On the Role of Analytics in Estimating the Cost of Delivering Complex Information Technology (IT) Outsourcing Services Projects

Abstract

In this paper, we describe the challenges in accurately estimating the cost of delivering complex IT outsourcing services deals from an IT services provider's point of view, and we discuss how and which analytics can be employed to improve the accuracy of cost estimations. The accuracy of cost estimation is measured by the gap between the costs predicted at the time of contract signing and the actual costs incurred in delivering those solutions. Our proposed analytics are grounded in a set of observed influencing factors that are derived from our experience in developing costing tools for a large IT services provider, Also, we present a vision for building an ideal operational environment for IT service providers to achieve increased levels of visibility into their operations to improve the accuracy of their project cost estimates. To the best of our knowledge, this is the first work of its kind that articulates the issues, challenges and the role of analytics for improving the accuracy of estimating the costs of delivering complex IT outsourcing projects from IT Service Provider point of view. We hope that our work serves as a call for future research in this area. We are currently actively developing some of the analytics proposed in this paper at a large IT services provider.