Cost, Value & ROI

Is It Time To Outsource IT Utilities?

When is it time to outsource IT utility services? Before a business leader can suggest which functions to outsource, he or she must carefully analyze the organization’s objectives, as well as the IT department’s requirements, accountabilities, abilities, and expectations to draw the best conclusion. The answer will not be the same for any two organizations, but the process for identifying those utilities can be the same.

Outsourcing: No One-Size-Fits-All Solution

There is no one-size-fits-all approach to outsource IT functions. For example, executive leadership at smaller companies with limited resources may be much more comfortable outsourcing, while those at larger enterprises may wish to outsource only a few carefully selected functions. Regardless of where a business falls in the outsourcing comfort spectrum, common IT goals among companies both large and small include: focusing on core business strategy, controlling costs, improving functionality, freeing up resources and providing better IT service to the organization.

Know Where the Resources Go

Typically, the best technology service candidates for outsourcing are the ones classified as utilities. Technology utilities are commodity type services that an organization uses in a similar fashion to every other business, regardless of their business vertical or unique business practices. Commodity utilities can often be handled more efficiently and effectively when outsourced. This strategic outsourcing allows companies to utilize an outsourcing provider’s core competency, rather than build it internally at a much higher cost. To determine whether or not to outsource a utility function, leadership must conduct a value analysis to get a clear picture of where their department uses IT resources. This means auditing IT to identify those services that keep the business operational, but do nothing to give the company a strategic edge in the marketplace. Those functions may be:

  • Email
  • Voice communication
  • Data storage
  • Data backup and restoration
  • Networking

For each utility, the company’s leaders must evaluate whether or not it would be a better use of resources to outsource the function, take a hybrid approach, or keep that solution in-house. If the goals for IT are to control costs, free up resources, and drive business strategy, it may be necessary to move those functions off of IT’s plate.

Meeting Resistance from Leadership

There can be some resistance to outsourcing utility functions, so both technical and non-technical leaders need to evaluate the benefits of moving each identified utility to a third party.

Outsourcing can help to improve company focus. When IT staff must split their time between utilities and value-adding technologies, they are not able to give those functions the necessary attention. Transferring utilities to third parties gives the entire organization access to subject matter experts (SMEs) for those functions, and also allows them to develop an in-house team of SMEs who can focus on business applications that enable business strategy.

Removing non-core business functions to third parties also frees up capital funds for projects and technology services that are directly related to products, services, and customers, ensuring there are enough resources in place to allow IT workers to focus on innovation, rather than operations.

Other IT Functions worth Outsourcing

According to a recent survey of 200 CIOs conducted by Bluewolf, outsourcing is on the rise. In addition to utility functions, the survey identified several other key IT functions that those executives currently outsource or plan on outsourcing in the near future:

  • Application development – 46% of respondents currently outsource application development, while 30% have a plan in place to begin outsourcing.
  • Web and mobile – 39% outsource mobile and web development projects, while 22% currently utilize managed services providers for these functions.
  • Application hosting – 28% utilize third-parties for app hosting.
  • Application maintenance – 26% employ consultants including developers, admins and analysts for their app maintenance.
  • Data center operations – 23% work primarily with managed service providers for their data center operations.

Every organization is unique, and leadership staff must evaluate outsourcing possibilities on a service-by-service basis. With careful analysis, most businesses can identify the functions that would be better served by third-party providers – so that IT staff can focus on value-add work, not operations and maintenance.