Surviving the recession: a Quocirca series

In the latest episode of this 12-part series Quocirca analyst Clive Longbottom explains what you must consider before deciding if someone else is best placed to run your company's IT. Time for a look at the theory and practice...

First, the theory. What business are you in? It is unlikely that, as an IT project manager working within an IT department, your company's core business is actually IT.

Whether your company is in the financial, pharma, logistics or whatever sector, IT is a necessary evil, rather than a core part of the business. Therefore, why does the company employ a large number of people to implement and manage something which is non-core?

The answer, of course, is because that is how it has always been done. Should that define how it will always be done? Logically, we are now in a world where bandwidth is not a real problem and we have companies out there who will bite your hand off to provide you with a fully outsourced solution managed to a solid service level agreement. Why are we not there?

It's because of reality. First, your job is currently dependent on the status quo. Should your company decide to go for 100 per cent outsourcing, where would your job be?

Second, bandwidth is still a problem - it shouldn't be but due to the efforts of Oftel and BT we are still firmly mired in the technological wastelands when it comes to broadband access and the confused SME market doesn't know whether it should be using E1 lines, POTS, ADSL, fixed wireless, 802.11 or baked bean cans and pieces of string.

Large organisations - even though they have the bandwidth capabilities - are already under a degree of thrall to incumbent facilities management (FM) companies, managing the solution in the company's own data centres.

Third, the marked (and highly public) lack of success of companies in the application service provider (ASP) sector during 2001 (e.g. Cityreach, Exodus, iProvide) firmly dented any putative trust users may have been building up in this type of solution.

Fourth, the perception is that having full control over IT gives some sort of market advantage - even when it becomes apparent that the inflexibility of the incumbent solution and the incapability of the IT department to cost-effectively change this are the key areas that are holding the business back.

But are we doing ourselves and our company a disservice? What real added value does your company get by managing or even having the IT service directly under its control? Even in the real world, we have the following problems:
* Fully capable resource is difficult (and expensive) to find, keep current and keep within the company.
* Getting rid of poor resources is costly and difficult.
* Service level agreements tend to be only pieces of paper - there is little capability to take any action against non-conformance.
* There tends to be a Luddite tendency within internal IT teams against change - it is easier to manage a known environment than to implement and manage a new one.
* Areas such as full security, full fail-over, disaster tolerance and application currency are seldom completely dealt with.

So, let's look at what a well-thought out and well-managed outsourced solution should provide:
* Well-skilled people who are kept skilled-up through a formalised training programme from the outsourcer.
* A fully-maintained data centre providing full disaster tolerance, back-up and restore, along with flexible platforms for growth and a fully secure environment (both at the data and physical levels).
* The capability to keep applications and operating systems at the latest level, complete with hot-patches and upgrades as necessary.
* Fully managed and reported service level agreements, with proactive help to ensure the SLA is not breached and realistic penalty clauses for when the SLA is breached.
* The capability to switch solutions and/or introduce new solutions rapidly as your business requires.
* The technical know-how and capability to provide adequate bandwidth both from the customer to the hosted solutions and from the solutions back to your business, as well as the capability to integrate any existing solutions which are already extant within the business.

This leaves the big question - if you go for an outsourced solution, where does this leave you? You may want to become a small cog in a large outsourcer's machine but, then again, you may not.

Quocirca believes the best opportunity for being a major influence on the future of the IT facilities within your business and on the business itself is to be the translation layer between the business and the outsourcer - to become the person who takes the business issues, translates these into technical needs and negotiates with the outsourcer to ensure these changes and implementations are carried out rapidly and cost-effectively.

So, to return to the question - in-house or outsourced? The choice is yours. But, if you remain committed to in-house be prepared to pay the salaries the likes of CSC, EDS and IBM pay. Prepare formalised training to ensure your staff remain current in the technologies you need. Get certification for key staff in the technologies they use. Be prepared to embrace new technologies where the business needs it. And then be prepared to watch all your staff go and work for CSC, EDS or IBM...

Next week: Managing for the future - the need for flexibility

**Quocirca is a leading, user-facing analyst house known for its focus on the 'big picture'. For a full summary of its activities see www.quocirca.com, or reach the company's founding directors by emailing quocirca@silicon.com.

Previous Surviving the Recession columns:
Part 9. Creating and using Windows of Opportunity
http://www.silicon.com/a51109
Part 8. Time to Capability
http://www.silicon.com/a50908
Part 7. The use of Game Theory
www.silicon.com/a50677
Part 6. Creating a basic Total Value Proposition
http://www.silicon.com/a50475
Part 5. Supply and demand - managing expectations
http://www.silicon.com/a50295
Part 4. The mobile factor - preparing for the deluge
http://www.silicon.com/a50159
Part 3. Knowing the customer
http://www.silicon.com/a50052
Part 2. Prioritising business needs
http://www.silicon.com/a49901
Part 1. It's a recession - save or spend?
http://www.silicon.com/a49733