Today, a growing number of organizations recognize that few, if any, of their Information Technology (IT) activities fall within their core set of competencies. As a result, the past several years have seen a noticeable increase in the number of companies procuring outsourced services to plan, optimize, maintain, and propel the value of IT assets.
For some companies, outsourcing is a way to make the management of IT, an often ill–defined and murky business process, go away. For others, it is an opportunity to raise the overall quality of IT, as well as to ensure the strategic relevance of IT activities to core business objectives.
A decision to outsource IT management involves soul–searching and raises many questions:
- “What timeline can we expect, and what kind of partner do we need?”
- “Which IT processes should we outsource and which should we keep?”
- “How do you structure a deal to allow for changes in the business environment over the course of the agreement?”
- “How does the arrangement impact our relationship with other vendors or partners?”
- “We have projects all the time; how do we juggle those and introduce outsourcing without causing disruptions?”
However, after all is said and done, the decision to outsource IT management concerns business outcomes. What does “good” IT look like to your company? Establishing business outcomes requires the company that is outsourcing to answer a few critical questions, beginning with:
“What do I want the provider to optimize?”
- “Is it price?”
- “Is it speed?”
- “Is it quality?”
- “Is it a combination of these?”
The real question for today’s businesses is “Where do I want my IT asset capability model to be in a few years?” If your organization wants a range of IT services today, and also wants an annually reduced cost of service, the practical way to do that is to follow a defined process towards Business Technology Optimization (BTO) with a trusted Managed Service Provider.
The value proposition for BTO is easy to assemble, as the value points are clear. The primary value points for BTO include reduced operational expense through the automation of IT tasks and reducing downtime and mean–time–to–repair (MTTR). This can be coupled with deep and proactive monitoring of critical IT business processes to provide a “window” into the state of IT at any given point in time. In addition, the collection of real IT performance data provides significant value through the reduction of capital expense, enabling the consolidation of IT assets, and more effective planning for application deployment.
A complete BTO value proposition takes into account numerous value points:
- Servers, Workstations, Network
- Number of Full Time Employees (FTEs), Number of Consultants, Operations FTEs, Help Desk FTEs
- Size of Infrastructure, Personnel, FTEs to Implement, License Upgrades, Repurposed Hardware, Service Pack Deployment
- Licensing, Recurring Maintenance Fees, Report Generation and Analysis, Training
- Higher Employee Productivity, Higher Customer Satisfaction, Increased Utilization
- Added Hardware, Implementation, Professional Services, Faster MTTR, Reduced Outages, Reduced Brownouts
- IT Improvements, Capital Expenditures, Operation Expenditures, Revenues
- Costs Incurred, Benefits Realized, Return on Investment
- In reality, any given organization will receive the most value from three (3) or four (4) of the above value points.
Although Return on Investment (ROI) continues to be a major factor in IT decisions, research conducted on IT ROI reveals a perplexing paradox. While business owners and senior executives require IT investments be justified in terms of rapid Return on Investment (ROI) they usually do not believe most of the ROI studies presented to them. In lieu of ROI, a simpler approach can be taken that includes time–to–value (TTV). If the performance of an IT infrastructure is draining a significant amount of money from the bottom line, then it follows that the business would be interested in how long it will take to improve that performance (TTV) and how much it will cost (ROI).
For example, if a given IT investment produces a 30% ROI but takes one–year to implement, it is probably not a wise investment in today’s economy unless long–term competitive advantage can be achieved. Businesses should look at a solution that has a rapid TTV and takes into account acquisition costs, implementation costs, deployment costs, and measurable metrics. This type of value proposition is a far more pragmatic approach than sheer Return on Investment, Net Present Value, or Internal Rate of Return.
As the trend for businesses to outsource the management of technology assets continues to increase, so will the number of Managed Services companies in the market. Choosing a trusted Managed Services Partner that will act as a guide in assisting businesses to understand the value proposition for BTO will become increasingly more difficult. Understanding what quality IT means to your business is the first step in the process.
Thomas Kauhaahaa is the Director of Sales and Operations at Resonant Technology Partners, LLC. The company specializes in assisting small and medium business enterprises achieve Fortune 500 Information Technology results.
The company continually designs, researches and develops new consulting processes and procedures that adapt solutions to suit individual client and market requirements. Please call 866.404.4439 or go to www.BeResonant.com for more information.
