Table of Contents
- What is Outsourcing and its Benefits?
- 5 Reasons to Outsource IT Services?
- Competitive Business Advantage
- What are the Challenges of IT Outsourcing Services?
- Developing a Change Management Plan
- Grow your Corporate Family
Outsourcing IT Services saves money, improves productivity and reduces business risk.
If IT is not your core business competency, then someone else should be doing it.
Outsourcing is defined as: A strategic decision to obtain goods or services from independent organizations; to purchase goods or services instead of making or doing them.
Note: I use the term Outsource Provider to mean the company that provides the outsourced activities, not the company hiring the outsource organization. I refer to the company doing the outsourcing as the organization or firm.
5 Reasons to outsource IT services?
- Create and sustain a Competitive Business Advantage
- Increase Productivity
- Improve IT Service and Support
- Lower Costs
- Improve Image
Competitive Business Advantage
All technology follows an adoption path using the cycle of technology: new technology is a Competitive Advantage, then becomes a Competitive Necessity and finally ends up a Competitive Disadvantage.
With new technology adoption there is a continuous cycle of value. The newer the technology, the higher the risk to implement it. New technology initially creates a Competitive Advantage. As a technology ages, the competitive advantage weakens to a point it becomes a competitive necessity (everyone has it and uses it) and finally to those that continue to use older technology beyond its useful life, it becomes a competitive disadvantage. Then it is replaced with a newer technology.
To keep up with the constantly changing world of technology you need to partner with a company whose core business is technology. Their job is to keep up to date with the latest trends and technologies, then use these new technologies to provide the biggest benefit to your business. They will make sure your firm achieves and maintains a competitive advantage using technology.
Outsourcing IT services will increase the profitability and productivity of highly paid employees. IT functions are not typically related to the interests or value creating functions of your core business. IT functions are usually considered necessary overhead so it makes sense to hire an expert to take over these activities. The IT outsource provider has expertise in technology and can reduce your costs, improve function and keep your business safe.
Often the outsourced functions are lower priority tasks. If you can relieve highly paid employees from the burden of troubleshooting, managing and maintaining technology, their time can be spent adding value to the organization and servicing clients. You free your staff from having to do things they are not interested in doing, do not add to value to them as employees and keeps them from doing the things they want and should be doing to benefit your company. Morale improves because people are not doing things that don’t interest them, they are not proficient at doing, and are unrelated to their skills and interests.
Improve Service and Support
IT Outsource Providers can provide improved service over the employees that are being outsourced. Utilizing an IT outsource provider, you are hiring an entire team of experts. Instead of relying on a few people to service your entire organization, you have a whole team of trained specialists to rely on. Unless you have a very large and deep bench of IT employees, the IT outsource provider has more and deeper technology expertise. They can troubleshoot and fix problems faster and more efficiently. The outsource provider does not take vacations or get sick, they are always available to provide their services. Additionally, your in-house staff is free to concentrate on strategically applying technology to your core business. Your staff can use technology to transform your business and create a true competitive advantage.
Outsourcing IT services is a way to help manage costs. The outsource provider can often provide the same or better service for less than the cost of fully loaded in-house staff. These freed up funds can be directed to other business needs. Your organization knows exactly what has to pay for the outsourced activities. Additionally, the cost of outsourcing is an operational cost and may provide tax benefits over the capital expense of hardware.
Your contract should outline the exact services provided for a given cost. Your organization is relieved of tasks that do not add value. Outsourcing IT services can directly reduce employee benefit costs, costs of recruitment, training, and payroll. Staff reductions can be considered but this needs to be weighed against the corporate values. Often times, freed up staff can be better utilized to grow and improve your business rather than just being eliminated.
Outsourcing IT Services is not just the hot business trend of month, it is seen as a smart strategic business decision. Your organization will be viewed as progressive and forward thinking. Outsourcing IT portrays your organization, especially service organizations, as part of the “smart” business crowd, as perceived leaders in business.
