IT outsourcing: when it works and when it doesn’t

Outsourcing IT can deliver substantial benefits in both the medium and long terms, but getting it right takes more than a glance at a spreadsheet.

If you are considering outsourcing your IT, it’s likely you are experiencing significant disruption within the business due to:

• Staff change, such as key personnel loss or additional flexibility needed
• Technical change, which may require new IT skills
• usiness change, requiring extended coverage or new IT solutions

Although these reasons aren’t always the primary motivator. Sometimes the desire to outsource is primarily financial.
As an organisation dedicated to providing outsourced IT, we know that when outsourcing is done for the right reasons – and with the right objectives – it can make a real difference to an organisation.

But the reverse can also apply – yes, we said it. Outsourcing arrangements performed without an alignment of outcomes create problems and are a no-win situation for either party.

Therefore, in this article we will examine when outsourcing your IT works best – but also when it may be better to retain or supplement your internal team.

We will mainly focus on the people and service aspects, as the decision process about whether to outsource infrastructure is usually more straight-forward.

The rule of two in outsourcing

When it comes to outsourcing anything in business, cost often becomes a factor. However, reducing the choice to a simple matter of minimising expenses is not a recommended starting point for IT outsourcing. This is because, depending on the services required, outsourcing can cost a lot more in the long term than simply growing and managing your own internal IT teams.

You may have heard this mantra:

Outsourcing arrangements are often sold on the premise that they will deliver all outcomes in the fast-cheap-good trinity. However, this ‘Goldilocks’ state is rarely achieved without a large amount of existing inefficiency. Which lends itself to the argument for always picking the ‘Good’ options.

1. If a solution is fast, but not good, you will spend more time fixing it up or managing it in the long run.
2. If a solution is cheap, but not good, then you will spend more money fixing it up or managing it in the long run.

So while cost may be a factor, it should be a secondary one at most. Instead, consider some other business-oriented drivers, including:

1. How do your employees impact your business? Are you facing issues related to key personnel loss? Do you have a need for greater flexibility in staff numbers?
2. What’s currently involved in your IT environment? Is your environment fairly modern or is there a need to refresh or extend your IT capability? Will these extensions require new skills? Does your in-house team have these skills?
3. Do you have strategic growth planned? Business growth necessitates IT growth, as more locations and more staff need more equipment and services, which can be difficult to manage with a smaller team. Do you have new products and service that require new IT solutions?

Every business is an IT business.

You may have heard this saying in meetings or seen it floating around on LinkedIn. It doesn’t mean that your organisation focuses on computers. Instead, it means that your business relies on IT to function.

This statement is true for almost any business. IT permeates virtually any business activity you care to name. Communications, payroll, recruitment, public relations, marketing, inventory, production, logistics, distribution – name a department, and chances are that IT is in there somewhere. Some people might limit their IT to emails and internet connectivity – but there are a lot of opportunities for IT to improve efficiencies, streamline processes, and help lower stakeholder frustrations.

Many factors at play

As you might expect, the demand for IT solutions expands as a business grows. You need someone to install new systems, troubleshoot those already in use, keep intruders out of your network… the list of responsibilities is too long to enumerate here in its entirety.

Just as every company is different, managed IT services vary depending on their needs. Here’s an overview of the different types of services that managed IT service providers (MSPs) are likely to offer, as well as the types of companies that would benefit from these services most.

Given that IT already exists in your organisation to at least a small degree, how can you tell if outsourcing it will in any way improve your core processes?

Examine the most frequently used parts of IT

The first step is to look at the current IT systems and what you use these platforms for.
When examining the IT elements listed below, try to keep in mind the following:

• Are you able to explain the problems that your internal teams are trying to solve?
• What are the impacts and improvement opportunities within the business that you believe IT can improve?
• What are those issues costing you, both directly and indirectly?
• Have you given your IT teams the chance to suggest solutions for evaluation?

Which option offers you the best outcomes in the medium to long term on the balance of things?

Handled correctly, IT can be a source of competitive innovation that delivers superb value. Yet IT is often seen as a cost sink. While it’s true that IT can add to the cost of doing business, it doesn’t necessarily follow that cutting the cost of IT through outsourcing is a responsible action in the long term.

Your internal teams often carry knowledge and experience unique to your organisation. They’re well placed to manage your IT environment and offer strategic insights that change how you operate. It makes no sense to downgrade such a team to save a few dollars.

On the other hand, if you’re growing and have no internal IT, you get to start from scratch. This approach gives you a clean slate to build out your IT environment in a way that works for you. If you have the critical mass needed to build a self-sustaining internal IT team, it makes more sense to follow this route.

With that being said, here are the areas you might want to examine when considering IT outsourcing.

Areas for IT outsourcing

IT support. These hardworking individuals help keep an organisation running smoothly by providing an internal source for maintenance, troubleshooting, and automated tasks. IT support can free other internal IT resources to focus on revenue-generating activities and provide extended access hours to a team of IT professionals.

The decision to outsource this solution depends on your organisation’s values. If your IT environment is somewhat involved, you have a stellar team, or your IT support keeps things rolling on smoothly, then there’s no real need to investigate outsourcing.

vCIO. The chances are that if you already have a chief information officer, you’re unlikely to require the services of a virtual CIO (vCIO). However, suppose you don’t have a full-time resource to manage your IT and create strategic IT plans. In that case, a vCIO service means you can still access a senior executive consulting service for regular updates that help your senior management team manage ongoing IT performance.

