Introduction
In today’s rapidly evolving business landscape, enterprises are constantly seeking ways to optimize their operations and drive greater efficiency. One approach that has gained traction is outsourcing Enterprise IT to third-party Managed Service Providers. The theory behind this approach is the ability to leverage the expertise and abundant resources of these IT partners so that organizations can focus on the company’s core competencies. Beyond that, the thinking is that Enterprises will see benefit in terms of overall cost savings, the built in infrastructure scalability of the partner and access to cutting-edge technologies that these Managed Service Providers have access to and leverage across their customer base. However, the decision to outsource IT is not without its complexities. In this blog, we’ll explore the Pros and Cons of outsourcing Enterprise IT and discuss the importance of maintaining control, access and visibility while exploring a more collaborative model like a Shared Services approach.
Pros of Outsourcing Enterprise IT
Cost Savings
One of the primary motivations behind IT outsourcing is cost reduction. By partnering with a third-party provider, Enterprises should be able to leverage economies of scale as well as minimize their own infrastructure expenses and ultimately more efficiently streamline their IT operations. External vendors by default should provide a lower cost of operation since they’re spreading their IT operating cost across multiple clients.
Access to Expertise
Managed Service Providers also bring significant in-depth knowledge and experience to these engagements. They tend to stay more updated with the latest industry trends, emerging technologies and best practices since this is their core business. IT outsourcing allows these Enterprises to tap into this wealth of expertise, gaining access to skilled professionals who can handle complex IT tasks and provide strategic guidance.
Scalability and Flexibility
As Enterprises grow or undergo periods of change, their IT needs can also fluctuate. Outsourcing allows these businesses to quickly scale up or downsize their IT resources based on demand, without the need for significant upfront investments or long-term IT infrastructure contractual commitments. This ability is particularly valuable in dynamic market environments, especially the one we’re currently experiencing.
Focus on Core Competencies
By delegating IT responsibilities to an experienced and trusted partner, enterprises can redirect their internal resources and attention to their business core competencies. This strategic shift allows organizations to concentrate on key business objectives and initiatives, which should allow for better organizational focus as well as foster business growth and innovation.
Cons of Outsourcing Enterprise IT
Loss of Control
Outsourcing IT means entrusting a portion, or in some cases, the entirety of your technology infrastructure to an external entity. This is not an insignificant decision to make. This decision can create a perceived loss of control over critical IT systems and processes. Organizations also worry about the potential impact on security, compliance and overall governance. It’s one thing to be responsible for controlling external and internal security breaches as an Enterprise IT organization. It’s another thing when you hand over that control and responsibility to an outside party.
Dependency on Third Parties
Relying heavily on external Managed Service Providers introduces a level of dependency that not every organization may be comfortable with. While outsourcing can alleviate the burden of managing certain IT functions, it also means being at the mercy of the provider’s availability, responsiveness, and overall competence. Organizations who decide to outsource such critical tasks need to establish thorough and well-defined contract terminology as well as a comprehensive Service Level Agreement (“SLA”) to help mitigate this risk. A list of common SLA terms can be found here.
Communication and Cultural Challenges
Working with a third-party Managed Service Provider often involves collaboration across different organizations and possibly even different countries. Misalignment in communication, cultural norms, and work practices can lead to misunderstandings, delays, and operating inefficiencies. Enterprises must invest time and effort in establishing clear and effective channels of communication and building a strong working relationship with their chosen Managed Service Provider to avoid these issues.
The Importance of Control, Access, and Visibility
While outsourcing Enterprise IT can bring several benefits, it is crucial for organizations to maintain control, access, and visibility into the outsourced operations. This ensures that the business retains a sense of ownership and oversight, even while leveraging external expertise. Here’s why these factors are essential:
Control
Enterprises should have a clear understanding of the extent to which they can influence and guide the outsourced IT functions. This includes having control over decision-making, policies, and strategies related to IT operations. Organizations must establish robust governance frameworks and mechanisms that allow them to maintain control over critical areas such as data security, compliance, and service levels.
Access
Even though IT operations may be outsourced, organizations should have unrestricted access to their systems, data, and applications. This access facilitates transparency, enables timely auditing and compliance checks, and ensures that Enterprises can perform its due diligence in overseeing the Managed Service Provider’s activities.
Visibility
Visibility into the outsourced IT environment is crucial for understanding performance, identifying potential risks or bottlenecks, and making informed decisions. Real-time reporting, analytics, and monitoring tools can provide the necessary visibility, allowing Enterprises to assess the quality-of-service delivery and take corrective actions if required.
The Shared Services Model: Embracing Collaboration
To strike a balance between control and collaboration, organizations can adopt a Shared Services Model. This approach fosters a cooperative relationship between the Enterprise and the Managed Service Provider, allowing them to co-manage the IT environment effectively. There are several benefits of leveraging a Shared Services Model:
Collaboration
The Shared Services Model encourages close collaboration, enabling the Enterprise and the Managed Service Provider to work together as partners rather than adversaries. It promotes shared goals, facilitates regular communication, and enhances transparency, leading to better outcomes for both parties.
Flexibility and Customization
With a Shared Services Model, enterprises can customize their IT environment to meet their specific support needs. This model allows greater flexibility to retain control over critical decision-making processes, while still leveraging the expertise and resources of the Managed Service Provider. This flexibility allows organizations to adapt more easily to changing requirements without compromising on control.
Efficient Resource Allocation
By sharing the responsibility of managing IT, enterprises can allocate their internal resources more efficiently. The Managed Service Provider’s expertise complements Enterprise’s capabilities, leading to optimized resource utilization, increased productivity, and improved cost-effectiveness.
Conclusion
Outsourcing Enterprise IT can be a strategic move that enables organizations to reduce their IT operating costs, provide greater access to specialized IT expertise and allow them to better focus on the company’s core competencies. However, it is crucial to strike a balance between control and collaboration. Enterprises must maintain control, have access to their systems and ensure complete visibility at all times into their outsourced operations. Embracing collaborative models like the Shared Services Model and leveraging collaborative SaaS Management Platforms like the Nuvolex ManageX Platform empowers Enterprises to easily establish a comprehensive co-managed services model for Microsoft 365 and their extended SaaS environment. In addition, establishing robust governance frameworks, fostering open communication, and maintaining a strong working relationship with Managed Service Providers, organizations can reap the benefits of outsourcing while retaining control over their IT landscape.