Why you’re Crazy if you don’t Outsource your IT

Why you’re Crazy if you don’t Outsource your IT


Servers, VPN, IT architecture for the network and Training of staff (complex systems/multiple systems)

A key question by a number of organisations is whether to outsource or not and whether to own their own hardware or host it. An obvious benefit of outsourcing and hosting is that it lets you have a relatively flat cost curve, rather than the “mountain ranges” associated with upfront costs and then upgrades and replacements. What’s best for any given organisation varies and one size does not fit all. To help you determine what works best for your organisation, here are some of the costs to keep in mind in determining the true costs of maintaining your IT systems and staffing your IT department. With your own infrastructure and systems you have the following cost components:

  • Upfront cost of infrastructure and software licences.
  • Upgrade costs for new versions of software/operating systems.
  • Flow on costs to upgrade existing infrastructure to support new software versions.
  • Replacement costs (approximately every 3-5 years) for infrastructure.
  • Ongoing vendor maintenance and support costs.
  • If you host your own systems, increased rental costs for your computer facilities as you add more hardware.
  • Increased power costs to support additional hardware, air-conditioning etc.
  • If you have multiple complex systems then you will also have:
    • Integration costs between those systems.
    • Potentially middleware software costs.

With staff, you not only have their salaries and on costs, but also the following training costs:

  • costs of retraining and potentially recertification in new versions of hardware and software including:
    • Operating systems
    • Network monitoring, antivirus, firewalls etc.
    • Software versions for systems
    • Training costs for those multiple systems

The flip side is that if you don’t upgrade software versions or infrastructure, then the cost of maintaining those systems and infrastructure increases as vendors increase support and maintenance costs. In addition, your staff costs will increase as a) availability of resources with skills in the older versions becomes harder to find/attract and b) you potentially lose staff who want to work with the latest versions. Personally my philosophy is that your staff, those positions that you require specific intellectual property for your business (e.g. first level support, architects, business analysts and project managers) and then outsource the technical roles (software developers, 2nd level technical support staff) that require specific technical knowledge so that the cost of training those technical resources becomes someone else’s cost. A system that is reducing the costs associated with IT infrastructure is NetSuite’s SuiteCommerce Advanced. Built entirely on the cloud, NetSuite doesn’t have any hidden server room costs. The end-to-end solution allows retailers to focus on what counts and that is customising the buyer journey. Whatever you choose, ensure you determine all the costs of your environment including ongoing training before determining what works best for you.  

Jason Furness Talks Professional Services and Support After the Implementation

Jason Furness Talks Professional Services and Support After the Implementation

If you have been in business for any length of time you have probably engaged with some form of professional services firm and most likely have at least one experience where you felt let down. Achieving ROI on the project is critical initially and for any ongoing support from the services firm only. How do you avoid a lousy professional services experience and how can you rescue a professional services project that is going bad? Whilst there are many reasons that this can happen a few of the most common ones include • What the sales team promised you is not what the technicians can deliver • The professional service firm regards you as an invoice, not an ongoing client (no one will say this, but it is way too common) • You and your team did not maximise the learning available during the project so you could be self-sustaining • You do not see ongoing value being provided by the services firm as sufficient to justify their ongoing involvement Let’s deal with prevention first Business Outcomes Not Methodology Write a specification for the project that deals in: • Specific business outcomes • Clear measurements to assess progress • An estimation of business value that should be created by the project. Why do we do this? We do not buy professional services, we buy a business result that we think the professional services should deliver. No one buys software. People do buy something that they think makes it easier for them to control the financial performance of their business. Have all of the conversations with potential service providers based upon your business outcomes, not their methodology or software capabilities. A second reason we do this is to ensure that the customer sees enough value to continue to be committed to the project throughout implementation. If the project is marginal, or provides a lower return than other activities then your own internal team will drift away. If the project is not that important then don’t start it! A third reason for this up front crystallisation is to move away from a methodological and technological solution conversation, which is where the service firm is strong, and to have the conversation about your business where you are much more informed, skilled, and knowledgeable. Have the service provider discuss their offerings in YOUR context. If they cannot, they struggle then they are not the right provider, move on to someone else. There are plenty of implementation issues that can derail a project, however an unclear, non-business focused project specification is at the top of the list. It Seemed Like A Good Idea At The Time What do you do if a project has gone off the rails? At some point the key person of the seller shook hands with the key person of the buyer and they made a contract with each other. In a project that is not delivering, these people need to meet face-to-face and work through the gap between performance and expectations. This must be simply and clearly documented. An agreed plan to remedy the situation must be developed. Again this must be documented. Measures on how to agree that the project is improving must be established. Regular, weekly or daily, updates on progress must be enacted, ideally with the two key decision makers present until the project is back under control. A War Story A client of ours purchased some software. They were promised the software would do many things. When the technicians arrived to implement the software to the clients business they were asked about some of the wondrous things that the client was promised it could do. ‘It can’t do that, I wish they would stop saying that’ was the technician’s answer. The client had already paid for the project. The technicians beavered away to customise the software, the client spent months doing their part. The owner of the business became impatient, as the timeline had slipped. The company went ‘live’………….and could not invoice for three weeks. The owners were tired and emotional! The technicians had left the site and would not return until an additional fee was negotiated. The software providers budget for customisation was used up, but the clients business outcome was not being achieved. The client is stuck with the software and trying to make it work. The software company has an angry client who will never recommend them to anyone and will not receive anything above the bare minimum in service fees. Everyone loses, no one wins. Post Follow Up Support The best way to ensure that there is ROI for post project support is to ensure that the original project works incredibly well – the value created by the post project support is clearly articulated, measurable, and agreed before you begin.