October 2007
Black|Line Consulting is proud to bring you the first issue of our monthly Education Series. As we move into the fourth quarter, we are placing a greater focus on enhancing communications with our clientele in an effort to reinforce our aims of excellence in client service relations. Black|Line is consistently trying to define new ways to serve our clients better, so the primary focus for each of our informational publications is you, the client, and your business. The intention of every newsletter we publish is to provide you with the most useful information concerning the relationship between your business and information technology. This month’s topic is centered on the benefits and importance of IT outsourcing.
“Outsourcing,” as you well know, is a general term that refers to the process of contracting an external group of people to provide any number of services important to your company’s operations. The cost and ever-increasing complexity of running in-house IT systems has proved to be burdensome for firms of all sizes, and so numerous companies have been turning to outsourcing their IT management.
Although outsourcing information technology has been very popular at large companies for quite some time now, small to mid-market companies have traditionally stayed away from making such investments. But this is not the case any longer. Small- to mid-market businesses are discovering the numerous benefits to outsourcing IT, or as we at BLC like to put it, time-sharing. After some careful market research and assessment of our clients, here are some of what we have found to be the most significant impacts of outsourcing.
- Elevated Efficiency – As you well know, the leaders and employees of small- to mid-market businesses are often asked and required to wear multiple hats and assume multiple responsibilities within their companies. The demands of concentrating on so many issues at once can, more often than not, become a great hindrance to production and efficiency. By outsourcing IT, companies like you are able to focus on what you know best: running your core business.
- Increased Reliability – Outsourcing / time-sharing enables firms to focus on their main operations while forwarding their technological issues to the expertise of qualified engineers. According to Meta Group’s Outstanding Desk Reference, companies who rely on in-house technological support often find that their problems exceed the expertise and training of their in-house staff. In addition, outsourced IT support guarantees reliability and efficiency, including service-level agreements and a specific timeline for problem resolution, as well as regularly scheduled maintenance.
- Enhanced Capabilities – Rather than settle on using pre-fabricated systems for your business’s operations, a well-qualified IT provider can create a comprehensive package of services for its customers. Such services include, but are not limited to, the assessment, governance, strategy, installation, and maintenance of a streamlined technological program tailored exclusively to each of your specific needs. Streamlining the technological operations at your company facilitates a subsequent increase in productivity and growth.
- Smarter Spending – The Companies that endeavor to manage their IT themselves almost always have much greater expenditures because of the need for research & development, infrastructure, and distribution. These costs are often placed upon your own customers, but the ability to offer more competitive prices as a result of a decrease in expenditures can help you to attract new and maintain existing clients.
- Greater Market Impact – As a result of the ease and lowered expense of outsourcing, streamlined technology also serves to level the playing field between small- to mid-market companies and their larger competitors. Smaller companies with outsourced IT have access to the same world-class capabilities as larger businesses, which is usually unaffordable with the extra costs of an in-house IT department. Such capabilities enable your business to reach a greater number and variety of clients while maintaining a high level of production and quality.
- Controlled Expenditures – Through proactive service plans, regular maintenance, and server checks, outsourced IT programs enable you to plan your expenditures. Surprise costs due to a lack of foresight and expertise are diminished. As a result, outsourcing is ultimately more cost-effective and will save you money. This frees up capital you might have previously needed for emergent situations, so you can more suitably invest it areas of your core business.
Today, one of the greatest incongruities between large and small companies is the ability to assemble manpower. Large companies are able to employ a great number of staff to focus on highly specialized and narrow tasks which need to be addressed in their businesses. However, smaller firms encounter a very similar number of responsibilities, but most always lack the funding to employ specific people to address each obligation individually. It is becoming increasingly popular for small- and mid- sized corporations to make up the difference by deciding that it is best to keep their main staff from concentrating on non-strategic work, such as information technology. Outsourcing is a good option for small firms, enabling them to make a profit by placing such responsibilities in the hands of experts while freeing-up human capital to generate greater funds for the core business.
This information was obtained through interviews with owners, presidents, and CFOs at 22 organizations in the manufacturing, consulting, marketing, software, and finance industries. In addition, BLC expanded its existing knowledge-base by reviewing other leading research studies in the outsourcing arena.