A Case for Increasing I.T. Agility through Outsourcing
Belston Technologies CEO Todd Perrine recently delivered a presentation designed to help Austin business owners rethink their I.T. strategies and budgets in order to stay competitive in today’s market and prepare for tomorrow’s innovations.
The keys to success
1. Transition from administration to transformation.
2. Shift resources from “keeping the lights on” to leveraging technology that is proprietary to the business.
3. Outsource commodity I.T. as soon as possible to avoid overspending and losing market share.
What is I.T.?
I.T. is made up of four domains: Data Center, Networking, Cloud and Service Desk. In order to achieve I.T. agility, each domain must be examined to determine which services are commodity and can be outsourced and which services are unique (proprietary) to the business and should not be outsourced.
How much of I.T. is core?
For most enterprises – especially for small and medium enterprises across Commercial and Public Sector verticals – commodity Infrastructure & Operations (I&O) accounts for the great majority of I&O spend. These services can be outsourced successfully in ways that benefit the overall business.
How are I.T. costs distributed?
If we examine each I.T. domain, honing in on I&O, we see that the majority of spend occurs in Data Center followed by Networking. This breakdown implies that the greatest impact of outsourcing and re-thinking can most likely occur within these domains.
How can businesses start taking a strategic approach to I.T.?
Most enterprises’ I.T. has become unnecessarily heavy both in terms of owned assets and personnel. The first step in achieving agility for enterprises is to streamline.
1. Switch to cloud computing
As the above chart demonstrates, Cloud is dramatically reducing the cost of on-demand compute – and doing so in a very short period of time. Small and medium enterprises, because they lack economies of scale, are unable to come close to these compute costs. Also important to note is that Cloud offers elasticity – capacity on-demand – that small and medium enterprises cannot realize when owning fixed assets. As a result, Cloud offers small and medium businesses a tremendous value proposition around reducing spend: (1) Moving from CapEx to OpEx and (2) Paying only for what you consume at Enterprise-level volume pricing.
2. Outsource servers and storage
Server consolidation and virtualization are driving down internal costs for I.T. as well. Because most server assets utilize approximately 20% of potential compute, companies do not achieve the return on investment promised. Server virtualization and consolidation improve utilization dramatically. Many small and medium enterprises do not have the right staff to undertake server virtualization and consolidation. Outsourcing can expedite this process since managed services providers should have these resources available to support their clients.
More and more small and medium enterprises are leveraging colocation (CoLo) data center facilities to host their servers and storage. Not only do CoLo providers have the necessary physical security and disaster recovery infrastructure, they also level the playing field by extending enterprise-like costs to small and medium businesses. As Gartner points out, enterprises with fewer than 50 racks should employ a CoLo-First data center facilities strategy.
3. Rethink Networking
Many small and medium enterprises are overpaying for telecom services. ISP and phone contracts need to be re-evaluated in order to capture cost-savings while leveraging newer technologies. VOIP (voice over IP) phones offer incremental value compared with legacy phone systems. Additionally, outsourcing network I&O enables small and medium enterprises to lessen staff overhead while ensuring that best practices, optimized tools and well trained personnel are managing and monitoring their network assets.
4. Outsource service desk
The majority of service desk calls are routine and many can be handled via self-service. However, it is typically cost-prohibitive for small and medium enterprises to implement, configure and maintain a business-class service desk platform and service desk team. Outsourcing service desk for routine and commodity support, with the option to escalate proprietary support issues to internal staff, pays dividends for most small and medium enterprises.
A Strategic Plan for Building Agile I.T.
- Streamline I.T.
-Reduce I&O Assets
-Reduce/Re-Focus Staff (Staff Costs Alone Account for 40% – 60% of I&O)
- Adopt a Cloud-First Strategy
-Data Center & Networking
- Reduce I&O Costs
-Shift Budget from Operations to Innovation
- Focus on Innovation
Once commodity I.T. has been outsourced to a managed services provider, cloud services and/or CoLo facility – or, ideally, to one Strategic Services Provider that delivers all of these services, I.T. staff can shift its focus from “keeping the lights” on to becoming a strategic advantage for the business. Having streamlined and become more agile, I.T. can work with the lines of business as an internal services provider to understand how I.T. can support strategic business growth and profitability.
For companies with fewer than 50 – 100 employees, who may not have internal I.T. staff, it is critical that they partner with strategic services providers who deliver not only I&O managed services but also provide CTO/CIO-like consulting that ensures I.T. will stay relevant to the business’ core goals.
Keep pace with technology change and prepare for the future
As we stand on the cusp of broader, bolder innovations, we must keep pace with technology changes – or risk failing even further behind. The rate of technology change in today’s markets is accelerating. The only way for a company to keep pace is to have the right services providers and to ensure internal staff can maintain a laser-focus on strategic, proprietary I.T. text here.
Many clients feel like they are treading water just to stay functional; but help is out there.
Technology and strategic service providers have evolved to bring you optimal value NOW and to put you in a position to take advantage of the coming innovations. Modernizing and transforming is easier and faster than you may think. Readiness is within reach.