In the IT world, the idea of outsourcing has been around for some time. In 1994 while working at Digital Communications Associates, I ultimately lost my job because the entire IT function was outsourced to EDS (an odd situation, since I helped negotiate the contract). In those days, the primary benefits of IT outsourcing were: 1) Containing IT costs and making them predictable; 2) Allowing staffing levels to be ramped up and down based on needs at any given time. Many companies outsourced their entire IT function in this era, and most never realized the benefits they sought. There were always more functions than were put in the agreement, leading to higher costs, and since outsourcing companies were not fond of paying people they did not need, staffing levels could not really be rampled up quickly after all.
Sixteen years later, a different version of outsourcing, what I call the “new outsourcing” is a viable option for smaller companies. The focus of this version is using a company with IT expertise to handle routine functions such as server management. In his book Meatball Sundae, Seth Godin says of outsourcing
“Either what you are doing is repetitive, in which case you ought to outsource it, or it’s homemade, insightful, and filled with initiative and judgement, in which case you can charge for it.”
His point is clear. If IT is a major factor in how you make money, you should be doing it and making money for it. In the case of organizations which depend on their IT to carry out their profit-making work, but for which IT is not part of that profit, routine IT functions like server management, PC repair, phone system maintenance, etc, are good candidates for outsourcing. In the case of such companies, routine IT functions distract them from their money-making function. For an IT company however, they are part of the core function, and can be performed at a low cost via economies of scale.
As a specific example, we recently began handling server and backup management for a medical practice who had just converted to an electronic medical records system. Their monthly cost is low, because we do that function frequently, and for us it is a very quick and efficient process. On the other hand, them doing it in house would take them away from the function of providing patient services, which serve the community and make them money.
If you are a small business bogged down in routine PC, server, and/or phone system functions, you are a good candidate for the new outsourcing.
