The Outsourcing Continuum, Part I

Co-Location Managed

This model is very similar to the in-house managed environment except the servers running your business are housed outside of your offices. The advantage is you will be more likely to have a robust physical facility with multiple sources of communication and power. That will ensure that your systems are available in the event of a disaster. The downside is you won’t have quick, physical access to the machines.

You’re also paying for the physical plant so it will be more costly than having the machines on site. However, odds are you won’t have the same level of physical security and reliability on site so you have to weigh that risk against the cost of a better environment. You’ll still have the cost of owning and maintaining the equipment. You’ll also have to pay, as in the in-house model, for expertise to manage your systems.

Fully Managed

In this environment you don’t own the servers and don’t have to worry about whether they are up-to-date. You are paying for someone else to take on the technology refresh costs. You are also paying for the expertise to manage and monitor the systems. The systems you’re using are housed in a risk managed environment with backup power and communications. Again, this is more expensive than the other models, but you have to weight that cost against the resources that you would be dedicating to the acquisition, management and maintenance of your systems.

Decisions, Decisions

In order to decide the right path for your organization, you have to understand the strategic business goals and how IT contributes to those plans. You also have to determine the risk that your company is willing to absorb and if outsourcing will mitigate or aggravate that risk.

Reviewing the offerings of multiple service providers can be daunting unless you have a good benchmark to measure those services against. You’ll need to negotiate an SLA that protects against poor service. All of these tasks take time and effort to do right but, if well done, it can lead to a far stronger IT contribution to the company’s business.

In future articles, I’ll examine more of the details of how each of these outsourcing models work and what you need to do to determine what is the best plan of action for you and your company.

Mike Scheuerman is an independent consultant with more than 26 years experience in strategic business planning and implementation. His experience from the computer room to the boardroom provides a broad spectrum view of how technology can be integrated with and contributes significantly to business strategy. Mike can be reached at [email protected].