In-Depth
Q&A: Best Practices for Outsourcing IT Management
Outsourcing is a popular way to reduce IT costs, but outsourcing critical network and data center infrastructure monitoring and management can be filled with problems. To learn about the biggest mistakes IT makes (and the best practices that can help you avoid them), we spoke to Sam Mohamad, senior vice president at e4e (http://www.e4e.com) for his perspective and advice.
Enterprise Systems: What tasks can and should be turned over to a third party (outsourced)?
Sam Mohamad: IT departments are faced with drastic cost-cutting measures. Many IT managers we have spoken with are facing diminished budgets and are exploring ways of sending even more work off site to save money, or at least take capital costs off their plate. The reality is that almost any task within the enterprise environment can be outsourced.
We generally see companies go through three stages when outsourcing enterprise infrastructure. The first stage is focused on offloading operations that are routine and non-strategic (for example, infrastructure monitoring, help desk, and Level 1 support). The next stage of outsourcing is to consider operations that are of higher value to the enterprise such as end-to-end service-level management and security management. The final stage of outsourcing is to outsource core and strategic operations (such as data center management, governance risk, and compliance initiatives).
How does IT assess the best choices -- that is, how do they determine what monitoring should be moved off site?
At the broadest level, IT should assess their remote infrastructure monitoring and management priorities based on two factors. First, where can they achieve the highest ROI both from a financial as well as performance perspective for the business. Second, which avenue represents the lowest switching or transfer costs to the outsourcer. Often times, there are situation-specific factors driving the outsourcing decision. An enterprise might lack sufficient internal resources to manage an expanding IT infrastructure. There could be time pressures for completion of a specific project that require additional resources to ensure on-time completion. In some cases, an outsourcing partner may have specific domain expertise which makes use of the partner more efficient.
How easy is it to turn over the monitoring and management of critical network and data center infrastructure?
The maturity of technology and availability of standardized IT operations frameworks such as ITIL has significantly lowered the complexity of outsourcing the monitoring and management of critical IT infrastructure. The standards allow the customer and outsourcer to speak the same language and ensure that the business requirements are being addressed adequately. The technology vendors that have implemented standards-based monitoring and management tools allow the outsourcer to easily transition the operations from internal IT to their own operations centers.
What are the biggest mistakes companies make when outsourcing?
The lowest-cost provider may not be the best provider for a specific situation. Outsourcing relationships often fail because of a combination of the following issues:
- Little or no domain experience: It’s essential to ensure an outsourcing partner is familiar with your industry terms and requirements.
- Poor or non-existent project management interface between client and outsourcer: You must have onshore project management in the early stages of the outsourcing relationships. It helps establish good working relationships between the in-house and outsourced teams.
- Inexperienced operations team: If a business is not big enough for the outsourcer, then the chances are that it will get a mediocre or less-experienced team managing its operations is high. Due diligence is essential to ensure that your business is important and strategic to an outsourcer.
- Lack of scalability: At some point, pure labor arbitrage-based cost savings starts to produce diminishing results, and from a performance perspective starts hurting service levels. Businesses should look for outsourcing partners that have technology-based operations platforms that allow them to scale the business and pass-on exponential cost savings without affecting performance.
How much money can IT truly save?
The cost savings is very situation-specific. However, we have seen savings of anywhere from 25 to 40 percent in hard savings based on the complexity of the customer infrastructure and stage of outsourcing.
Typically, how are the service levels affected by outsourcing IT management?
Any good outsourcing relationship should improve the service levels. The fact is that the outsourcing partner is providing standardized operational processes and best practices in addition to providing you with lower cost. The standards and best practices should help improve the service levels.
Besides the obvious benefits (having an experienced team monitoring your work, removing those tasks from IT so they're free to work on other tasks, and so on), what benefits can an enterprise expect?
I have a perfect example of this. One of the world’s largest communications companies offers a consumer portal that receives more than 30 million hits every month, making it the sixth most popular Web portal in the world. The company sought to improve the overall availability of the portal, thereby providing a superior customer experience which in turn generates more revenue. The Telco needed capabilities that combined infrastructure management with proactive monitoring.
We deployed a unique managed services solution that combined the capability to proactively support consumer portal infrastructure, SLA management, escalation capabilities, and resolution of all issues. The Telco reduced downtime by more than 60 percent, thereby improving availability to 99.99 percent. Most importantly, because of the business-specific experience we had in telecommunications, the capability was delivered in 60 days resulting in proactive trouble resolution, better customer experience, and ultimately more revenue.
What managed services does e4e offer to the market?
e4e offers a scalable and differentiated portfolio of managed services to enterprises through the innovative use of technology and business-specific domain experience. The company provides comprehensive infrastructure management services covering applications, desktops, networks, security, servers and storage. These managed services result in improvement of performance and availability of business services and reduce operational costs.