Does your organization insource or outsource all or some IT services? In my assessment of about 200 organizations’ procurement and supply chain capabilities some obvious opportunities have been discovered like SKU rationalization, supplier rationalization, specification homogenization and outsourcing. MRO, internal print shops and IT can be excellent candidates for outsourcing, since these areas are not core competencies for many companies and there are opportunities to improve cost, productivity and efficiencies. For this blog, I want to focus on the IT outsource.
Many mid-market companies cope with decaying technology, old versions of key business systems, limited resources and tech staff turned firefighters who try to keep systems running. When implemented well, outsourcing IT will result in cost improvements, new technical capability, increased capacity and improved staff productivity. When the IT issues consume the company’s priorities and take a large amount of management time and resource or when IT issues cause the company to lose customers and impact employee productivity, it may be time to consider outsourcing.
Outsourcing is not a panacea! Many companies who have struggled with outsourced IT services implementation will confirm that, but when done well with an IT managed service provider (MSP) who’s right for your organization and can develop into a trusted advisor, there can be tremendous payback for your organization. Here are 5 key considerations for successful outsourced IT services:
- Once IT is outsourced, the supplier has a strategic link to your business. It is essential that the contract aligns the outsourced supplier’s strategy to your overall business strategy.
- Demand that the supplier’s team is not only competent, but a good fit with your company culture. Insist that the team stay with your business beyond the implementation so that the supplier won’t be tempted to divert those resources to other clients.
- Define supplier performance and develop KPIs that maintain and drive performance.
- Build a disaster recovery plan for risk management.
- Run the outsourced supplier as if they are an extension of your firm.
If companies have not made the appropriate investment in IT, outsourcing can be a good solution and provide budget control not possible when IT suppliers are considered only in break/fix scenarios. It enables the company to upgrade technology, reduce cost, increase uptime and provides high quality resources to the IT area. You technical staff can focus on strategy to drive your company forward. If your company does not depend on IT for competitive advantage and you can manage the pitfalls, it can be a good candidate for mid-market companies.
Is it time to review non-core competencies and outsource?