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Outsource everything….at your peril: Part 4

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…

It’s not all one way traffic

Not every company wants to leap headlong into cloud sourcing – and there are typically good reasons for that. Noel Leeming’s Harper is a case in point.

“We’re looking at this thing with our eyes wide open," says Darrin Harper, IT manager at Noel Leeming.

"Part of that is considering why and how each IT function is done through a strategic lens.

"It’s fair to say we are tiptoeing on the edges of cloud, looking at those items which present relatively low risk to the business- like payroll and email.

"We’re seeing what will work there [in the cloud] and what won’t; our executives certainly need that visibility,” he explains.

The issues which he believes need to be resolved to the satisfaction of those executives include reliability and security.

“There are systems so critical to the business that as an IT manager, you feel like you’re putting your life in someone else’s hands," he says.

"It comes down to a question of how much you trust that third party.

"With things like email, if it goes down occasionally, we could live with that.

"Point of sale? Not so much.”

OxygenIT’s MD Stace Hema is on the same page as Harper.

“When outsourcing to the cloud, we are totally comfortable with it with most customers," he says.

"It does depend on weighing up the risks, the pros and cons.

"And the cloud is only as trustworthy as the provider you are choosing.

For Hema, the real risks lie in unproven service providers. “You get a lot of people claiming they offer cloud, but in reality, where is your data? It’s easy to rent data centre capacity somewhere, where the client has no control over it or their data," he says.

"In such scenarios, you’ll find yourself relying on a long and faceless value chain – not an ideal scenario if a business critical system goes down.”

More Mr. Nice Guy

What is abundantly clear is that outsourcing often achieves advantages for the businesses that obtain their resources in this way.

Just as Timothy Ferriss’ book is not universally considered gospel (he was once described as ‘the greatest snake oil salesman of all time), outsourcing everything remains an unlikely option for most companies, since value-creation happens at various levels and with the manipulation of various resources.

However, through careful analysis which can involve some hit and miss, most companies find the sweet spot.

“We learned the hard way how outsourcing can get a bit of a bad name [with the AS/400 environment]. Be a careful about what you choose to outsource and do it strategically,” is Harper’s last word.

For part one click here, part two click here and part three click here