What are the challenges of IT outsourcing services?
IT Outsourcing Services could involve “layoffs”. In some cases, the staff that are replaced by outsourcing might be let go? This might be counter to your corporate culture. In most cases, a valued employee can refocus their time and experience and find ways to benefit the firm in a strategic way and leave the day-to-day tasks to the outsource provider. If there is a disconnect between the corporate culture regarding layoffs or reducing staff, then outsourcing can be implemented in a way to refocus existing staff.
To successfully integrate an IT outsource provider, you need to answer the following questions.
- How does outsourcing support our corporate vision?
- Are there problems with the status quo?
- What are our goals with this change?
- How can you succeed and provide real benefits to the staff and the staff affected by outsourcing?
- How can you outsource and avoid an “Us versus Them” mentality from developing?
- How do you manage the change and expectations and how do you communicate these effectively?
A Change Management Plan will answer these questions.
Developing a Change Management Plan
According to John Kotter in his book, Leading Change, the goals of the Change Management Plan are primarily relational. Attempting to change the work process and/or reduce staff will likely result in resistance. There is a strong cultural image that is being threatened. A transition to outsourcing must address the needs of the employees. Clearly stating and communicating the reasons for IT outsourcing services will appeal to the shared values of the staff. Taking the time to identify the reasons for the change and presenting an implementation plan will reassure the staff that the changes being implemented are not in contradiction with the existing culture.
The Change Management Plan follows the general format:
1. Identify the staff needs and problems – what is standing in the way of improvement?
2. Create an implementation team – Join the provider and the organization leaders to create a cross functional implementation team with the proper knowledge and power to make change happen – not just the senior management but the senior leaders who really understand the needs of the staff and have the power to successfully lead and institute the change.
3. Develop the implementation strategy. The implementation team develops the strategy to meet the corporate needs and validates this strategy against the corporate vision. If there is contradiction, then they reevaluate the strategy to align it with the stated vision or they examine the vision to make sure it is still relevant to the needs and culture of the organization.
4. Communicate the change. Begin a pilot program. The implementation begins. This stage is applied through either by the implementation team (#2) or taken directly to the staff through an existing communication channel.
5. Identify the successes. Identify short-term wins and communicate the progress being made to the staff. Identify success metrics and measure the results. Address any potential obstacles to success.
6. Solicit staff feedback. Loop the feedback back into the change strategy and adjust the plan to address any concerns.
7. Acceptance and incorporation of the change into the corporate culture. The change is accepted and the change has made a positive impact on the organization. Check to see if this change model can be applied to other needs of the organization. (back to #1)
Grow your Corporate Family
Your organization is like an extended family. IT Outsourcing services must demonstrate to staff that you haven’t lost a son, but have gained a daughter. The IT outsource provider becomes a trusted member of the family. While the change may result in staff reduction, every effort should be made to ensure the proposed change is additive to the organization and not subtractive.
A clear plan for implementation further demonstrates that outsourcing is part of a larger overall plan to improve the firm and by extension the staff. The plan should define milestone points and deliverables in the implementation. Building upon small successes will address the problem of the process taking too long without visible results. Once these benefits are explained and demonstrated, the staff will be reassured that outsourcing is in alignment with their own and the organizations shared values and acceptance will follow.
Work with a leader in providing IT outsourcing services. Advance2000 is a full-service managed IT service provider, specialized in Private Cloud Computing, IT Cybersecurity Risk Assessment, IT Strategy and IT Support services. Advance2000 has the expertise and proven methodologies to plan, deploy and manage complex IT solutions for every industry. We provide proactive IT Management and Support, aimed at building an organizational partnership with Advance2000 to keep your entire IT running at its best and your business operating at peak efficiency.
Interested in Outsourcing IT services or need advice? Then get a 30-minute, free strategy session with an Advance2000 expert.