To MSP or not to MSP....

In-house or outsourced IT, that is the question.

Johannesburg, 18 Jul 2017
Read time 6min 10sec
Lee Jenkins, Head of Technology, ETS Innovations.
Lee Jenkins, Head of Technology, ETS Innovations.

During tough financial times, the majority of companies look at ways to cut costs while still delivering value and growth, and outsourcing non-core business functions is the obvious way to go. There are a number of reasons that businesses choose to outsource certain business functions, but the primary ones are to free up cash or in an effort to focus on the organisation's core business goals, according to ETS Innovations Head of Technology, Lee Jenkins. It makes sense if you think about it - if your bread and butter is bricks-and-mortar retail, why would you want to expend valuable resources on setting up an IT department, for instance?

Over and above the cost to company of having an entire division dedicated to a function that's not actually generating revenue, there's the additional pressure of having to hire the right skills, providing ongoing training to ensure those skills remain current, and replacing those skills when needed. Jenkins says: "It makes good business sense to find a supplier who can provide an appropriately-skilled person or even just do the job for you. Just finding a person with the prerequisite IT skills can prove challenging, we're currently encountering a massive contrast between the high unemployment rate in this country and a lack of skilled people to fill positions."

Jenkins says there are pros and cons to both having an in-house resource and outsourcing your IT, but firmly believes that outsourcing your IT services to a trusted managed services provider (MSP) is the way forward.

The upside of working with an MSP

* You can choose to have a resource provided to you by the MSP, who sits onsite. This works well for clients who are more comfortable dealing with a single person who sits at their offices. Of course, if you outsource the entire IT function, you get access to far more resources, and the IT division is unaffected should someone be on leave, for example.
* Having a managed services provider instead of an individual person on site means that you're not bound by office hours when it comes to resolving IT issues.
* The ability to run an IT function remotely saves the business travelling expenses, but also means that the business can still operate in remote or high risk countries.
* An MSP will be able to offer your business value that an employed individual may not, when it comes to availability, performance and independence.
* Using an MSP mitigates risk to your business as you're buying a service, not an individual, so won't be limited by that individual's skills and knowledge (or lack thereof). You get access to a much wider skill set by outsourcing.
* Controlled cost management means you can budget for your IT services expenditure, whereas with an in-house resource there are additional and often unpredictable costs such as overtime, medical aid and the like. Also, outsourcing the function means that the expenditure becomes Opex as opposed to Capex, which holds tax benefits for the business.
* Having a proper ticketing system in place will enable your provider to get to the root cause of any IT issues. You'll be able to log issues and track the progress of a ticket.
* Asset management will be much simpler as many companies often don't have a detailed breakdown of the physical IT assets that they own - or the software that's running on them.
* Performance is measured against a set of predefined key performance indicators. Application availability is an example.
* Access to consistent reporting about the status of your IT, which may not be available in the business's current environment.

Things to consider when choosing an MSP

You've decided that outsourcing to a managed services provider is the way to go for your business, but what are the things that you should take into account before signing on the dotted line? Jenkins recommends that organisations ask the following questions upfront:

* Does the vendor have the necessary resource base to meet your requirements?
* Will there be penalties for non-performance by the vendor? Jenkins says, "There must be accountability. The contract must clearly state how both parties must address issues or conflict." Both parties must agree on recovery point objectives and response times on faults logged.
* How flexible is the contract? Can either party get out if they want or need to? This protects both parties down the line.
* Are the two businesses' cultures compatible? It's important to ensure that the vendor has a similar culture to the prospective client to avoid a mismatch, a young and innovative client needs an equally young and engaged vendor, for example.
* It's advisable to only deal with a single MSP so that it's clear where the responsibility lies. In a multi-vendor scenario it's easy to fall into a blame game situation where each blames the other for a fault.

Making it work

Jenkins has the following advice to ensure a successful relationship with your managed services provider: "Firstly, don't focus exclusively on price when negotiating the contract, otherwise you might end up with a work-to-rule provider who won't go the extra mile when it's needed. When it comes to IT services, you really need 24/7/365 availability.

"Communication with the vendor management is key from the outset and should be ongoing. This will enable issues to be resolved quickly, before they reach a critical stage and result in the relationship between client and vendor deteriorating. On this point, it's vital to maintain internal ownership of the IT outsourcing services. Somebody within the organisation has to own the relationship with the vendor as it is best not to rely on the MSP to manage the whole environment unaided.

"Also consider who owns the assets. Traditional outsource models involved the MSP procuring infrastructure to support you, the client. However, it might be advisable for you to own the assets so that if the relationship is dissolved, you don't have to start from scratch with a new provider. This is where a plan comes into play, before migrating to a fully outsourced environment, you need to plan what you're going to do and how you're going to do it, as well as over what period. The MSP should help you draw up this plan."

Jenkins says that businesses that are wary of jumping into outsourcing their IT function, could consider a staggered approach, gradually moving across to a full managed services solution.

The bottom line, says Jenkins, is to choose a trusted advisor and partner, and not just a supplier, ensuring that you engage with an expert who spends the time getting to know your business and its requirements.

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