3. You didn't set up effective innovation metrics.

Innovation in IT outsourcing varies from customer to customer. So, too, do innovation metrics. Outsourcing customers have to define their unique desired outcomes and tie those objectives to service levels in the contract.

That's easier said than done. Outsourcers are starting to move away from traditional IT service metrics that are easier to collect—and meet—to more complex business-outcome metrics, but the transition "is happening more slowly than many expected," says Andrews.

"Clients realize that a variety of internal and external factors could impact a business metric—not just the work of the service provider—and they are hesitant to link the dollar value of the contract to such a complex metric."

Further complicating the situation is the fact that more quick and easy metrics for innovation—such as number of Patents or R&D spending—don't do the trick when it comes to IT outsourcing and innovation.

There are pockets of new innovation-related metrics activity in the IT services industry. India's Wipro is starting some of its engagements with metrics discussions. "Instead of dictating a traditional IT metric, they are honing in on a client problem statement such as, 'We want to reduce our days-sales-outstanding,'" says Andrews. "That helps the Wipro delivery team think about ways to affect that metric with their technology capabilities."

In many cases, IT outsourcing customers who want innovation must push providers toward metrics that align with their innovation objectives, whether it's the introduction of emerging technologies, the development of more flexible technology platforms, process improvements, or increased business collaboration. Defining the desired end state will challenge vendors to come up with creative ways to meet your innovation requirements, says Andrews. [form:cio.com]