A digitally organized business is and will continue to be an irreversible trend during the coming years. How can you achieve sustainable savings? How can you limit the risks? And will your choices provide an adequate financial return in the long term? In the next few years, the digital component of your business will be your focus. This is inevitable. But, how are you going to organize this? What will be your IT architecture? In other words; how can you sleep well at night without worrying about your clouds & IT infrastructure? This blog covers the things you need to consider for a future-proof IT strategy; choosing between in-house or outsourcing doesn’t have to be a devilish dilemma.
Why the right sourcing mix helps your digital business?
At the end of the 80s and the start of the 90s outsourcing was a popular company strategy to reduce labor costs and keep ahead of the ever-increasing competition. Outsourcing is effectively the process of using external service providers to carry out specific business processes. These days, the benefits of outsourcing extend far further than just optimization. It is a necessity to create strategic progress. Whether it concerns allowing your company to grow, improving customer experience, reducing costs or managing risks, outsourcing and transferring work capacity will be fundamental in the coming years. You want to organize your IT organization more efficiently, increase performance, accelerate the time-to-market of installing infrastructure and applications and implement innovations faster.
Along with the benefits, outsourcing also presents challenges
Firstly, a brief overview of the benefits of outsourcing:
- Focus on your core business – This seems fairly obvious these days, but it is still worth mentioning. Create time to make your business future-proof and then keep it that way.
- Flexibility to increase and decrease capacity – achieve benefits in terms of materials and expertise for specific IT-critical processes.
- Savings in time and costs in respect of personnel – attracting and recruiting the right kind of talent will continue to be a tremendous challenge in the future. On average, it takes up 14% of a manager’s time. Think of the time you spend on managing, training and motivating your staff. But also consider the operational risks of staff turnover when the market recovers again.
- Extend the lifecycle of Legacy IT – Maintaining your legacy Enterprise IT platforms can be a heavy burden and distract you from making your company future-proof. Outsourcing these mission-critical IT platforms, frees up time to focus on innovation.
- Reliable service quality – improved service so that ideas can be transformed into products much faster.
- Shared risks – The risks are shared equally with a partner company.
- Lower equipment costs – Successfully acquired partnerships can lead to lower product prices.
In order to achieve the benefits from outsourcing, you must first identify what your most expensive and stressful challenges are. Which problems do you regularly struggle with? Which require specialized knowledge or tools? Which are far removed from your core competencies? And how will these things develop within your organization in the near future. When formulating such challenges, the question of how outsourcing can help plays an important role.
Develop your own strategy
In order to take the correct service decisions, you first need to take good business decisions. Carefully and thoroughly assess your current requirements and those which will play an important role in the future.
1. What should we and what should we not outsource?
Take your IT Enterprise Architecture as the starting point and include your hybrid multi-cloud strategy as part of your strategy about whether or not to outsource. Ask your teams the questions: what can be outsourced? To what extent should this take place and what should we continue to do ourselves? But above all, the key question must be: why do we want to outsource?
Carefully consider, when determining the available packages whether you want to outsource entire stacks (e.g. your ERP stack, specific horizontal functions (IT infrastructure management) or a smart combination of both). These choices also impact the market attractiveness of the outsourcing packages, and must therefore be carefully analyzed.
2. How do we outsource?
It is important to plan your outsourcing strategy in a timely fashion. Correctly and successfully transferring your operational activities to an external service provider takes several months. Aspects to take into consideration during this phase are:
Risk – Which risks are there? What is the chance of these risks occurring? What is the impact of these risks? What can be done to control the impact of risks?
Transition – What does the implementation of the required IT service agreements entail? What is involved in managing the required IT service agreements? Which options are available and what is their impact? Which decisions need to be made and what are the consequences?
Governance – What must the secure organization look like? How should we amend our IT governance model?
3. How do we manage what is outsourced?
Before you engage the external service provider or cloud provider, it is crucial that you have given sufficient consideration to how you can manage the outsourced activities. Take time to carefully develop your governance policy. How should responsibilities be organized? Does the service provider ensure sufficient transparency? Will they document your systems and the work that they carry out?
Furthermore, it is important that you have a clear picture of the consequences for your own organization. What is the impact for your company? Who is going to manage the outsourced services and how is the coordination organized? Who is responsible for monitoring the quality of your IT organization? Creating successful relationships within your IT policy is always two-way traffic and requires cooperation with maximum control. Make it future proof: accelerate your transformation into a digital business.
An optimal strategy for outsourcing critical IT functions helps you to get to grips and keep control of your core business. If data is seen as the oil, then outsourcing critical IT functions and cloud services is the engine, and artificial intelligence will be the accelerator to transform your organization to a digital business.