Outsourcing is all the rage, particularly in IT. But all too often, the cost savings of offloading work becomes the focus, rather than evaluating which team is best suited to deliver on the desired business outcomes. Deciding between a Do-It-Yourself (DIY) approach and outsourcing comes down to careful considerations around:
- Skillsets, expertise, and experience
- Staffing costs
- Time-to-hire and train
- Employee retention
- Proven processes
- Technology costs
- Security and compliance risks
When weighing your options, it also helps to identify success requirements, defining how much of your project will depend on people, process, and technology. This is also known as the success equation, because it defines each category by a specific percentage.
DIY or Outsource: First Identify the Success Equation (Sample Equation)
People: If expertise and experience dominate success, it might be time to bring in the experience of an outside partner – depending on your in-house talents.
Process: When process excellence is the leading factor, remember that it takes time for internal teams to develop and continually improve operations, which can be sharply contrasted by the proven tactics of a specialist who has already invested years in perfecting results through automated workflows.
Technology: If technology represents a vast majority, consider an in-house approach. Teams can easily access information through a new tool.
All of these are key considerations in deciding who is best suited to achieve higher returns on your investment. Don’t let DIY kill your ROI. Business outcomes can be easily undermined when saddling already overstretched teams with more goals and metrics to hit. Carefully consider what fidelity is needed to carry strategies, plans, and technologies through, leveraging expertise and proven process to recognize real business outcomes.
IT Cost Management: DIY or Outsource?
Here’s how to put this success equation exercise into practice, looking at IT expense management.
Success Equation for IT Expense Management
When it comes to managing IT expenses, people, and process represent a total 70% of the success equation (50% expertise + 20% process). Whereas just 30% of success stems from the technology and tools needed.
Why that breakdown? In today’s age of artificial intelligence, advanced technologies make it easy to drill down on IT costs and service usage information. Thanks to integration and machine learning, it’s fairly simple to point to potential savings and efficiency gains.
Zeus Kerravala put it best: “But discovery is just step one,” he explains in his Cloud Expense Management Buyer’s Guide, which outlines strategies and technologies for both SaaS and IaaS spend management.
Then what? The harder (yet most important) part are the steps that come after discovery. I.e. the expertise needed to turn information into savings opportunities and the response process — the action plan to turn identified savings into actual dollars saved. What’s even more difficult? Automating that response process.
Identified Savings are Abandoned
Many companies are struggling to act on cost-saving recommendations – much less automate them. Data shows companies are leaving money on the table with as much as 52% of identified cost savings never actionized or implemented. That’s like cutting your ROI in half.
Savings are often abandoned in part because IT talent shortages are increasing year over year — even despite today’s mass layoffs and economic pressures. Does your IT or finance team have the time and automated systems to rapidly make changes to services? Can they effectively dispute and correct invoices or catalog new services and cloud applications as they are purchased all while leading digital innovation? Do they have the time to help the company switch to a more affordable service?
Here’s what one global client said about Tangoe’s staff augmentation services, which were helping him cut costs 41% and transition telecom services for 10,000+ mobile devices. “Tangoe’s support team saved our employees hundreds of hours and many, many headaches. The operational execution and service delivery was critical to the success of moving all those lines. Things that would have taken us 4 to 6 hours to resolve were completed in just 1 or 2 hours,” he said. Read the complete story.
This starts to explain why expertise and process automation are critical to the returns on any IT cost management program.
Much like advanced security technologies need the support of a security operations center (SOC) and AI to act on threat detection intelligence, IT expense management (ITEM) platforms need the support of experts and proven processes to operationalize insights and squeeze more value out of existing IT services.
The benefit of a fully managed ITEM service is much like the benefit of a managed security services provider (MSSP). An MSSP typically results in 50% faster time to threat containment, and a comprehensive ITEM managed service provider (who backs their AI technology and money-savings insights with staff augmentation) offers a faster time to savings. That’s fewer lost opportunities and more year-over-year savings.
ITEM is not typically a one-person job, but rather a three-person job according to Forrester. Besides, isn’t cost governance easier when you can phone a friend?
Don’t miss our next article: 3 Reasons Not to do IT Cost Management In-House
Learn how Tangoe can help you both identify savings and act on them.