Why IT Outsourcing Goes Wrong, Part 1


At Atlantic-IT.net, we’re proud to be the outsourced IT department for our customers. By outsourcing IT, our customers operate more efficiently, protect company and customer data, and ensure that IT tools and services are always available. That’s why it frustrates us to no end when we see organizations trying to cope with outsourcing nightmares that produce the exact opposite results.

The only thing worse than trying to get a handle on an in-house IT mess is trying to get a handle on an IT mess that exists someplace else. Here are some of the most common mistakes small businesses make when outsourcing IT.

Focusing Too Much on Price

Most small businesses outsource to reduce costs, which is indeed a major benefit of IT outsourcing. However, they take it a step further by focusing too much on the service provider’s monthly fees. Rarely does the cheapest provider offer the expertise, customer service, support and sophisticated tools required to deliver the results you demand. Some companies also demand a fixed price to ensure predictable costs, but this takes away the flexibility to add or remove services as business needs evolve.

There’s a big difference between price and value. Look for value when outsourcing IT.

Overestimating Cost Savings

Too many organizations expect to save exactly what they estimated, if not more. While you shouldn’t necessarily expect the worst-case scenario, it’s a good idea to assume your cost savings will fall somewhere in the middle. The longer you outsource IT and build a relationship with a provider, the more likely you are to find cost-saving opportunities. It doesn’t happen overnight. At the same time, don’t discount how improved efficiency, reliability and productivity — and the ability to focus on core business functions — can impact your bottom line.

Failing to Identify Specific Objectives

Every IT-related investment or decision should be based upon achieving a clearly defined goal. Otherwise, it’s impossible to determine whether the investment or decision you made was the right one. What exactly do you plan to achieve by outsourcing each IT service or function? How long should it take to reach this goal? Are these goals and parameters realistic? How will they be measured? This leads us to another common mistake…

Failing to Measure Results

Turning over various IT services to an outside provider doesn’t mean you should stop paying attention. Online dashboards are being used more and more to provide organizations with the ability to monitor the performance of the service provider. However, there must be more than random “check-ins.” Organizations should have a formal process that enables them to leverage their visibility into key performance indicators (KPIs), as well as a clear understanding of how to interpret those KPIs.

Not Knowing What to Outsource

Some small businesses think they can save a ton of money by outsourcing everything. Others outsource what they don’t understand. Others don’t outsource enough because they refuse to give up control. Ideally, organizations should outsource IT-related tasks that are outside of their core business processes. Think about what tasks your staff is capable of managing effectively and how important those tasks are to your company. For example, day-to-day IT maintenance and monitoring draw attention away from the strategic business strategies and innovation that help a business grow. However, they’re critical to business operations and can be managed more effectively and efficiently by an outside provider.

To be continued…