Outcome based business - overview
The services industry is shifting its focus away from the delivery of IT outcomes and towards the delivery of business outcomes that result from IT services. Traditional IT-based services focus on reducing IT costs for the enterprise through automation and standardization. The performance metrics are not surprisingly in the language of IT; mean-time-between-failures, average server utilization, average storage utilization, the service-level agreements, or the number of servers that can be managed by a system administrator. Clients are increasingly using measures of revenue, profit goals, and other metrics that indicate positive impact on business performance. This shifting focus is helping companies that adopt this approach to increase sales, reduce the cost of customer acquisition, and more effectively retain existing customers.
Some industries such as healthcare and government are particularly ready for an outcome-based model as they seek to contain costs while simultaneously investing in projects that add value to the organization. For example, to reduce costly patient re-admittance rates, government agencies have passed laws that penalize hospitals if a patient is re-admitted within 30 days with an estimated savings of $8 billion over ten years. IT services solutions that address patient transition care are designed to allow hospitals to manage their patients more effectively, with the objective to reduce re-admittance rates and avoid penalties. Another example is services solutions for clinical trials of drugs, which once were aimed primarily at cutting costs in the trial process but increasingly will target revenue growth by focusing on accelerating the launch of a new drug, thereby increasing market revenue potential and reducing operational expenses for clients. The project's goal is to systematize outcome based business methodology.