Outsourcing of IT activities without losing control

Maintaining control over future  decisions is critically important when outsourcing an organisation’s IT activities Yet many supplier contracts  include no  provision for supplying information needed to support decisions and adjust priorities as business activities and processes evolve.

Apoteket’s primary business activity is the distribution of pharmaceuticals across Sweden. Apoteket also acts as an intermediary in providing information from pharmaceutical producers to patients as well as to hospitals and other health care providers. Apoteket has been in a period of major business change, as it has lost its monopoly position and as a result has had to divest assets and reconfigure its business

Senior management has been putting increasing emphasis on better financial performance and improved supply of Apoteket’s products and looking for better ‘value for money’ from the IT spend. They wanted to get a better understanding of IT activities and IT spending and to make the performance transparent to the business. They wanted to have a better base from which to make strategic decisions and to set priorities for the future. They wanted to identify those areas of the business in which IT service is an ‘issue’.

With this business context, CIO Anders Persson recognised the necessity of selecting and implementing a business focused measurement process so that it would be possible to measure the ‘vital signs’ of all IT activities.

He selected the IT Optima analysis tool set.

Improved transparency and better communication of IT performance and spend

The measurement process was introduced immediately before the major business changes mentioned earlier, and provides a baseline for ongoing reviews as the business and IT evolve. The results show the value of IT and not only the cost of technology and service level.

Effective customer-supplier cooperation through an incentive model

As part of the work to ensure effective customer-supplier cooperation, supported by IT Optima, Apoteket and one of their IT suppliers, Tieto, have developed a new incentive model for outsourcing activities. The model builds on a bonus system in which the supplier  earns points by achieving jointly agreed targets. This has provided both parties with a tool to set and manage performance, measure KPIs and agree targets for both the IT operations and the applications portfolio management. It has created a relationship of openness and learning between Apoteket and Tieto, helping them to achieve further improvements.

Simplicity and synergies between the tools

When Apoteket decided to introduce a new IT performance measurement process they set very clear criteria:

• Simplicity and minimised effort, so that it  caused minimal disruption to business activities and was not time consuming for the  staff
• Focus on all the areas which are important for a good relationship between Apoteket and its  suppliers
• Ability to compare and learn from other organisations with well defined and comparable benchmarks. Access to experience from other similar organisations and their business situations.
• Low total cost for the service.

IT Optima’s solution proved to be the best against all of these criteria

Focus on the important things

For Apoteket the transparency in IT performance and spend that they wanted has been achieved in an easy and speedy way for a minimal investment. The analysis has given senior management an objective view as a base for discussions and decisions, and this proves to be helpful in business decisions outside IT as well.

The analysis helps management to focus on what is important or critical while not neglecting the rest, and to continuously compare and learn from other organisations using the IT Optima services. This has led to significant improvements of the IT support to the business processes.

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