Here are a few definitions:
- Outsourcing is now a well-known concept: you hand over a project, or all or part of your IT department, to a service provider.
- Insourcing emerged as a concept after outsourcing took off, and means taking back what you previously outsourced.
- Co-sourcing means different things in different sectors. It can be defined in simple terms as "collaboration". In the IT sector, when we talk about co-sourcing, we mean that the customer continues to manage the IT department, whereas the staffing is handled externally
- Multi-sourcing means that a company no longer ties itself to working with just one service provider. We are seeing more and more often that projects are being shared across several providers, each with their own specialization.
What's the point of all these terms and definitions? Trendiness aside, they do get us thinking about the million-dollar question for your IT department: should I be outsourcing?
To answer this question, we must first have a clear picture of the scope of your IT department and what its responsibilities are. System management is a given. But what about application management and user management? To what extent are users at your company allowed to install apps themselves, and who is responsible for maintaining these? How broad is the support provided by the IT department to users? Once you have defined the answers to these questions, you can move on to the next question: what should I, or shouldn't I, be outsourcing?
I'll do it myself...
We've been hearing about the benefits of outsourcing ad nauseam for years now: cost-savings, increased efficiency, greater flexibility and so on. But does this mean there are no advantages to having your own IT department? Although a survey by Deloitte from 2014 indicates that outsourcing is still a growing trend, there are also political and technology factors that could put the brakes on this development in the next few years.
In particular, legislation regarding privacy, data security and offshoring. A move towards IT outsourcing is certainly not one you take lightly. Rapid technological developments in cloud computing and elsewhere have forced companies to take time to think about the security of their data. If service providers on another continent cannot guarantee adequate data access and back-up capabilities, then it may make sense to opt for your own data warehouse in-house.
Small and medium-sized companies it is also the case the you can react more quickly in-house to any technical problems: reporting of technical problems through a ticket system, phone calls to the service provider, phone calls or jumping in the car to fetch a solution, all of this takes more time than simply talking to a colleague who's sitting right next to you. For a company with just five employees, the costs will outweigh the benefits. Moreover, you know your employees and their capabilities better than anyone, and they know your business better than anyone. With your own employees, you get everyone on the same page faster.
I'll outsource it...
But what about the lightning speed of technological change at present? New updates, apps and options are released worldwide, every few seconds. If you want to keep up with these developments, you need sufficient resources. Do you have time to stay on top of all the developments, in addition to performing your everyday IT management? If your company is growing, the complexity of your IT management will grow with it. Can you keep track of all this and provide your end users with the quality they deserve?
Business continuity is another important theme. It's an oft-forgotten factor that only seems to become a priority when lightning strikes your servers. Do you have the resources you need to duplicate your IT infrastructure and databases yourself?
Is your business sector one that requires 24/7 support? Does your production run in a four-shift system? Then you need at least four or five full-time IT employees to man the help desk. The salary costs quickly add up, assuming you can even find the right people to do the job. For proactive monitoring, you also need to have the right technology.
It's safe to say that the key points for decisions regarding outsourcing have shifted from products and technology to results. As the CIO of a complex company, you are no longer interested in how your ERP package works, you just want to know that it will work, problem-free and with minimal maintenance. In this case, it can be useful to outsource the technical aspects to a specialized provider so that your staff are available for what really matters: the business.
There are many upsides and downsides to outsourcing and it's not a decision you can make overnight. There is no one-size-fits-all answer: your decision will depend on the current situation at your company, the sector in which you work and the maturity of your IT. You are likely to come to the conclusion that a combination of "insourcing" and outsourcing will work best for you.
At any rate, take your time to inventorize your IT department and to weigh up all the pros and cons. A checklist can help you to assess whether outsourcing will benefit your company.
Want to learn more about IT outsourcing? If so, contact Jo Leemans, Sales & Governance Manager IT Outsourcing RealDolmen.
This blog post is the sixth in a biweekly series of eight about IT outsourcing.
Want to learn more about IT outsourcing? Read also our other ITO blog posts:
Disruption is a fact: use IT outsourcing to reinforce your company's ability to change
You know the cost of IT outsourcing, but do you know its value?
Business continuity is the basis of every healthy company
In-house technology management is shifting to usage-base IT management. Are you ready for this? A checklist.
The cloud: the final hurdle on your way to IT Outsourcing?
If you want something done right, do it yourself - or maybe not?