Outsourcing your ICT - smart financial and operational choice


Johannesburg, 12 Apr 2011
Read time 4min 20sec

Until recently, outsourcing was considered the prerogative of larger companies that engaged the services of external companies and specialists to expertly manage their ICT and other "back office" functions. However, this is changing. Both large and smaller companies are fast realising the benefits from an operational and financial perspective.

Over the years, organisations of all sizes have realised the benefits of outsourcing, and are increasingly opting for this model to provide their ICT needs. As the realms of ICT keep increasing, it becomes less cost-effective for smaller companies to employ fulltime ICT specialists, so it makes sense for these companies to outsource their ICT infrastructures and only pay for the services required.

This way, they have access to a wealth of knowledge and technical expertise, which they would never have had had they employed one or two people on their permanent staff.

Managing ICT within a company, especially if the company's core business is not necessarily IT-related, can be complicated, time-consuming and require the finance, resources and capacity that these businesses often do not have.

A mistake many companies make is investing in the wrong technology, which is an expensive exercise. A competent outsourcing service provider will have invested substantially in technology - an investment that need not be made by companies whose forte is not ICT. This leads to the benefit of not having to factor equipment into capital expenditure, but rather it becomes an operational expense.

In addition to the initial outlay, there is the cost of support to also consider. Removing the ICT management function from within a company can free up time and budget, which can then be channelled into more strategic activities.

Outsourcing also reduces the ICT headcount, thus reducing fixed costs in the form of salaries; lowers the cost of hiring and training ICT specialists and support staff; and cuts the ICT operating costs, including those of equipment and disaster recovery plans.

Among the ICT services that can be outsourced are data centre operations, desktop support, help desk services, network management, software development and support, disaster recovery, Web hosting and application management. A company or organisation can opt to outsource either only selected services or all of its ICT services.

Full outsourcing involves handing over complete control of the entire ICT environment to an outsourcing provider, from the desktop to the network through to connectivity. The client does not have to manage the complex ICT infrastructure and places the implementation, maintenance and control of the environment in the hands of a vendor.

The benefits of this scenario include significantly reduced IT cost, access to a range of skills and resources, and reduced lead times when implementing or maintaining, as the business only needs to deal with one supplier.

The co-sourcing model involves having some internal capabilities and resources and then outsourcing the rest of the IT environment. This may be useful for organisations that have a certain level of skills but need to bring in specialised resources for certain tasks, or for businesses that have very specialised skills and wish to outsource the more labour-intensive tasks such as desktop support.

Co-sourcing enables organisations to reduce head count in terms of in-house IT resources, as well as better utilise skilled resources when and where they are needed, while the rest of the IT work is covered by an outside vendor.

Managed services take place on the infrastructure side. The outsourcing supplier will provide technical expertise in areas that are required to be up, running and available at all times, such as data centres, networking equipment, servers, backup and so on. The vendor will provide 24/7 monitoring of these environments and proactively fix problems to prevent downtime.

This model is ideal for large enterprises that cannot afford downtime and the risks and cost associated with it. There is also a cost saving aspect as the company does not need to purchase and maintain expensive monitoring equipment and software. There is a reduction in risk resulting from downtime and access to specialised skills.

Hosted services may be software as a service (SaaS) or hosted hardware services. This model offers a variety of services to businesses as a hosted option, meaning that the organisation 'rents' the service from a provider that has the infrastructure. This means that there is no need for large capital outlay in order to take advantage of the services.

In handing over the management of any part of its ICT to an external organisation, the client has two basic expectations - an increase in the quality of services and a decrease in the costs connected to those services.

Outsourcing to the correct service provider offers this.

Editorial contacts
Evolution PR Liesl Simpson (011) 462 0628
Webcom Steve Webster (011) 234 6747 steve.webster@webcom.co.za
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