In my recent blog posts, I’ve addressed the “what, when, how,” and “why” of outsourcing, including the best time to outsource (i.e., when you need help advancing your business). The “when” and “why” may sound very similar, but there’s more to the “why” than just needing help. I often find that many organizations are relying on reasons that are not ideal when making their decisions around outsourcing and managed services. This faulty reasoning can lead to outsourcing at the wrong time – and often to outsourcing the wrong activities in the wrong manner.
First, let’s address cost. Read or research anything around outsourcing, and you’ll find that cost is often the number one driver. Don’t get me wrong; this is a valid reason, and outsourcing certainly should be pursued at a price point that maximizes the business return. However, using cost as the primary driver will lead to problems down the road. The “cost-driven” approach often leads to totally outsourced environments, which as discussed previously, can remove the key connection between the business and vested IT resources that understand the important linkages that exist.
Another popular reason for outsourcing is operational improvement. On the surface, improving operations sounds like a great reason to outsource. Again, this should absolutely be a goal of any outsourcing arrangement, but relying on operational improvements as the primary driver can lead to structure and processes that may not support the business most effectively. When it comes to continuous improvement around operations, the law of diminishing returns is certainly in play: I’ve seen improvement efforts push costs too high, create resource problems, break business processes, and diminish morale. I advocate a process integration approach – which will fit better within the strategic framework of the business itself – rather than a process replacement approach.
The best answer behind the “Why should we outsource?” question is to advance people. The IT market is evolving and changing very quickly, leading to constantly changing skillsets required for most IT practitioners to be successful. Today’s IT staff has to broker services, be more business savvy, manage projects effectively, communicate more often and more effectively with the business, and juggle more strategic aspects of the organization. These are very high- value business activities that must be done, but someone still needs to provide the day-to-day operations around the clock. There is neither the time nor adequate resources to do both. Organizations need to enable their key people to advance the business by giving them the time and tools necessary to accomplish this task.
By outsourcing operations to advance people, you empower your IT staff by giving them the tools and resources to work strategically on the business, and ultimately, to create a tremendous competitive advantage.
Lee Whitaker, Director of Managed Services