subject: Key Considerations For Outsourcing Managed Hosting & Managed Services [print this page] IT costs for managed hosting and managed services has always been a hot topic for companies. However, the issue looms even larger in the current state of the economy. As IT spending continues to be scrutinized closely, technology managers really must do more with less. This article will discuss the key considerations for enterprises that are investigating hosting and managed services as an alternative to traditional in-house service delivery.
Today, enterprises evaluate every IT activity to determine what should be funded or supported. During this evaluation, managers justify the demand and compare the project's costs relative to the projected ROI. Obviously, costs must be at the lowest level possible to demonstrate a greater ROI in a shorter period of time.
Investigating managed hosting and managed services as an alternative to traditional in-house service delivery should be done by an organization's IT leadership. Often an outsourced model can provide the same services or better services at a lower cost. This approach can save the organization money on an ongoing basis, as well as free up resources (both personnel and cash) that can be deployed against other high-value projects.
For every IT project analysis, decision-makers should include an "in-house" versus "outsourcing" cost comparison. Although outsourcing benefits have become well known over the years, enterprises need to start at square-one, ask some basic questions and evaluate all costs.
Key Considerations
Prior to running the numbers, managers need to ask themselves why they would consider outsourcing managed hosting and managed services. For example, if you started your business from scratch today, would you build this capability internally? To answer this question, you need to assess your internal capabilities:
- Would other companies hire you to do this for them?
- Will tomorrow's leaders of the company come from this area of the business?
- Are you receiving world-class services at a competitive cost today?
- Does this process create or defend a unique competitive advantage for your firm?
- Is this business process directly contributing to business growth or expansion?
To make the best decision for your company (and to save the most money), you must have the required expertise to manage your IT operations at peak performance. If you don't have, or can't afford, this expertise, your IT operations will most likely fall short of expectations and end up costing you more.
In addition, managers need to explore the reasons for exploring managed hosting and managed services:
- Are you looking to solve tactical issues? For example, are you looking to achieve short-term results, immediate cost reductions and current staff augmentation?
- Are you looking to solve strategic issues? Is your focus longer-term and you want to free up your time for strategic initiatives? Do you want to improve your service level measures?
- Or, are other issues prompting you to outsource, such as leadership frustration or wanting to transfer risk to a third party?
Answers to these questions will provide valuable insight and help align outsourcing projects with business priorities.
