Save money
Unless you are running a very efficient IT operation, you are likely to save money by handing your IT infrastructure over to a specialist service provider. However, there is a word of caution here. If you are currently exercising diligence with adequate data management, security, service assurance and asset management, then you will be incurring costs which can be reduced. If on the other hand you are not in full control of these areas, you may find that outsourcing is more a process improvement than a cost cutting exercise.
What is "core"?
We all spend the majority of our working time dealing with day to day issues: Serving customers, keeping the lights on, controlling the purse strings, managing staff and staying legal. And IT infrastructure plays a vital role in keeping it all running. But is it a positive discriminator? Will it help you attract and retain customers? Will it make you more profitable and will it keep you out of trouble? At best it will be unseen; just part of the fabric of the business. The only time it gets noticed is when it goes wrong. So as long as it keeps working, it doesn’t positively affect your business. It can only hinder it. For most companies it is akin to a telephone system. And you wouldn’t dream of running that yourself, so why bother with IT infrastructure?
Looking for a service provider
Bespoke, or ready to wear? You could be forgiven for thinking that one outsourcing service is much the same as another. After all, most companies need largely the same basic services from their IT systems: a method of communication, file storage, a way of sharing information, access to applications and the web and a reasonable level of performance and reliability. However, outsourcing is not about rip and replace. To protect your investment and existing work practices, you must start with your current infrastructure. We all start from different places, so a thorough understanding of the starting place is very important to achieve a satisfactory conclusion.
And the end point may also vary, dependant on the nature of your business. Different industries use infrastructure in different ways. For example, law companies manage large quantities of documents. Backup procedures can be very lengthy and the time taken must be factored into the design to avoid crossover between the day run and the overnight backup window. Banks have to deal with a high volume of online transactions which requires continuous bandwidth in order to maintain service levels.
So although the services may be largely similar, the requirements of different companies are sufficiently varied to ensure that a “one size fits all” approach is inappropriate. But does bespoke mean expensive? Well, only if you go to the wrong tailor. We’ll look at this in a bit more detail in a moment.
Sourcing Strategy
Whether or not to outsource is a strategic decision and there are a number of factors to be taken into account. Is the outsource candidate strategic in terms of competitive advantage? Is it unique or generic? Are the associated skills beneficial to other parts of the business or isolated? Does operational risk increase or decrease as a result of outsourcing? Do your company’s financial metrics improve or diminish? Is it more cost effective to outsource?
It’s really just a case of viewing outsourcing in context with your business goals, objectives and direction. Let’s assume that your intention is to grow by 10% per annum for the next 5 years. What will be the effect of that growth on your workload volumes and how will you scale? You may decide that some services will need to scale considerably and that they are not core to your differentiation in the market place, making them potential candidates for outsourcing. The important point is that a decision to outsource does not conflict with your business strategy.
Speed of transition
As with any change, there is always the potential risk of disruption. The last thing you want is a long drawn out process and delays are usually a sign of poor planning. Experience tells us that very few projects go wrong, more often they start wrong. A robust plan is fundamental to ensuring that potential transition issues can be detected, identified, understood and avoided.
Risk of transition
Understanding is the key here. The aim is to achieve a seamless change, where users are unaware of the activity. There is simply no substitute for due diligence. The more you understand the requirements and the current position, the more you are in a position to reduce the element of risk. It always makes sense to highlight issues at the outset and ensure they are resolved before any changes take place. Hence the value of transformational outsourcing, where anomalies are addressed and infrastructures are rationalised, taking advantage of the transition to derive maximum benefit from the decision to outsource.
Cost
The cost of transition needs to be looked at in the context of future running costs. A low initial cost may seem attractive, but will soon be forgotten as operational costs rise. Take the case where servers and storage are simply transferred from your premises to those of the service provider. You may be missing the opportunity to consolidate some of the workload onto a fewer number of servers with major implications for future operational costs. It always makes sense to examine the options before transition.
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