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Organization Level: Establishing Service-Level Measures

Service-level measures are most commonly associated with outsourcing arrangements. They are established as a means to measure the performance of an external provider of software services. In addition, as organizations become increasingly sensitive to the needs of their customers, and as IT goals and objectives become more aligned with business performance and customer satisfaction levels, internal service-level measures are becoming more popular.

Function points play a key role in the establishment of application development and maintenance (AD/M) service-level metrics. There are three typical outsourcing scenarios in which function points can play an important role: single projects or applications, application maintenance, and the outsourcing of an entire AD/M environment. The decision to outsource a particular project rather than an entire development shop, of course, will vary significantly. Some of the typical reasons for outsourcing may include any of the following:

  • To allow companies to focus on "core competencies"

  • To convert relatively fixed allocated costs to direct variable costs

  • To take the IT function to the next level of capability

  • To improve time to market

  • To facilitate the best possible implementation of new applications

  • To change the culture and re-skill the IT function

  • To convert legacy system resources to new development resources

An effective set of measures is mandatory to monitor performance trends and improvements. These measures should link to and provide information on performance as it relates to stated organization goals and objectives.

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Last Update: November 17, 2020