Services and Service Level Agreements
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Services and Service Level Agreements book
The charges may range from a global fixed price for the whole contract at one extreme through daily rates and direct costs, to intricate formulae for individual calculations at the other end of the scale. Allowance should be made for adjusting the charges during the life of the contract, to accommodate variations to the services, or to enable the supplier to cover its own rising costs. In evaluating outsourcing charges, the customer should ideally be making direct comparisons with its own current budget. The supplier will claim business experience in its customers' industries and that it is continuously keeping up to date technologically. The customer's financial motives may go further than a cost-cutting rationale or seeking predictability of costs. When the supplier acquires equipment and staff from the customer, this may release capital and other financial resources. The customer's budget for outsourcing information technology (IT) must always include the costs of preparation for outsourcing, which can be surprisingly high.