Top 5 benefits of outsourcing (including some you may not have considered)
By now, we’re all familiar with the argument that by identifying non-essential services like software development and support, you can make your first steps towards outsourcing IT solutions and IT services. By outsourcing your IT services you can look to reduce costs and improve efficiencies.
A drive towards innovation and flexibility in the way outsourced IT services are managed, compounded by big changes in the business landscape overall, are realigning expectations for many businesses. IT strategy no longer has to occur in-house, meaning external experiences and learnings can be brought to your IT project and solution architecture without having to make expensive mistakes. This changing face of service delivery is bringing with it many unforseen additional benefits; when you outsource IT you garner business intelligence from an external perspective (that you otherwise wouldn’t have) but you still own the IP and solution architecture.
Based on our experience with outsourcing customers like the Department of Corrections and more recently, Meridian Energy, here is a quick guide to the Top 5 benefits of outsourcing IT:
1. Managed IT services partner with skin in the game and a commitment to outcomes
A recent CIO.com article on outsourcing trends to watch picked the move to outcomes as their number 1 trend for 2015. This isn’t news to us: Optimation’s core strategy is built around a 100% focus on our customers’ business and technical outcomes; whether those are delivered through an outsourcing contract or through project-based or managed IT services engagement models.
When it comes to IT outsourcing, our commitment to outcomes, and our willingness to put skin in the game with at-risk elements and robust shared governance, makes for a true partnership. In addition, outcomes-based pricing helps to address some of the challenges of making a large up-front investment in an outsourcing provider.
For example; we manage the software development and ongoing IT support for the Department of Corrections’ core applications. Through one of the country's largest application IT outsource contracts (8000 seats) we assist the Department in achieving their business and technology outcomes. We’ve helped them to achieve significantly higher quality in their business intelligence and IT strategy, and supported a robustness of service that has seen the Department recently re-sign for an optional multi-year contract renewal.
2. IT project management and IT solutions that still give the freedom to focus on growing your core business
When you outsource IT you do so to help support your business imperatives. Outsourcing your IT can free up time to allow you to work on other aspects of your IT strategy; aspects that need to remain in-house for various reasons. Outsourcing means you can focus on results, not on managing the applications, platforms and processes that help to deliver them. When you hand off support of day-to-day IT functions to a specialist outsource partner, it’s up to them to put together the right mix of skills, capabilities, and services to deliver your outcomes and to manage the mix to achieve continuous improvement to your solution architecture.
Dynamic, fast-moving industries can really benefit from this approach because it means internal staff are freed to focus on growing the business, instead of worrying about keeping the lights on. Good IT strategy will focus on best utilising the assets you have; be they time, money, personnel, or technology.
In the energy sector, for example, generators and retailers need to be ready to move quickly to stay ahead of the market. Managing non-core functions in-house just saps time and distracts from strategic imperatives. By encouraging externally managed IT solution and outsourcing basic support, maintenance and enhancement of business applications to Optimation, Meridian freed up management time, focus and capital for strategic initiatives, while ensuring they are supported by cost-effective, high performing IT services.
3. Maximise the benefits of business transformation initiatives through better IT project management
When you’re embarking on a business transformation programme or restructuring your operations, functions that are not core to delivering on the strategic vision can become a distraction. Or alternatively, performance and quality can start to suffer through lack of attention. But they still need to be done or your business will grind to a halt. Outsourcing is ideal for this scenario, and the intense strategic thinking and planning that comes as part of the transformation journey provides the perfect opportunity to think about the best way to achieve your long-term goals.
This was the case for the Department of Corrections. It chose Optimation as its long-term partner for Application Development, Maintenance and Support back in 2009, when it was beginning a major programme of business transformation. The Department knew they needed an adaptable, low-risk information technology environment to support their business and public service vision. The outcomes-based outsource model has proven a powerful way to meet their objective of delivering significantly higher quality and robustness of service. Bringing in information management consultants, to help guide this transformation process gives the added benefit of invigorated and fresh insight. Something which can be difficult to generate when an IT team is already bogged down with the day to day.
4. Access to resource and capability
We know that skills shortages, combined with headcount caps at many organisations, are a major handicap for companies wanting to accelerate business performance through better use of technology. A hybrid onshore/offshore outsourcing model provides access to a global knowledge base, opens up a deep talent pool and lets you leverage specialist capabilities that would simply not be viable to retain in-house.
For example, our outsourcing customers like Department of Corrections and Meridian Energy are able to draw on Optimation’s practices to design and deliver strategic projects and new programmes of work beyond the scope of the outsourcing IT contract. As their outsourcing partner, we already have a thorough knowledge of their; strategy, business drivers, risk framework, and culture. Add to that proven skills in end-to-end software development and integration, and in high-demand areas like cloud enablement, information management, and database solutions, and you have a recipe for game-changing results.
5. Governance and integration across multiple IT service providers
Last but not least, one unsung benefit of outsourcing is the lift in capability and performance you achieve through robust governance and integrated risk management across multiple service providers. The number of service providers organisations are using is growing dramatically, driven by cloud computing and Software-as-a-Service (SaaS), and this increases the challenges of governance. To ensure new procurement and provisioning models are delivering value, you need to effectively manage SLAs across multiple, often inter-dependent, providers; eliminate duplicated and unused services while planning for future growth and new demands; and constantly monitor, evaluate, and renegotitate to ensure business outcomes are being effectively delivered.
This is where an experienced outsourcer can add significant value. They can provide robust governance and proven risk management frameworks, along with the experience to effectively manage multiple service providers for maximum technical and business effectiveness. This is how Optimation is operating to deliver business outcomes for the Department of Corrections. As the prime contractor, we provide governance and risk management across a range of local and global service providers, and also manage integration interfaces with the Department's third party infrastructure and hardware providers.
If you want to know about how Optimation's outsourcing practice can add value to your business, contact us today.
- The hidden benefits of outsourcing http://www.optimation.co.nz/our-work/blog/the-hidden-benefits-of-outsourcing/
- Risks and benefits of offshore IT outsourcing http://www.bizjournals.com/chicago/how-to/technology/2015/07/risks-and-benefits-of-offshore-it-outsourcing.html?page=all
- Gamechangers in IT oursourcing relationships http://www.cio.com/article/2903713/outsourcing/game-changers-in-successful-outsourcing-relationships.html