Does the recession mean that people are more likely to outsource? What parts of your IT operation should you outsource? How do you find a company you can trust asks Michel Robert, managing director, Claranet UK
In today’s economic climate IT managers are under increased pressure to do more with less, and are looking for smarter ways to get the most out of their IT spend. A recent report from the National Outsourcing Association shows that last year British businesses spent 12 per cent more on IT outsourcing than in 2007. Clearly, outsourcing is proving an effective way for many businesses to reduce costs and free up internal IT resource at the same time. However, some parts of the IT function are not suited to external management, and some industries, such as financial services, may be limited by regulations as to what they are allowed to outsource. The focus of this article will be on an area of IT which is ripe for outsourcing, and some key things to look for in a supplier.

We’ve found that it’s the boring but important bits of IT that are the most readily outsourced and from which businesses benefit the most by handing them over to an external party. I’m talking about the ongoing management and maintenance of the IT infrastructure and the applications which run on it. This, combined with other IT maintenance elements, takes about 80% of the average IT budget and is becoming increasingly demanding as business consumption and reliance on IT grows and applications like websites, payment gateways and customer databases become more complex.

It’s no wonder the cost of managing applications in-house is high. As well as costs associated with regular training and staff retention, it typically takes a 12-person team employed full-time to provide a 24/7 IT support service. Managed services providers, already equipped with highly trained staff and a purpose built business model, offer cost-effective solutions by taking on these maintenance tasks and giving IT managers the freedom to focus on their IT strategy.

Leading spare parts distributor to the domestic appliance market place, Connect Distribution, can vouch for this after recently deploying one of our managed application hosting services. “By partnering with Claranet, we can now offer our customers a higher availability application infrastructure to manage our distribution and stock lines, which would have proved too time-intensive for us to achieve alone,” said David Payne, director of business development at Connect Distribution. “Furthermore, we now realise the internal benefits of outsourcing with more resources available, which has since allowed us to focus on the evolution of our core IT strategy rather than worrying about the day to day administration of our application management.”

The level of service provided by the external party managing a hosted application for instance is obviously fundamental to the success of the project, and crucial to the ongoing growth in IT outsourcing. If whatever is outsourced is not functioning as well or is less available than before, then the business will revert to in-house management. Therefore, IT managers should look for a managed services provider with the flexibility to adapt the service as business requirements change as well as one that holds the highest levels of responsiveness, support and reporting. In particular, it is vital that businesses interrogate the SLA offered and ensure they know exactly where accountability lies.

Even in the most reliable system, applications and networks go down and it is the response to events like this that makes the difference. Accountability is therefore key to outsourcing, which is why a service provider must maintain accurate and detailed records of service performance, reporting when things are going well and when they’re not.  Lack of accountability has been an unfortunate pitfall some businesses have encountered when outsourcing to multiple providers. As no one provider has overall responsibility for the entire service, it can be time consuming and costly to detect the fault and restore service. And when what breaks is an e-commerce site, the costs in terms of revenue and reputation can be huge. However, a single service provider that offers a true end-to-end SLA will ensure a business doesn’t need to become heavily involved should there be a fault, as ultimate accountability rests with the provider.

The recession undoubtedly is driving the uptake of outsourcing as many businesses take advantage this opportunity to review their IT function to find new ways to cut costs and improve efficiency and effectiveness. IT managers looking to outsource, however, need to interrogate exactly what a service provider will manage and what they are accountable for if they are to maximise the benefits of handing over the boring but important bits of their IT.