Published by Oliver Schmid at 4954 IT Consulting, LLC

Outsourcing is becoming more and more a viable option for many businesses. Reasons for outsourcing vary and can be increased-shareholder value, reduction of cost, improve operations, keeping up with competition, lack of internal resources, improve cash flow, turn fixed cost into variable cost and many more.
Outsourcing has been around for generations. Outsourcing is a part of how businesses operate. In its lowest form it is your office cleaning crew. Another form of outsourcing is your source of electricity. Who would ever think about having their own power plant to generate the electricity needed to run their business?

Outsourcing is taking a set of work, tasks, responsibilties or functions and transferring them to an outside service provider.

Why would you outsource Information Technology? You may say that there is a profound difference, but is there really? Is Information Technology the core of your business, it this where your organization is best at?

In the past outsourcing Information technology was a business decision in order to drive down internal IT costs. I agree this should be a factor in your decision making, but it should never be the sole reason or you will be in for a big disappointment further down the road.

What can be some of the advantages of outsourcing Information Technology in its entire or only partial? How about:

  • Best practices service – > State of the art service you only could provide at a substantial increase in cost.
  • Improved network operations – less down time through a more stable network infrastructure
  • Opportunity to reduce costs – through IT operational overhead cost reduction and infrastructure standardization
  • Reliable data backup and recovery – allowing for business continuity and sustainability
  • Network Redundancy – allowing for business continuity and sustainability through redundant data center

At the same time you may argue disadvantages like:

  • Loss of control – It depends on a good contract and agreed upon Key Performance Indicators (KPI)
  • Less flexibility and customization – Flexibility could be a minor issue but with the right planning the issue can be minimized. Customization – not really a disadvantage but rather an opportunity for standardization.
  • Fragmented services and vendor coordination issues – it depends. You certainly do not want to fragment your critical business process in order maintain control and avoid costly “finger pointing”.  Planning is crucial.
  • Possibility of increased costs – Yes you may have increased cost for the start-up, but due to improved efficiencies these costs can be recuperated fairly soon.

Again, key is being diligent in planning your outsourcing project in all details. Don’t leave it up to your vendor or service partner.  I can assist you in doing the planning, providing cost-benefit analysis and work with you on finding a service partner that fits your needs.

I will provide you with a free 1 hour phone consultation. Please email me at

(c) Oliver Schmid / May 02, 2009 / IT Consulting, LLC

LImproved network operations
Opportunity to reduce costs
Reliable data backup and recovery
Economies of scale and specialization

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