Cybersecurity. The risks associated with poorly managed cybersecurity are already well documented, and you can not easily quantify the value derived from appropriate levels of risk mitigation related to information security. If you have a team that knows their stuff, they are worth their weight in gold. However, if you don’t have an IT team that specialises in cybersecurity, having an external provider manage these services can be a valuable decision. Especially if they’re ISO certified.

Cloud services. Outsourcing cloud services involves transferring responsibility for cloud-based services or platforms from internal teams to an external provider. The MSP can handle any aspect of cloud you care to name – from setup and license management through to data transfers and even staff training. Not to mention upgrades and maintenance on essential systems such as cloud backup and disaster recovery. One key reason to outsource is the removal of key personnel risks. If your internal team relies on one individual to manage and maintain your cloud environment and they’re suddenly not available, then their absence can disrupt the entire business. But there’s still a lot of value in having a team of passionate professionals on hand to manage and maintain this kind of vital infrastructure.

Unified communications. Unified communications (UC) becomes an essential business tool for organisations as they become more connected. Integrating voice, video, messaging, presence, and conferencing tools, UC aims to enable collaboration regardless of location. There is a sweet spot where outsourced UC belongs. If your organisation only needs relatively simple telecommunications with online messaging, you can manage several off-the-shelf UC packages in-house. On the higher end, full-focus contact centres often have internal staff to manage bespoke systems. In between these two extremes, outsourced UC helps take the guesswork out of the platforms used, management, and how they work to deliver improved collaboration and innovation.

End user computing. Managing your users’ devices is the key to giving your teams the freedom they need to work anywhere. Finding the best way to manage the risks involved can require the insights of a professional. If you have a user volume that warrants an in-house team, then outsourcing may not be an ideal outcome. On the other hand, if you don’t have dedicated IT support – or want to free them up to work on more value-adding projects, outsourcing can help you manage your platforms while reducing your internal administration burden.

Applications. End-to-end application support can change how you do business by streamlining daily interactions and reducing the risk of failed deployments. If you have a growing number of users, an in-house team makes sense. However, if you’re shy of the critical mass needed to warrant dedicated app support, outsourcing can help you manage your applications while reducing IT noise related to app performance.

Connectivity. Reliable and efficient connectivity solutions are the cornerstone of modern work. Without connectivity solutions you can trust, productivity quickly stops. Like many options on this list, a managed network solution can take the guesswork out of installing, operating, upgrading, and monitoring these critical investments. This solution makes outsourcing an ideal option for all but the largest enterprises, as the cost savings alone can significantly impact an organisation’s bottom line.

Professional IT services. In theory, having in-house IT professionals precludes the need to outsource for IT consulting, as you have an individual or team on-hand who can tell you what’s needed, how to improve systems, and how much it will cost. However, if you don’t happen to have a team of strategic IT professionals on hand, then accessing innovative solutions and well-defined IT strategies can feel out of reach. Medium-sized businesses that don’t already have an in-house IT professional tend to outsource these roles to a managed service provider. This option delivers access to valuable insights and planning services, but without the cost of a full-time professional salary. However, suppose an on-site professional is needed. In that case, MSP can also provide on-site staffing for many purposes, including backfilling temporary vacancies or taking on a full-time position as your go-to IT strategist.

Where to from here?

You might not be sure exactly which outsourced services your organisation needs – if any – but an audit of your existing IT environment can help identify any gaps.

A managed IT service provider can go through the strengths and opportunities inherent in your current setup and identify the solutions that work best for you.

While many MSPs provide a blend of the services listed above, the real value offered by outsourcing comes from combining services for two key reasons.

1. You get a single point of contact for everything IT – that’s troubleshooting, maintenance, strategic insights, procurement – you name it!
2. You free internal resources for other value-adding processes. Sure, you have internal IT already. They know your business and could be working on many exciting and innovative projects. But instead, they’re running backups and applying security patches. Support their efforts by outsourcing the typical tasks and letting them focus on more value-adding areas.

Outsourcing Options

Keep it in-house – you’ve got a crack IT team already, and they’re on top of everything. Operations are smooth, there’s no IT noise, and the team is working on innovations that add value. Why fix what isn’t broken?

Fully outsource – let’s face it, your organisation is not in the IT business. Your specialities lie elsewhere, and gaining the capability to build and run an IT environment is somewhat outside your capacity. Outsourcing your IT will give you the resources you need to get on with things without worrying about daily details or long-term IT project delivery.

Co-managed IT – Why not both? You’ve got the staff who know their stuff and do a great job. They don’t need outsourcing – they need support. A co-managed IT solution (Commit) gives you the option to split IT duties between internal staff and external managed service providers. The result? A joint focused team that can handle whatever the IT world can throw at it!

Conclusion

Whether you already know what your organisation needs from IT or are just exploring your options, outsourcing is not a step to be taken lightly. Knowing what you stand to lose is just as important as knowing what you stand to gain, and a thorough investigation of the opportunities available should be the first step in the process.