For any questions and comments, please feel to contact me or post on our blog page.

Happy Vendor Management !

By Saibal Sen


Read More

ZENATICS - Analytics Platform for Vendor Management

ZENATICS is probably the Industry's first analytics platform for managing outsourced service contracts.

ZENATICS is our Service Management platform on the cloud. We have created our unique Framework of 12 KPIs that can universally manage any IT service. Be it Networks, Data Centers, Applications, Security, Storage etc.  

Listed below are all the KPIs addressing fundamental insights you will need to monitor in any outsourced service:

Incidents - Are the number of incidents in a given period too high?
Changes - Are the number of changes in a given period too high?
Availability - Has service uptime fallen below contracted agreement?
Agility - Is speed of service execution is acceptable?

Financial KPIs
Demand/Capacity - How well matched is it?
Budget - Are we over or under plan?
Utilization - Is it optimum?
Billing Errors - Are we being billed accurately? 

Infrastructure Compliance
Standards - Are the vendors compliant with industry or internal standards?
Hardware Contracts - Are they about to expire?
Service Contracts - Are they about to expire?
Age - Is it still in life?

Each of these KPI thresholds can be set by specific service and a specfic vendor making it fully customizable. 

See the two-minute video on our main page for a quick overview and some screen shots. Or call us for a demo. 


Read More


Contact Us

Feel free to get in touch with us

ZENeSYS Consulting
Innovation Hub,
110 Canal Street,
Lowell MA 01854,
P: 781-325-1774

To get in touch: Please fill in this form and we will get back to you as soon as we can.

Become a ZENeSYS Partner: ZENeSYS Consulting invites alliances with partners to provide a richer service integration solution for the end customer by combining their customer knowledge and ZENATICS. Either call us on 781-325-1774 or just leave a message through contact form. We look forward to speaking with you.

follow us on social platform

© 2016 ZENeSYS
Powered by Mavericksoftware (I) Pvt. Ltd.