Considering IT Outsourcing? Why This Is A Strategic Decision For Business
If your business is considering outsourcing IT management, you are not alone. According to Capitol Counselor, the global IT outsourcing market will be worth $397.6 billion by 2025. The top reason most companies decide to outsource is to save on the overall cost. While that is one of the most impactful pros of choosing to outsource IT, there are several other reasons this can be a strategic decision for your business.
A big part of the success is really, qualifying and understanding the why behind what they’re possibly considering outsourcing, because in certain cases where it’s crossing the bounds into things that are more strategic. The guidance to the client might be that’s really something that you shouldn’t outsource, because if you do, whether it’s NETRIO or anybody else, they’ll be set up to fail.
It’s going to fail, that’s right. Yeah. And so for for SMBs, for example, this is where the biggest challenge comes in, because an SMB, when you bring them into a managed IT, we’ll say engagement, you know, their expectation is that there’s a high level of involvement in strategic decisions for the organization.
When I say strategic decisions for the organization, I’m thinking about things like, hey, what kind of laptop should I buy? These are SMB strategic decisions, right? What kind of laptop should I buy? Should I allow my end users to access their email on their phone. And what parameters do I put behind that? How do I protect specific assets within my organization? So obviously I have antivirus product and usually I’m just going to take whatever the MSP is shoved down my throat.
But do I understand what that product’s doing, do I understand what the capabilities of that product are and is that adequate for me as an organization? You know, those types of things are strategic, whether you realize they are or not. And the expectation for the SMB is that they manage it, service providers doing those things. But in many cases they’re not. They’re just applying generic technologies to generic desktops or laptops or whatever is in the field.
They’re not giving it a second thought about whether or not that’s a good business decision for the customer. So if you don’t have a virtual CIO type resource or if your MSP doesn’t offer that as an extension of their service and really offer it, I don’t mean like put it as a bullet point. You know, on the list of product benefits, and say virtual CIO. That virtual CIO means you’re sitting down with that person on a regular basis. You’re meeting you’re talking about strategic direction for the organization.
Things like budgets are coming up. You’re talking about long term goals. You’re talking about growth of the company. It’s not just an I.T. discussion.
It’s really a fractional CIO, somebody that’s going to be a stakeholder in the business on a part time basis. And somebody is going to be involved in all the strategic decisions and, by the way, have a certain degree of authority within the organization to affect change.
Absolutely. Yeah. No, I mean, you captured it perfectly. They need to have some stake in the success of the business overall and how successful the engagement with the MSP was. And that’s why I think I get into these conversations about when organizations decide to outsource, what are the driving factors behind outsourcing. Right. And for me, it has to be very strategic to your organization. You’re trying to satisfy things like I don’t want to bring on technical staff and try to manage them.
I don’t want to deal with recruiting in today’s economy because it’s very difficult to compete from a salary perspective. You know, I don’t want to have to staff to get the type of coverage that I need. I need twenty four by seven coverage, but I can’t hire twelve people. I don’t have the budget for it. So all of those things are strategic items that help an organization make a selection to outsource something. And that’s where it starts to make sense.
Right, because then you’re starting to meet your strategic objectives as a result of your selection to outsource your I.T. That’s where business and I.T. start to align. And those types of things need to happen in an MSP engagement or managed service engagement so that you understand the why behind what you’re doing.
And done right. When when in the sales process and from the customer’s perspective, it’s the qualification process and kind of defining requirements. Where ideally does that conversation take place?
I mean, it’s got to be at the very beginning.
Yeah, I agree.
You know, I mean, if it’s if it’s not part of the very first conversations that you’re having about, you know, how am I going to deal with IT in my business, then it’s hard, I think, to backtrack and have that that conversation later, because you’ve missed opportunities to define what your strategic goal is. And I’m calls with potential customers all the time where they say, oh, yeah, we’re looking for an MSP and we’ve got 50 servers and 250 desktops.
You know, can you give us a price, please? And really, it’s like, OK, let’s pump the brakes for a second and let’s talk about why you’re making this decision. How are you handling it today? Is that working well for you? You know, what gaps do you have in your organization that aren’t being filled today? Are you having conversations about business continuity? Are you having conversations about your cloud based strategy? Do you consume most of your software through SAS?
And is that a goal and objective that you want to continue to try to push all my applications in the crowd, in the cloud or ground to cloud migration strategies for on prem equipment or infrastructure? And so if you’re not having those conversations in the very beginning, you don’t really understand what that client’s trying to accomplish anyway.
In this week’s White Board Wednesday episode, Mike Cromwell and Brian DeVault discussed the strategic decision of outsourcing IT and the factors to consider. When a company decides to outsource, it has to be a strategic decision. Here are five benefits to choosing to outsource:
1. Provides Capabilities Otherwise Unavailable
When a business decides to outsource, they are opening up capabilities and skillsets they either do not currently have available on their team or cannot afford to hire someone internally to fulfill the need. Additionally, outsourcing to experts can reduce liabilities when completing non-core-related tasks.
2. Allows Internal Resources To Focus on Core Needs
Another huge advantage to outsourcing IT needs is allowing internal team members to focus where their expertise lies. Liabilities can be increased when internal team members are trying to fill space they are not an expert in. Bringing on an outsource partner, lets internal staff focus on their core responsibilities and delegates non-core-related tasks.
3. Enhances Accountability
When an outsourced partner is brought into the mix, contracts will be signed for the services being offered. This adds a level of accountability for the business and outsourced partner. We have spoken many times about how important documentation is, and this situation is no different. A detailed contract safeguards both parties while increasing accountability for the task.
4. Reduced Cost
According to Capitol Counselor, 70% of IT companies who outsource list cost as the top reason. Hiring and training in-house staff can be very expensive. Oftentimes, a reliable outsourced partner will save the company money while allowing them to save on overall labor costs.
5. Keep the Company Focused on Core Business Objectives
The internal team is normally focused heavily on the core business objectives, but objectives outside of that scope come up often. Outsourcing non-core business objectives allow the team to excel within their specialty and allows the outsourced team to handle the other objectives efficiently and effectively.
Larger companies are 66% more likely to outsource than small businesses according to Time Doctor, however, 24% of small businesses outsource to increase the efficiency of their business. While small businesses may not outsource at the rate of large businesses, outsourcing as a whole is a rapidly growing industry.
This blog post is part of NETRIO’s weekly Whiteboard Wednesday series. Follow along on Linkedin and YouTube each week as Brian and Mike discuss use cases, new technology, and trends.