Outsource everything? Turn it all into operational expenditure instead of capital expenditure? Is this the answer to managing IT operations better?
According to research by AMR Research , the key to achieving savings in information technology expenditure is to outsource what is not strategic. This is not the same as compulsory or necessary tasks – strategic tasks are those which specifically add revenue or increase customer loyalty.
A study by PricewaterhouseCoopers showed that outsourcing not only saves costs, but enables organisations to better access wider skills, gain more flexibility, reinvent their business model and drive innovation. In the current economic climate, your vendors can be thought of as your partners - valued collaborators who can help drive business reinvention.
This kind of strategic outsourcing can help grow your business more quickly. Instead of gradually developing inhouse skills, you can leverage the specialist skills of your providers to generate more value more quickly - only using what you specifically need for as long as you need it.
There are four areas of savings identified:
 |
Skills and headcount
Outsourcing typically gives access to a wider range of skills than can be retained inhouse. Keep an understanding of your key business processes in house, and use outsourcing to draw in resources as you need them. |
 |
 |
External services
Small savings can be made by realigning and consolidating services already provided externally. |
 |
Application software
Some business processes are much less inexpensive if purchased on an as-need basis, and can be outsourced. |
 |
Software infrastructure and hardware
Many companies overprovision software and hardware, buying resources that they never use. |
How to be successful when outsourcing your IT infrastructure
For some companies, outsourcing has a bad name based on poor previous experience. However, the AMR report points out that service delivery models have matured substantially in recent years. Improvements in provisioning, networks and storage now means that there can be considerable advantages in sharing the cost of major IT components by outsourcing to vendors who specialise in the relevant area.
The obvious examples are data centre services, which comprise services such as storage, computing power, networking, communications and - crucially - specialist application availability and management services. In practical terms, this means having a specialist provide your application provision, delivery and management services rather than having this in house.
To be successful in outsourcing your business IT:
- Make sure that you understand the reality of your current costs and processes. These are often far higher than you think.
- Establish service levels based on continuous improvement and desired business income.
- Invest in program, project and relationship management skills for internal staff to ensure that your relationship with your providers is as effective as possible.
- Benchmark service levels and use them to push process improvements through outsource partners.
- Match the skills and geographic location of outsourcing partners with tasks being outsourced.
Choose your partners
Outsourcing can be as small as managing your recurring billing through a service like Multibase’s rePay scheduled payments system at a cost of cents per transaction to replace manual billing, to outsourcing the management of your in-house servers to experts who dedicate themselves to maintaining.
Many buyers say that successful outsourcing is most dependent on selecting the right vendor, as well as one that commits to a high level of engagement in ongoing management of the business relationship with you. This includes a well-structured deal.
Multibase is well place to support your business as a partner, with offerings across the range of business IT services:
|