Errors in the controls used for IT outsourcing governance result in expensive manual processes, inaccuracies that lead to significant waste, and in lack of trust between the service provider and the client. The need for governance in IT outsourcing is very real and has strong business value, saving companies millions of dollars.

Three real-life examples of costly IT outsourcing issues that Blazent solves:

Inaccurate Baselines

When the baseline – the foundation of the relationship and of the outsourcing contract – is inaccurate, the result is disagreement and constant disputes around billing. This was the case for one of our customers, a service provider who was under-billing its client $1.1 million per year. 1750 desktops were miscounted, and at $50 per desktop per month, the annual loss for this service provider was significant.

Without Blazent, an accurate baseline is often impossible to establish, since there is no realistic way to run a wall-to-wall inventory of a large number of assets in remote locations. This results in outsourcing contracts that are based on an inaccurate baseline, which results in billing mistakes, in lack of trust and in time wasted on disputes.

Using Blazent enabled the service provider to automatically establish an accurate baseline, to automate ongoing billing and monitoring to reduce costs, and to provide their client with pre-invoice validation. For this customer, invoicing is now 100% error-free, there are no more bi-weekly billing calls, and no more disputes.

Costly Billing Inaccuracies

An interesting example of billing inaccuracies recently uncovered by Blazent was erroneous billing for 70 servers that had been scheduled for decommission. Because the new status had not been communicated to the service provider, the servers continued to be maintained and billed, adding significant costs, but adding value to no one. At $1500 per server per month, the service provider over-charged the client $1.3 million per year.

With Blazent, bills are automatically reconciled against actual services delivered to help ensure accuracy. In fact, while without Blazent many outsourcing relationships are characterized by weekly dispute resolution calls, with Blazent customers achieve 100% billing accuracy.

Operational Gaps

Most IT outsourcing contracts include security and vulnerability-related SLA’s. An aspect of these SLA’s is a measure of the level of anti-virus agent penetration and the patch level of those agents. On the service provider side, penalties for compliance failure can be extremely high, sometimes reaching hundreds of thousands of dollars. On the enterprise IT side, lack of compliance can have significant costs if audits are failed.

One customer faced a $2 million penalty, prior to using Blazent, when a routine audit had discovered that only 75% of its assets had anti-virus agents, while the compliance requirement was 99%. This was an extreme case: typically, without Blazent, anti-virus coverage is 85%. With Blazent, customers get 100% anti-virus coverage.

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These types of outsourcing problems are typical. There are also more extreme problems – like one client who didn’t account for an entire data center because of data problems. Blazent provides outsourcing governance to help both service providers and enterprise IT organizations avoid these costly mistakes and achieve greater visibility and control in their IT outsourcing programs.

One of the biggest challenges facing IT Outsourcing providers is the new expectations that payments are made against actuals, when assets or services are actually live on the network and being consumed. Although this seems like a reasonable demand from IT Outsourcing customers,  it’s a major problem for service providers – even the largest ones.

Billing for the assets that are actually consumed is complicated in complex IT environments and, if done manually, expensive, time-consuming and prone to errors.

The trouble with those errors: they place a heavy strain on the service provider/customer relationship and create a lack of trust.

When the baseline – the foundation of the relationship and of the outsourcing contract – is inaccurate, the result is disagreement and constant disputes around billing. This was the case for one of our customers, a service provider. They were dealing with a client who had complex infrastructure – hundreds of servers, thousands of PCs, and many assets in remote locations.

Since there was no realistic way to run a wall-to-wall inventory under these circumstances, the Infrastructure Outsourcing contract between the provider (our customer) and their client was established on an inaccurate baseline, which resulted in  time wasted on disputes – for both sides. This included bi-weekly billing calls and got to the point where the business relationship became strained.

At this point, the service provider sought our help. Using Blazent enabled them to automatically establish an accurate baseline for that relationship, to automate ongoing billing and monitoring to reduce costs, and to provide their customer with pre-invoice validation.

In the Blazent customer’s own words, “The beauty was, that for the first time in this relationship, we were finally able to say, ‘here’s an accurate account of all the assets under management.’ It became a fact-based discussion – we have found these assets, they are real and billable. The dispute was over.”

For this customer, invoicing is now 100% error-free, there are no more bi-weekly billing calls, and no more disputes. This of course translates into big savings for both parties, in terms of both time and money.

As the customer says, Blazent was the enabler of getting this business relationship on the right track.