The benefits of infrastructure outsourcing

The benefits of infrastructure outsourcing

Forrester's Phil Sayer shares practical advice on best practices in IT infrastructure outsourcing when your goal is business transformation. Beware: while the business case for infrastructure outsourcing is sound, organizations still find cost savings lower than expected.

The ever-increasing economic pressure continues to drive IT professionals to take a closer look at infrastructure outsourcing as an efficient means of filling their resource gap and driving business transformation. As a result there are a number of best practices in IT infrastructure outsourcing engagements that can help the process along.

Today's competitive business environment, coupled with a volatile economic climate, demands that organizations invest time, talent, and financial resources on core competencies and activities that differentiate their business from the competition. Even if yours is a technology-centric organization, the management and support of your IT infrastructure is unlikely to be a core competency or business differentiator. Rather than deploy internal resources on non-differentiating activities, Infrastructure & Operations (I&O) professionals should look to IT infrastructure outsourcing vendors to provide or manage IT infrastructure.

This idea - focus resources on what you do best and leave the rest to someone who specializes in it - is not new. However, the imperative to drive down costs, improve efficiency, and simplify IT operations has never been stronger. Unfortunately, now is not the right time for major IT outsourcing programs. Such initiatives take many months to plan and execute, and they only make sense in a stable economy. In today's uncertain times, I&O professionals need immediate cost reductions combined with maximum flexibility. Stay focused on outsourcing the commodity elements of IT infrastructure on short-term contracts with standard service-level agreements (SLA).

While the business case for infrastructure outsourcing is sound, organizations still find cost savings lower than expected. Forrester recently wrote a report for members of Forrester's Infrastructure & Operations Council. The result, based on in-depth interviews with some of Forrester's most senior clients, showed that this happens because too many companies pursue infrastructure outsourcing agreements based purely on immediate cost savings, with not enough thought given to service quality, flexibility, and long-term needs. Organizations also often neglect to measure infrastructure service levels and therefore don't know what SLAs they need from vendors. And, infrastructure outsourcing contracts typically fail to incorporate adequate provisions for innovation to ensure that businesses stay current with emerging best practices.

Faced with the need to cut budgets and headcount, CIOs are turning to infrastructure outsourcing to maintain service levels while reducing costs. Outsourcing works best for well-defined commodity services delivered against standard service levels. I&O professionals must push back against an overemphasis on cost reduction and provide valid evidence of the issues that arise when a purely cost-driven approach rules the outsourcing decision. Aggressive demands to lower costs force vendors to respond with proposals for long-term contracts with little or no flexibility.

Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags outsourcingsourcing

More about Forrester Research

Show Comments