It just makes business sense

GARTNER ESTIMATES "that 70% of IT support for infrastructure services can be performed from a remote location" and "remote infrastructure services can reduce labour costs by 10% to 50%, depending on the delivery location, resulting in a 3% to 30% overall net savings, excluding one-time transition charges". Attractive numbers.

Essential  outsourcing checklist

Jaroslav Cerny, MD at RDB Consulting, points out that negotiating the minefield of outsourcing providers and outsourced offerings - and selecting the one that will work best with your organisation - can be challenging. "Taking certain key criteria into consideration when assessing an outsourced service can be advantageous," he says. These include a review of the following: 1. Appropriately skilled technical staff 2. Multi-platform, multi-operating system support 3. Pre-define the services offered, and how they are delivered 4. In-house developed, proactive monitoring and alerting tools 5. Implementation of industry standards and best practices 6. Service level management 7. Regular management meetings 8. Strategic partnerships with software vendors 9. Comprehensive documentation 10. Achieving a significant ROI

Jaroslav Cerny

For companies that don't have the resources the largest operations do - yet have all the pressures and headaches - this type of managed infrastructure service offers the potential of improved performance and lower expenses, which is a great concept regardless of a company's size. Jaroslav Cerny, MD at RDB Consulting, points out that outsourcing has been gaining popularity recently, mainly due to its effective 'pay as you go' model. "Outsourced and managed services are an attractive alternative to companies that are hard-pressed to find skilled, technical resources and need to lower costs.  These services offer a cost-effective 'pay as you go' model for businesses with agreements in place that determine the response time and expected levels of service," he says.

Basically, the outsourcing model offers access to skills, resources and experience that would not otherwise be available to many organisations because of the financial outlay that would be involved in building these specialised proficiencies in-house. This is especially appealing in light of the current global economic downturn. 

RECESSION = CATALYST

"Businesses that are moving to outsourced managed services are looking to lower capital costs, focus on their core business, leverage off experienced knowledge, gain further cost benefits from their IT infrastructure and improve integration to maximise return," says Rabin Ram, divisional director for Xerox Global Services at Bytes Document Solutions.

Rabin Ram

He says that when times are good, companies are better placed to foot the bill for ownership, keeping everything in-house, and retaining control. In times when every cent counts, organisations are well advised to turn to professionals just as they would focus within their organisations on what they do best for their own customers. In return they get the best experience, which leverages experiences globally from international organisations, the collaborative benefits of people working on multiple projects or sites, and the replication of best business practice. "They also get the flexibility of complete solutions broken down into modules, which makes it easier for them to understand and evaluate how customised solutions will benefit them or solve their business problems. There is also the advantage of volume buying power that a single, large service provider can deliver due to economies of scale," he adds.

Adi Leshem, corporate business development manager for ECI Telecom, agrees that the current market situation has made managed services even more appealing than before. "It presents to the customers the opportunity to share risks on one hand and reduce costs on the other," he says.

"Managed services has the potential to reduce costs of existing operations by turning to vendors who, because of specific expertise, can offer the same services in a more efficient manner. It can also support future business development through models of risk sharing which attach pricing to future growth, or deliver services based on the business development needs."

William LaFontaine, IBM general manager of Global Technology Services, adds that controlling costs has always been a key factor in making business decisions, and nowhere is that more prevalent than in the IT department - where a rand saved on operations is a rand that can be invested in more strategic projects. He feels that a solution to the challenge of optimising IT operations while balancing budgets may be a creative approach to IT management - remote managed infrastructure services - that keeps control in the CIO's hands and frees up IT staff to focus on growth areas for the business, yet offers the potential for both reduced costs and improved service levels, too.

AVOIDING THE PENDULUM

The risk pendulum, however, can swing both ways when it comes to outsourced managed services. Themi Themistocleous, chairman of IndigoCube, explains that the swinging of the pendulum is a common occurrence: "Businesses have problems, so they look to outsource whatever it is that's causing them pain. This leads to other problems, so they invariably go back to insourcing, and the old problems resurface."

William LaFontaine

This view is shared by Daniel Nel, CEO of Nebula. He says that any organisation looking to outsource any area of its business must make sure their environment is clean, and that the handover is done properly. Ram points out that it can be risky for the customer if the supplier is not chosen well and cannot then deliver the service as originally envisaged and detailed in the service level agreement. "It is therefore of vital importance that any potential solution provider's track record credentials are comprehensively researched," he says.

One potential solution to the risks involved in outsourcing is doing it in bite-sized chunks. Rob Kimmings, general manager of business operations at ALIndigo, says that completely outsourcing an IT department can be risky, and suggests managed services of certain areas as a better option, avoiding having companies put "all their eggs in one basket". Marc Pillay, divisional manager: Best Sourcing at Konica Minolta South Africa, points out that, particularly in light of today's bleak economic forecast, companies should look to approach outsourcing or "out-tasking" from the perspective of outsourcing a single function at the beginning. The customer can then expand the number of tasks outsourced and appoint an official outsourcing partner as needed.

Despite the potential problems that can arise for companies outsourcing non-core activities, by opting for managed services, businesses can get the solutions they need when they don't have the necessary capex (capital expenditure) for an in-house solution and are lacking the internal skills. The biggest barrier, according to Mark van Rensburg, executive: Managed Services of the Intuate Group, is a mistrust of the outsourcing model, but this barrier is steadily being eroded by every business sector and most organisations feeling some level of added pressure as a result of the economic situation.Top 10 considerations when selecting an outsourced partner.