IT Infrastructure Outsourcing

The Key To IFO Success: Assessment

An Outsourcing Definition:
The conscious business decision to move internal work to an external
supplier with whom your company develops a mutually beneficial and
strategic relationship.

With infrastructure in its various capacities acting as the backbone for most businesses, infrastructure availability has become a mission-critical necessity for growing enterprises. Organizations evolving with today's fluctuating business climate face the challenges of managing and maintaining their increasingly complex business center operations and various infrastructure areas.
As a result, many successful businesses are turning to infrastructure
outsourcing as a way to maintain a competitive edge. Infrastructure
outsourcing (IFO) enables companies to focus on areas critical to their
strategic success while gaining the advantage of competitive infrastructure
functions, enabling business growth.
There are several keys to successful IFO, including finding a service provider who partners with your organization to help you to evolve strategically and profitably. However, before you can even get to the point of seeking out a service provider, companies must identify those areas within their infrastructure that are good candidates for outsourcing. This assessment phase is key to the ultimate success of a company’s outsourcing ventures. So, how does a company go about assessing their outsourcing needs? A lot of introspection and unbiased evaluation!

What IFO Services Are Out There?
Success in outsourcing depends on how well you define and communicate your IFO needs to potential contractors, and the quality of the relationship you develop with your chosen service provider. The goal of IFO is to bring in experts to serve your infrastructure needs more efficiently than you can on your own,
freeing you to dedicate more of your resources to your organization's core competencies. There are several types of IFO that can be utilized within one company including business processes, IT, enterprise support and manufacturing processes.
• Business Processes (BPO): is the delegation, to a third party, of the management, operation of a company process, to allow the company to improve its productivity, efficiency, and competitiveness.
• IT (ITO): is the delegation of IT infrastructure, application development, maintenance, and support to an external provider to improve performance of this critical support service.
• Manufacturing Processes (MPO): is the delegation of product manufacturing to an external provider to improve the a) development, b) production, fabrication, assembly, or c) post-production support of that product. Establishing a relationship with a third-party to support the manufacturing process joins the strengths of both companies to go to market sooner, produce a superior product or extend the market penetration of the product.
• Enterprise Support (ESO): is the Facilities Management Services that support the company’s premises and its occupants. This can include Administrative Support Services that enable the company to operate more effectively, e.g.: travel desk, teleconferencing support, and fleet maintenance. Within each of these categories, a company may outsource day-to-day maintenance and administration, or planning and design. Making a decision about what to outsource should depend primarily on the capabilities and needs of the organization and the knowledge and expertise of the staff.

Assessing Your Needs
The assessment phase can be one of the more difficult stages of the outsourcing process, simply because there are more than likely going to be political, emotional and financial factors motivating the decision- making process. If handled systematically and without bias, however, this stage in the outsourcing process
can be extremely productive and will directly contribute to long-term IFO success. According to Lew Houck, Senior Associate of the Outsourcing Institute (OI), “The first step is to clearly understand the operational requirements of the business units that are supported by the infrastructure – both current and planned. While
an IFO may be initiated in the interests of economy or enhanced technology, the day-to-day effect to the end user community should range from ‘business-as-usual’ to ‘much improved functionality.’”

The next step in determining which functions are potential IFO candidates, is to identify those functions that are strategic to your company’s core business and those which are supporting or non-strategic. With these key areas identified, the next step is to identify functions or segments of functions that can be outsourced.
Again, it is imperative to thoughtfully seek out those portions of infrastructure functions that are non-core to the company’s main source of revenue.

Houck recommends that companies develop a realistic set of outsourcing options based on existing and future needs of the company. “An unbiased approach is especially important for IFO. By its very nature the infrastructure is ubiquitous within the organization and to the user community. An unbiased approach
assures that every organization is heard and that every input is given equal consideration. The result is an assessment that is focused on the most positive impact to the business as a whole,” commented Houck. Looking to the future is a large part of the assessment phase. Identifying long-term business goals and
growth opportunities will guide companies in targeting mission critical functions. OI offers a set of probing questions that your company should ask when completing any IFO assessment exercise:

1. Where are we today?
2. Where must we improve?
3. What new requirements do we face?
4. What are our critical issues?
5. What business objectives must outsourcing satisfy?
6. What options other than outsourcing are available?
7. Which functions, if any, are good candidates for outsourcing?
8. Can outsourcing support our business direction?
9. Does outsourcing represent a good “fit” with the company?
10. Can outsourcing reduce costs at a sustainable annual rate of at least x%? If less, are there
compensating benefits such as strategic partnerships?
11. Will outsourcing enable us to maintain the required management control?
12. With outsourcing, can we retain an infrastructure that will enable flexibility for changing business requirements?

Houck offers some tips on how to stay unbiased in your assessment, “When we talk about unbiased, we are usually addressing the intra-organizational issues of politics, influence or such – the ‘unkind bias’. You also need to address the ‘kind bias’. Someone who has grownup in a given functional area will have a natural bias
for the needs of that area. They do not intend to be biased, but they necessarily are biased on the basis of their ability to understand the needs of one area. Using a committee sounds good, but the leader’s interests can be problematic. Using an outside person with the proper knowledge and experience is often the best
choice.”


The Results Are In: Approach Thoughtfully & Cautiously
Once the IFO assessment phase is completed and outsourcing seems to be the desired option, a rigorous and disciplined process should be followed when forming the parameters of the project. OI recommends that companies approach this new venture with enthusiasm, but also with caution. Why? Houck comments,
“Outsourcing the wrong infrastructure function or selecting the wrong outsourcing model can lead to tragic results.” There is a simple fix; however, discipline is the key word in this case.
Constantly test your assumptions on what you believe are the best IFO course throughout the entire process to make sure outsourcing is the right decision. Additionally, clearly identify objectives and fine tune them to the results you are trying to achieve. This may have to be done multiple times throughout the IFO process, but you will reap the financial and strategic rewards of a disciplined approach.

Final Thoughts

Outsourcing any infrastructure needs requires thought, research, and detailed planning. The keys to successful implementation include a disciplined and thoughtful assessment phase, clear communication with vendors, designating specific point people who are responsible for a specific infrastructure aspect, and working to increase the expertise in an organization to enhance strategic direction and compliment core competencies.