App Maintenance Outsourcing Gets Moderate Rating

According to our outsourcing study, application maintenance is the third most popular IT function to turn over to a third-party service provider, behind application development and application hosting. But it still gets a moderate rating for outsourcing frequency and customer experience.

The outsourcing profile in Figure 1 from our report, Application Maintenance Outsourcing Trends and Customer Experience, shows how outsourcing of the application maintenance function compares with the outsourcing of other IT functions. On frequency, this function is rated as being on the high side of moderate. The ratings are as follows:

• Outsourcing Frequency and Level: Application maintenance outsourcing frequency scores on the high end of moderate, meaning that the percentage of organizations currently availing themselves of these services is significant but a step lower than the leader, application development. The outsourcing level also is moderate. IT organizations that outsource this function tend to do so selectively.
      
• Growth trend and volatility: The net growth trend and volatility ratings also are moderate. The growth trend is a measure of the number of customers that plan to increase the amount of application maintenance work given to outside service providers in the current budget cycle, minus the percentage that are decreasing the amount of work outsourced. In relative terms, there is little growth beyond normal business growth. The volatility is a measure of the percentage of organizations changing the amount of work they outsource, regardless of whether the change is up or down. Again, there appears to be a moderate change in outsourcing this function.
      
• Cost and service success: Finally, the profile shows the relative performance on our two measures of customer experience. Again, IT organizations experience moderate success in lowering costs when outsourcing application maintenance services. The percentage of organizations that find outsourcing improves service is slightly higher, but also in the moderate range.

The full study examines application maintenance outsourcing adoption and customer experience. We report the percentage of organizations outsourcing application maintenance (frequency), the average amount of work outsourced (level), and the change in the amount of work being outsourced (trend). We also assess the customer experience by showing how many IT organizations successfully lower costs or improve service by outsourcing application maintenance.

Application software maintenance is a critical and central task for every organization. While hardware has become less expensive to procure and maintain, software maintenance consumes an ever-rising portion of the IT budget. As the complexity and cost of applications grow, and as legacy applications require more and more rework, application maintenance and related functions such as application performance management and application lifecycle management pose a key challenge to IT departments grappling with resource limitations.As such, outsourcing these functions needs to be considered as a potential strategy for reducing costs or improving service levels.

This Research Byte is a brief overview of our report on this subject, Application Maintenance Outsourcing Trends and Customer Experience, The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).