What's the fuss about... selective outsourcing?

What is your company good at? Now may well be the time to start thinking about outsourcing - again - says Quocirca senior analyst Clive Longbottom...

You work for a retail company or a finance company or a pharmaceutical company or whatever. All the employees are impacted by IT and somewhere between 5 and 10 per cent of the workforce are dedicated to IT in some shape or form. Seems like a decent ratio?

Within this IT employee base, you have people whose sole job it is to monitor systems for problems and to react when anything happens - to maintain the systems and apply the multitude of patches and fixes that come from the operating system and applications vendors.

This includes the grease monkeys who try to keep systems working - systems that should never become broken in the first place.

All the indications are that you are mad, that you are squandering shareholders' money and company assets. If your core business is retail or finance or whatever, why are you trying to employ people whose sole purpose is to line the coffers of Microsoft, SAP, Siebel, Sun et al?

OK, historically, you couldn't do anything else, as you needed the compute power and the applications to be yours so you could code areas yourself and gain a level of differentiation and performance. But nowadays?

You have multiple options. You can abdicate the role by bringing in a team of facilities management staff, though this is only shifting the problem sideways - you are still taking up company space and having to provide for these people on your site.

How better to look at problems purely from the business point of view than saying to someone else: "You fix it, you run it, you maintain it and don't let it perform under the agreed levels"?

You get the idea. Let someone else have all the problems of setting up the data centre. Let them have the problems of employing basic skills as well as advanced skills. Let them vet their employees. Let them provide data and physical security. Let them cope with all the upgrades, the patches, the fixes - but woe betide them if they don't provide you with an 'always-on' service.

Give yourself the opportunity to concentrate on what you should be doing - the core business, the issues that prevent you from being number one in your segment, the processes that must be changed to deal with the demands of the market.

So, what are you looking at? Wholesale rip and replace of existing systems? This doesn't make economic sense in the majority of cases and the impact on the business is likely to be catastrophic.

But as you look towards adding new functionality or dealing with new business issues, you should be taking the opportunity to offload the technicalities onto others more capable of dealing with infrastructure and day-to-day running of systems. You must keep the corporate strategy - but why should you be bothered about issues such as: "Sorry, the server's gone down again," or: "Sorry we were just hacked - I didn't know the vendor issued a security patch a week ago"?

You should be looking towards selective outsourcing - not the old-style ASP one-to-many model but the fully managed, dedicated systems model as espoused by CSC, Telenor and others.

Then, as a company, you can lay out our requirements from a business point of view and negotiate suitable service level agreements (SLAs) as to what the guaranteed uptime will be. You can ensure that speed of response to your customers and your suppliers is adequate, utilising the massive bandwidth capabilities these providers have.

But this is a bit idyllic. There are always nettles in the garden. The quality of the chosen hosting company is of paramount concern and longevity is not just a nice-to-have but a necessity.

The hoster must be viewed as a trusted partner, not just a supplier. They must be involved with business decisions being made, otherwise they cannot respond fast enough to business requirements.

They must be able to provide a level of co-existence between the new systems and the existing systems - something that will become far easier as web services become more of a reality. Test them with a low-risk solution first, then move more on as time progresses.

Gradually, more and more of your technological infrastructure moves towards this trusted partner. You can get back to being a business, rather than being shackled by technology.

Certainly, as you look to extending your reach through to new classes of customers, as you increase the electronic transactions between yourselves and your suppliers, you should be looking at someone else providing the grease monkeys, the iron and the base systems.

As you look to supporting the increasing mobility of the workforce, you need high bandwidth, highly secure solutions which are also highly available from anywhere in the world - you cannot provide the overall infrastructure, so why try to provide any part of it?

In Quocirca's view, the time has come to revisit outsourcing - not from the point of view of complete facilities management abdication, not as an air-locked ASP solution, not as a complete throw-the-baby-out-with-the-bathwater complete outsourcing of the whole kit and caboodle, but strategic, selective outsourcing of new and replacement functionality to trusted partners over a period of time.

Let's get back to running our businesses - not helping boost the greater wealth of Gates, Ellison, Siebel, Plattner et al.

**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.

Also in this series:
What's the fuss about... security?
http://www.silicon.com/a55808
What's the fuss about... virtualised IT infrastructure?
http://www.silicon.com/a55628
What's the fuss about... storage networking?
http://www.silicon.com/a55420
What's the fuss about... disaster tolerance?
http://www.silicon.com/a55340
What's the fuss about... CRM?
http://www.silicon.com/a55238
What's the fuss about... UnitedLinux?
http://www.silicon.com/a55136