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By Bruce Culbert
Today's market has all the right ingredients to launch the next wave of IT outsourcing and this time everyone is in. Not just the big guys with their cost accountants and offshore operations, but every business, large and small. Let's look at why now, more than ever, companies can benefit from and will need to outsource at least some of their IT services.
Let's start with the economy. It is easy to see that macroeconomic conditions are reducing demand and causing uncertainty in many businesses. There is tremendous downward pressure on every budget item including IT. Capital expenditures and headcount dedicated to new initiatives are hard to come by in today'senvironment of tight credit and lower earnings expectations.
Still, the need and opportunity for IT in every business continues to exist. Strategic use of IT represents one of the best opportunities for competitive differentiation, but it is increasingly difficult to maintain a level of expertise across all of the broad opportunities and skills in IT.
In a recent survey in InformationWeek Magazine, most CIOs and business owners indicated they were expecting to freeze hiring or reduce headcount slightly for 2009. They intend to use vendors and subcontractors to fill in the gaps. CIOs are increasingly turning to application and skills outsourcing to achieve precision implementation of the necessary improvements and innovations required for business viability.
I am currently seeing a growing number of businesses seeking to better leverage their already sunk investments in enterprise systems such as SAP and Siebel. They are willing to invest in extensions or upgrades of these systems if it can take costs out of their operations and/or help them acquire, grow and retain more customers now. The strategy is to create separate IT projects with a clear ROI and timelines. These requirements are then outsourced in the open market to the vendors and contractors with the appropriate experience and expertise required to deliver on the project's value proposition. The goal is to get the project s done quickly and the returns to come in fast. This outsourced project staffing approach in many cases can improve the overall ROI and lower project risk.
Next the Technology: Another major driver of IT outsourcing is the ability for companies of every size to gain access to the latest innovations in IT business solutions as a result of enabling technologies such as Software as a Service (SaaS), Service Oriented Architecture (SOA), Virtualization, Cloud computing and Social Media. These technologies enable IT services to be consumed on an as needed basis. With a growing number of global services providers delivering solutions via the Internet, IT application and support services can be sourced from virtually anywhere in the world.
SaaS and Cloud computing make it easy for a company to buy the latest business solutions without the expensive start-up costs. The ability to start small and add or subtract capacity on demand as the business requires is very attractive. No capital funding is generally required, and commitments to large deployments are not necessary to gain access to the latest IT solutions. Everything from e-mail and calendar to social networking and enterprise Finance, and ERP systems are available as a service over the internet. Additionally, SaaS applications are generally designed more like the consumer applications most employees and customers use at home, making it easier to achieve adoption in business applications.
Businesses have an unprecedented opportunity to access just the right mix of IT service they need from infrastructure to business applications to support a company's unique needs. This will only continue to get easier as more and more SaaS and Cloud solutions come to market in every category. The ability to access the latest IT solutions and to be able to outsource both platform and people on a pay as you go model is not only attractive but necessary in today's business climate. The question that looms today is not whether or not you are going to outsource IT but how you will leverage IT outsourcing to survive, stay competitive and thrive.
About the Author:
Bruce Culbert's is the CEO of iSymmetry, a provider of IT outsourcing, consulting and recruiting services for the public and private sector.
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