Future Economics - Outsourcing

Be prepared for the future, consider outsourcing 

Economic Lenses: Decrease Spend, Avoid Costs

Traditional 3 year buying cycles for technology as well as staffing a team often rely on a messy process of predicting the future and “just in case” scenarios. This theme will explore two ideas:

  1. How to take control of the buying cycle and spend your money more optimally?
  2. How to delineate skills that are worth developing vs those that aren’t core to your business?

The 3 year buying cycle was explained by a panel member like this: “When it comes time to ask for budget for capital projects, like infrastructure, a manager asks their team and they state their worst case scenarios with a little buffer added in just in case, the manager totals that and again adds a little wiggle room. This inflated grand total is submitted for approval and if some of it goes unused that is better than the alternative of needing more and not being able to get additional budget for three more years,” Craig Cook, Long View Director of Cloud and Managed Services.

Does this sound familiar?

What we recommend is looking at how to spend your money more optimally over time instead of trying to predict the future so you don’t have to worry about waste or underutilized assets (infrastructure, licenses etc.) and it may help you save money over time.

Sounds great, right? The cloud and subscription based services such as SaaS apps deliver this, and the best part is, if the resource is no longer needed in the future, you can “shut it off” and stop paying for it – or if you need more quickly, you can scale up almost instantaneously. This ability to turn your services up, down, on or off is key to success in a changing, sometimes unpredictable economy.

Disaster Recovery as a Service solutions are a great real world example of this. Most would agree that a DR strategy and plan is imperative as the likelihood of a disaster occurring is too high to risk and you don’t want to be in a position where you can’t recover.  That said, DR strategies are like insurance which is not an exciting line item to put money towards.  You want to do it in the most efficient and effective way possible. So instead of building a secondary data center and paying for the real-estate, infrastructure, heating / cooling, maintenance and so on, why not consider the cloud? With a DRaaS solution outside of some set up fees, routine testing etc. you only pay for what you use IF there is a disaster. Think of what you could re-purpose that money towards.

A similar story can be told for your people resources when you know you are going to need a certain specialized skill, however you can’t always keep that person or an entire team busy you may not want to hire permanent staff for those roles. The problem with acquiring these people of course is that it is likely those tasks that you keep them busy with are not the specialized and typically more expensive skill they were hired for.

In this scenario we recommend looking at ITO (IT Outsourcing) as an option, with an outsourcing model there are a number of benefits including eliminating the expense of finding, recruiting and retaining resources with highly specialized and sought after skills. For these persons you can also avoid having to hire them full time and only contract them when you actually need those skills either on a project basis or in an ongoing part-time model.

On the flip side, what if the skills aren’t core to your business?  Do you need to invest in skills, employees or training for things that are contextual, or that are commodity, not highly differentiated or highly specialized etc.? Or is there more benefit to outsourcing these skills so you can focus your energy on developing skills for those projects that differentiate you in the market?

With a clear understanding of your business strategy and needs you can adopt either of these strategies, but it is important to (again) find that trusted advisor who can walk you through the details of how to start and stop the service, understand the legal requirements, penalties, SLAs, and who to call if you have a problem, are they local? Will they come to you and how long are their response times etc. This will help you make sure that you have a solution partner who is invested in your success.

 

Things to consider:

  • Do you always accurately predict your resource needs in terms of people or purchases?
  • Do you only invest in recruiting and maintaining skills that are core to your business or only require consistent, full time work?
  • If you answered no to either of these questions, it is time to explore better consumption models to meet your needs.

Next up – Part V: “That’s how it’s always been done,” is not a reason.  Innovation today and what that should mean to your organization.  

Do you have a question for our panel? Leave a comment below.