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Outsource everything….at your peril: Part 2

Outsourcing is a bit of a yo-yo for a lot of companies: depending who is in charge, none, some, or all requirements are considered at one time or another for placement with service providers.

And the levels of outsourcing vary over time, depending on variables as broad as the state of the economy or as narrow as personal preference.

Donovan Jackson attempts to determine where to draw the line is, therefore, answering a ‘how long is a piece of string’ question…

Going too far

Stace Hema, MD of OxygenIT, concedes that outsourcing often doesn’t end up being the optimal solution, depending on just how IT is used to create value within the organisation. A chat with Darrin Harper, IT manager at retailer Noel Leeming, provides insight into how outsourcing everything wasn’t the best idea.

“Right now, our Intel environment is outsourced to Gen-i, including [application] development and support," he says.

"However, our IBM AS/400 [now System-i] environment is kept in-house."

The System-i environment was also initially outsourced, continues Harper.

“However, because this platform is central to our business as opposed to the somewhat commodity Intel environment, it turned out that having it outside of our direct control was not optimal," he says.

"When something is core to the business, it is just better to have your own guys look after it.”

What makes it a better option, he says, is that synergy is achieved between developers and the ‘tech guys’ running the systems.

“And where outsourcing delivers benefits is that we have access to Gen-i’s resources at volume," he says.

"We pay a fixed amount and get well looked after, something which was borne out through the Christchurch earthquakes.

"Having the clout of a service provider like Gen-i meant being back in business far faster than we could have managed on our own.”

Companies that themselves provide outsourced services, make use of outsource service providers where appropriate. Wayne Pointon is operations manager at Debit Success, which provides direct billing services.

“Deciding what to get rid of and what to keep in house requires looking at what your core functions are," he says.

"Anything that isn’t should go on the radar for outsourcing."

Included among the services that his organisation leaves to experts is software development and data storage.

“We don’t specialise in software, although software is key to what we do; doing the development itself is just not worth the investment,” Pointon notes.

Where data storage is concerned, he says specialist is able to provide SLAs for disaster recovery scenarios in accordance with performance levels expected by various elements of the business.

“Should anything go wrong, there are some elements which must be up in 2 hours, others 48 and yet others in 72 hours," he says.

"Achieving that is not something we are equipped to do in-house.”

Selecting a service provider, he says, didn’t depend primarily on cost, but on the ability to provide the necessary guarantees – and proven track record.

For part one click here, for the next installment visit Techday on Wednesday