10 Tips to Outsourcing IT

Smart companies invest in business technology to increase profitability, improve key operations and gain advantages over the competition. However, most soon realize that core business activities suffer when too much time is spent dealing with technology issues. For this reason, many business owners find it makes more sense to partner with an IT provider who can manage and monitor their technology.

Finding and evaluating outsourcing partners can be a headache, especially if you don’t know how to start. You know you want a technology expert with cost-effective pricing and flexible processes that can adapt to your needs. Now what? Outsourcing can be risky, but choosing the right partner will save you in the long run.url-2

Choosing an IT partner doesn’t have to feel like a game of chess, where one false move puts you farther from your goal. Each step gives you more insight into your business processes, helps you better understand your business drivers and allows you to see how an outsourcing partner can be more than just cost-effective technology services, but a partner in innovation.

Follow these 10 steps to painlessly identify the right IT partner…

Step 1 – Only consider IT partners that address both business processes and technology
When evaluating and meeting with partners, note whether they ask about your business not just your technology. You want a partner who can identify opportunities for technology to streamline your business processes. Find a firm that matches your business culture, has a proven track record and is experienced with your particular needs.

Step 2 – Know your evaluation criteria and recognize key differentiators
First, make sure you know what qualities are most important to you. The measure of a good IT partner is only as credible as your evaluation criteria. Differentiate the potential partners based on their technology expertise, flexibility of their delivery process, pricing structure, customer service levels, ability to scale and change control capabilities.

Step 3 – Seek value over price
Deloitte Outsourcing Report found that too many businesses seek outsourcing only as a way to reduce costs, rather than a way to streamline operations and drive improvements in efficiency, productivity and reliability. The strategic IT partner that can help you achieve multiple business goals and drive business value isn’t always the lowest priced. Recognize that cost savings over time are a given, and be receptive to seeing the big picture.

Possible big picture objectives include:
•Increase performance and reduce processing time
•Realize more availability and scalability of systems and tools
•Support the business with information for better decision making

Step 4 – Commit to open interaction
During the discovery phase, when you and the partner are filling in the blanks, take notice of the partner’s actions. Are the business development representatives reviewing their findings with you? Are they asking detailed, appropriate questions? Did they demonstrate their expertise by presenting a thorough proposal with a well-developed solution and plans to solve your business pain?

Be transparent in your discussions, as well. To create shared understanding of your specific needs, you should engage in collaboration, be flexible and devote time to providing detailed information. Protect yourself under a non-disclosure agreement, and share your true issues and intentions.

Step 5 – Require written service agreements
To ensure service levels align with business goals, it’s necessary to insist on a written service agreement outlining in sufficient detail the terms and conditions of the relationship. Having an agreement can help avoid disputes that might otherwise arise down the road. The services agreement should fully describe the scope of work, pricing structure and estimate of fees and expenses to be incurred.

Make sure it clearly defines your business’s current state and also your desired state. This will ensure each party truly understands the scope of the relationship. When asked what executives would do differently if they had to redo their outsourcing efforts, 49 percent said they would do a better job of defining realistic service levels that are aligned with business goals.

Step 6 – Create a partnership
A true partnership is based on trust. Mentally accepting the partner has the best interests of your business in mind will kick off the engagement to a great start. When people and technology are involved, it can sometimes be a bumpy road. Address each bump with a spirit of teamwork, expecting your partner will take full responsibility for successful smoothing of bumps.

A partner knows the solution is its responsibility. Support the staff of your partner as they attempt to solve problems and accept a familiarity period as the engagement begins.

Step 7 – Recognize that 100 percent just meets minimum expectations
Articulate that idea. It should encourage the partner to continuously meet the minimum. What you want is a partner who assumes full responsibility to ensure your operations run smoothly. As roadblocks and potholes do occasionally happen, it’s important to maintain open lines of communication. Problems are quickly resolved through prompt alerts and collaboration.

Step 8 – Require regular reporting and make time to meet with account management
The real value in partnership comes from getting to know your partner intimately and allowing a deep understanding of your business and its needs. Require original documentation and full backup of everything. Be certain that your partner completes a comprehensive asset inventory and stores it where you can easily access it.

Most importantly, require an inventory of software licenses including expiration dates, and order new licenses when prompted by your partner. Don’t ask your partner to break the law by installing pirated or unlicensed software.

Step 9 – Be prepared over the life of the partnership to consider pricing changes
Your partner delivers value and service through its people. Good people deserve and expect salary increases. Though the original pricing should allow for some flexibility, ultimately the price will need to be adjusted to reward the hardworking staff that takes care of you. Also, upgrades and add-ons to the project scope may increase pricing over time. A sign of a profitable partnership is when both businesses are growing together.

Step 10 – Remember the pains that caused you to seek outsourcing
After time, it can be common for a business to look at its outsourcing budget and decide savings can be accomplished by bringing the functions back in-house with full-time IT employees. Economic downturns may accelerate that belief or need. Remember the overall business value that an outsourcing partner brings. Remember the competitive advantages and business process improvements you are receiving from the partnership. Those achievements are much more valuable than saving a few dollars.

Also, when considering internalizing IT again, it’s in bad taste to offer your partner’s staff full-time positions without first getting an agreement from your partner’s management. Good technology firms make a major investment in their staff and losing one to you will be costly. Keep communication candid and treat your partner like you would like to be treated.

Following these steps of engaging and working with a technology partner will make the outsourcing experience a rewarding one. It also allows technology to deliver on its promise for return on investment and efficient operations of your business.

Remember the objectives that a strong technology infrastructure allows you to achieve:
•More manageable IT costs
•Improved service capabilities
•Increased scalability and availability of systems
•Enablement for business growth

Then, you can focus your time on positioning your business for growth and carrying out more profit-driving activities, leaving IT issues to the experts. Your business technology partner should make IT transparent to your operations.

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