Business in the Modern Age
Use of Information and Technology (IT) continues to increase with modern businesses and is a necessity for remaining competitive. Most business leaders would agree that good IT systems management is necessary to leverage this benefit. Therefore, the topic of organizational models deserves consideration in your quest for optimizing management of your IT systems.
Modern businesses use internal resourcing, external resourcing, and hybrid organizations to meet their IT management and operational requirements. How do these different organizational models perform, and which model is best for your organization? To answer these questions, it may be helpful to understand what other businesses (your competition) are doing. The following discussion can provide insight to this topic.
Statistical Summary of Outsourcing IT Management Services – A Global Perspective
Statista reports IT outsourcing by function ranged from a high of 64% for software application development, to 6% for KPO (knowledge process outsourcing). This information stems from a survey of 4,498 CIOs and technology leaders across 86 countries in Q1 2017. Assuming the respondent group fairly represents global business trends, we can conclude the following approximations, on a global basis:
- Approximately 2/3 of companies outsource Software Application Development
- Approximately half of companies outsource Software Application Maintenance
- Approximately 1/3 of companies outsource management of Networks, Help/Service Desks, Systems Integration, and IT Infrastructure
- Approximately 1/8 of companies outsource all IT function
A more detailed breakdown is available from the Statista report.
What we can conclude from this information is that the majority of CIOs and technology leaders globally utilize hybrid solutions. They utilize a combination of in-house and outsourcing resources to fill their IT service and management requirements. Logically, we may conclude there is significant benefit to utilization of hybrid outsourced/in-house IT service and management solutions.
However, rather than accepting this statement of ‘logic’ without hesitation, let us investigate the issue further. The following points of discussion outline some outsourcing benefits you can consider as you weigh your IT service and management options.
Major Benefits of Outsourcing IT Service and Management Functions
Strategic Development and Implementation of IT Systems
A high quality IT strategy will align with your business development and operational strategies, and will enhance tactical deployment within your daily operations.
A competent IT MSP that has significant experience with developing business and IT strategies and solutions can help you optimize your Information and Technology solutions. They can help you understand the relevant software application options available, whether off the shelf or customized to fit your specific business requirements.
Benefits of engaging an IT MSP that has a demonstrated record of helping companies develop business and IT strategy are significant. The greatest impact is realized when the MSP participates in development of the business strategy. This occurs before the IT system and operational strategies are developed. However, not every IT MSP possesses demonstrated capability to deliver positive impact to business strategy development. We recommend exercising due diligence in selection of an IT MSP to ensure this capability exists before signing an IT MSP service contract.
With a fully developed business strategy in hand, a competent IT MSP will lead establishment of an IT strategy. A quality IT strategy aims aligns with the business strategy, and enables smooth development of operational plans. This includes identification of appropriate applications that expedite business processes and increase company profits.
Leverage Industry Knowledge
On average, an IT MSP’s exposure to applications is broader in scope, than that of an in-house IT service provider. This is largely due to diversity of the client base and types of businesses the MSP serves. Consequently, an IT MSP will also tend to possess a relatively broad scope of applications knowledge. This equips the MSP to provide detailed input to selection, set up and operation of applications.
Similarly, the MSP will have exposure to a wider range of system configurations, business operational profiles, and IT solutions. The MSP has progressed through the cycle of planning, design, installation, and operation many times. These experiences equip a competent MSP to identify a range of viable options, and to provide guidance as to likely results for each option. An MSP with the relevant business acumen and understanding of your business can provide guidance on the best ways to combine your business and IT strategies.
Maintain Peak Business Performance
Outsourcing a portion of IT service and management narrows the scope of daily activity, to which a company has to devote attention. This allows company management and employees to provide greater focus on their primary business functions. Additionally, outsourcing IT service functions to a capable MSP will result in reduction of system downtime.
Modern business process typically requires filling several important IT department roles in order to perform competitively. A fully staffed IT department typically includes roles of CIO, IT Director, Network / Systems Administrator, and Front Line Support. When a professional is dedicated to each role, the combined employee expense can be difficult to justify. This is particularly true for small to medium size companies. Consequently, this scenario challenges decision makers to limit employee expense while maintaining high quality work output.
Some small companies attempt to fill multiple key roles with one or two professionals who have wide-ranging experience. This model can meet the objective of limiting employee expense. However, it presents challenges for meeting the objective of maintaining high quality. For example, professionals with the relevant range of knowledge and experience are not easy to find and employ. If this highly qualified employee leaves the company, business performance will likely suffer while the position remains unfilled.
Another risk of this model resulting in poor business performance relates to managing periods of high volume IT workflow. System disruptions, new software installation/integration, and many other operational anomalies can result in high demand for IT service. If the limited IT resource has to redirect focus to these high intensity events, day-to-day operational maintenance and oversight suffers. Conversely, if staffed to handle peak workflow volume, the company will be paying for employee idle time in slack activity periods.
From another perspective, consider the information needed to equip an employee to fill these roles effectively. The amount of information needed to perform a combined role is great, and is evolving continually. Expecting one employee to maintain consistently high performance in multiple roles may be unrealistic. Attempts to do so may expose the company to liabilities arising from human error and inability to meet demand. As the company falls behind in evolution of technology knowledge, general performance will likely suffer, relative to the competition. The cost penalty in this situation is potential loss of sales due to customer dissatisfaction and/or an inability to compete on price due to the underlying inefficiencies.
Use of a competent IT MSP can significantly reduce IT cost while providing access to expertise as needed. Leveraging MSP service on demand can successfully manage peak workflow. MSPs typically spread employee expense among multiple clients and workflow streams, and endure less idle time. Consequently, MSPs can offer this service at much lower cost than that of in-house services and management.
Secure Availability of Expertise
The consequence of losing key staff with business critical expertise is high with an understaffed IT department. Resulting interruption of workflow can cause loss of production, and can delay delivery to the customer base. This situation can quickly escalate, causing damage to customer relations and company reputation. Rest assured, risk of this situation occurring is significantly lower when using a competent IT MSP.
Custom Information Services (CIS) maintains a record of accomplishment for delivering all of these benefits to a range of businesses in the Dallas/Ft Worth Texas metroplex. CIS is available for a free consultation to help you investigate the opportunities for leveraging these benefits for your company.