Abstract
In this work we address an IT service customer’s challenge of selecting the cost-optimal service among different offers by external providers. We model the customer’s optimization problem by considering the potential negative monetary impact of different combinations of sequential service incidents on a customer business process – reflected via “business cost”. First, we describe which information a customer typically bases service level agreement decisions upon and analyze which additional information is needed to take a well-founded decision. Second, we define a set of constructs that supports customers and providers when selecting or defining service offers, which address the required service criticality. Third, we develop a procedure enabling customers to solve their optimization problem – given different service offers by risk-neutral providers – using a procurement auction. Introducing this approach, we suggest that customers and providers collaborate to define “business cost measures” which allow providers to better tailor service offers to customers’ business requirements.
Recommended Citation
Kieninger, Axel; Schmitz, Björn; Straeten, Detlef; and Satzger, Gerhard, "Incorporating Business Impact into Service Offers – A Procedure to Select Cost-Optimal Service Contracts" (2012). AMCIS 2012 Proceedings. 19.
https://aisel.aisnet.org/amcis2012/proceedings/StrategicUseIT/19
Incorporating Business Impact into Service Offers – A Procedure to Select Cost-Optimal Service Contracts
In this work we address an IT service customer’s challenge of selecting the cost-optimal service among different offers by external providers. We model the customer’s optimization problem by considering the potential negative monetary impact of different combinations of sequential service incidents on a customer business process – reflected via “business cost”. First, we describe which information a customer typically bases service level agreement decisions upon and analyze which additional information is needed to take a well-founded decision. Second, we define a set of constructs that supports customers and providers when selecting or defining service offers, which address the required service criticality. Third, we develop a procedure enabling customers to solve their optimization problem – given different service offers by risk-neutral providers – using a procurement auction. Introducing this approach, we suggest that customers and providers collaborate to define “business cost measures” which allow providers to better tailor service offers to customers’ business requirements.