Does this sound like your business? You require absolute control over your IT function, but have a shortage of capital. You spend a lot of time performing mundane data collection and reporting tasks. You find it difficult to keep your staff up-skilled and they leave as fast as you can train them. If this sounds like your business then you're probably a good candidate for outsourcing some, or all, of your IT function.

Before you commit to anything though, have a good look at what's available. There are many types of outsource service providers in IT, each specialising in one or more specific fields. For example MSP's specialise in network health and availability, ISP's supply bandwidth, ASP's provide application outsourcing and WHSP's provide web hosting services.

You need to consider whether you pass over the repetitive tasks that bore your staff and take their focus off strategic objectives -  or perhaps you should outsource the complicated mission critical applications to a provider that can guarantee continuity of service, disaster recovery and other value added services?

What are the options

In source
In this scenario you employ staff to run your systems exclusively in house. This is the way businesses have traditionally managed their IT function - but an in sourced solution can be an easy option to be fooled by. Why? Businesses need to consider what it really costs. Overhead associated with headcount - real estate, software licenses, PCs, phones, mobile phones, wages. And does your business rely on provision of 24 hour IT support? That'll take some doing. What about the cost of staff retention, training expenses and the upkeep of industry knowledge? A long term relationship with an outsourcing company will deliver the same benefits as an in house IT team such as retention of intellectual property, while taking the headaches out of those issues above.

Task Source (Partially outsource)
Partner with an outsourcing provider to deliver on targeted aspects of your IT requirements, perhaps the more repetitive or complicated needs such as security, network, application, storage and voice management. Your in house staff would then focus on providing front line support, running critical applications and addressing core business objectives, while still maintaining a high level of control over the outsourced activities.

Exclusively outsource
Partner with one or more outsourcing providers for your entire IT function e.g. to advise, install, manage and report on the systems, networks and special projects. These outsourcing partners would be answerable to your senior management team, and would become a fully functional IT division in itself.

The Outsourcing Market

Willem Bos, general manager of services for Logical CSI explains: "Managed services and outsourcing is a growth industry which is evolving rapidly and requires constant revalidation in terms of service offerings to remain competitive." He says this becomes increasingly relevant as organisations focus only on capital initiatives that support the core strategic direction of the company. "Logical CSI's approach is to provide a core range of offerings that are customer demand generated and talk to those customers regularly about what their growing needs in Managed Service Provision are."

Outsourcing can be an effective method of addressing some specific business issues, says Bos. "The practice can provide an environment where return on investment is measurable and service delivery becomes accountable, as all deliverables are tied to Service Level Agreements (SLA's) and where applicable, penalties for non-achievement of these SLA's are enforced."

Why move to an outsource model?

IT and technology is evolving quickly. Businesses need to understand and keep up with the systems and tools that their competitors and customers are using to remain competitive. Complex business issues often require complicated, and often expensive, systems to address and manage them. Many organisations lack the working capital to purchase systems outright - making leasing and outsourced arrangements attractive propositions. The increasing convergence of business and technology issues and the need for management executives to be involved in the decision making process for all levels of IT spending requires IT staff with the skill to strategise and communicate across diverse business issues. A good outsourcing partner will provide assistance in these areas as part of their service.

Justification of IT spend and proof of return on investment is demanded. This takes intelligent systems or considerable time to achieve. Also some functions such as network security and e-commerce website availability need to be addressed around the clock 365 days a year. In an outsourcing situation, employing a head to provide coverage for multiple customers and purchasing intelligent systems to automate the process is justified. 

Those businesses that have invested in a raft of propriety products may find their staff are spread too thin over fragmented systems. Today there is a lack of highly skilled professionals who have experience or are trained in the skills required to meet the needs of a modern IT department. An outsource provider can afford to retain skills for multiple product lines and can extend the lifetime of products past official "end of life" timeframes.

If you choose an outsourcing partner wisely you're likely to gain more time to focus on core business objectives, save money, receive better value for money and gain access to international best in class practices and solutions. Not only that, but you'll also have the trained resources available to support your requirements - whatever tack your business takes in the future.
OPEN BOX

10 things to remember when selecting an outsourcing partner

Thinking about outsourcing all or part of your IT infrastructure? Consider the following:

March 2003

By Tony McDrury