Case Studies

Definition of the new ICT outsourcing contract for MIUR

ADMINISTRATION	Ministry of Education, University and Research (MIUR)
SUPERVISOR	RTI: STS
PERIOD	2001 - 2003

CASE

In 1997 MIUR followed the transition from ICT service management, based on private treaty, to supplier selection by competitive tenders. Contractual form, used for the management of outsourcing contract in 1997 - 2001, was also based on forfait pricing methods and absence of service levels. This did not allow to manage appropriately costs of contractual services and their efficacy because of absence of instruments for quality evaluation of the offered services and the lack of elements to be compared for the evaluation of the service costs.

CLIENT'S GOALS

Administration, taking advantage of monitoring services since 1995, gave to the Supervisor the task to define technical and economical documentation for a new competitive tender (2003 - 2008), setting the following objectives:

contract control, based on specific levels of service;
evaluation of contractual costs for the definition of starting price of the auction;
definition of new governance procedures of contractual activities.

Goal achievement would be possible only thanks to the detailed information about technical and economical services, provided after monitoring activities on the same contract.

INTERVENTION

For the definition of technical aspects of ICT services has been used a specific methodology, that led to a complete reorganization of interested services, according to the models shared from ICT market. These services are characterized by pricing procedures, based on the volume of the provided services and specific service levels.
Starting price is defined according to specific economical benchmarks of contractual services
In the contract and in the technical specifications, some specific procedures for the management of the relevant contractual events have been included, as problem and change management, monitoring application.

OBTAINED RESULTS

New definition of contractual services and benchmark allowed to fix a starting price with a 17% reduction on management cost, compared to the previous contract (contract annual value decreased from 81 million euro to 68 million euro), with a total saving of about 67 million euro against 120 thousand euro for intervention costs (0,2% of the saving)
Final result of the tender and the additional price reduction, made by the winning supplier, gave an effective cost reduction of about 41%, against the ones of the previous contract (after tender results annual value of the contract arrived to 48 million euro)
Contract governance improved thanks to the availability of control instruments in terms of services levels and management procedures.
New contract form allows to fix more appropriate service costs, according to the effective needs of the Administration

Adaptation of the baseline of MIUR applicative heritage

ADMINISTRATION	Ministry of Education, University and Research (MIUR)
SUPERVISOR	RTI: STS
PERIOD	2013

CASE

New contract for the development and maintenance of MIUR Information System, activated in January 2013, included assessment activities of software package, intended to value the effective dimension of the volume (initial baseline), according to methods widely known in Literature (Function Point Measurement as by IFPUG version 4.2).
During contract activation, baseline value has been fixed on conventional base, as no precise calculation had never been made before, with negative effects on the management of service costs.
Contract implies that the same supplier had to follow the assessment, under the supervision of the Administration.

CLIENT'S GOALS

Administration delegated to the Supervisor the task to verify the correct application of calculation methods, adopted by the supplier for the evaluation of the initial baseline according to the contract in order to rationalize management costs. For the correct application of the methods, included in the contract, it was necessary:

identifying correctly the structure of these applications;
valuing calculation methods, used by the supplier;
verifying the final results of the calculation.

The activity had a great importance because of the economic relevance on the service costs for the Administration and for the Supplier

INTERVENTION

In order to reach the goals, fixed by the Administration, Supervisor made the following actions:

definition of the rationalized parameters of the initial baseline software structure, overcoming existing inappropriateness and identifying parameters according to the calculation methods (this was the most difficult part because eventual inappropriateness would have been reflected on the calculation results);
definition of the application process of the parameters to the current contest;
Check of the calculation methods, used by the supplier by an analysis of random calculations;
Complete control of the formal correctness of the measurament information, presented by the supplier, in compliance with IFPUG 4.2 standard, directed to underline possible incongruities with declarations of detailed calculation
Activities have been characterized by a considerable complexity and requested the employment of experts.

OBTAINED RESULTS

Thanks to the activities, value of the baseline volume has been halved, reaching a saving on the costs, indicated in the contract, of more than 4 million euro in the remaining part of the contract period;
The relation between the direct cost of the supporting activities of the supervisor (about 75.000 euro) and the minimum saving value is about 1/50 and that resources, available for the Administration, will be used in innovation activities.