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IT Outsourcing – Is There More Than Just Cutting Costs?

outsourcing

Information Technology (IT) is a mission critical operation for every modern company. It provides security, support, and allows for important strategic decisions to flourish. But small to medium sized businesses all too often overlook this department when building their business due to costs and energy required to create a decent IT department.

But in 2016, you’d have to be living under a rock to have not heard about the growing trend of IT outsourcing. The word about cutting costs on IT through outsourcing has essentially been fully permeated throughout our society. But there are so many other things IT outsourcing is capable, which any of our partners can testify to.

IT outsourcing investments are used by providers to build a more efficient, talented, and powerful IT department for companies all over the country. Here are 5 ways this happens.

       1. Renewed Focus on Core Business

The vast majority of companies in our society don’t use IT as a core operation, it exists to support and make secure all other company functions. If you decide to build your own data center with severs and security measures, it will inevitably drain focus and not create any tangible competitive advantage.

You’ll need to recruit top talent, keep them at your company, and update your systems to the most modern version every so often. But your business isn’t IT, so these tasks often get in the way finding new company revenue streams. And worthy of mention is the fact that outsourced IT is able to service needs 24/7 while going beyond what an internal team could do with service level agreements.

       2. Access to IT Experts and Latest Technology

Unlike other businesses, IT is the core competency of a Managed Service Provider. Full training, certification, and expertise validation are parts of the hiring process for all stand-up MSP’s. Being able to draw on this wealth of technological knowledge at any time gives valuable business advantages.

With all the different IT disciplines like cloud computing, security, and business networks, you have access to any IT expert at any time. And with the best in the field, you also get the latest and greatest technology to give your company the edge it needs to stand out from the crowd. MSP’s know the most modern technology is only utilized by effective deployment into proper environments and quick patching.

       3. Minimized Risk with Increased Flexibility

IT is inherently expensive for companies, especially if you’re going at it alone. One mistake can equal a huge investment. If you decide that your company needs to make the move to a new platform, it could go awry without the proper tools. IT outsourcing can both tell you if this is going to be a good overall decision and give you the tools you need.

Reducing the risk of data loss can be easily achieved through the services outsourcing IT providers allow companies to take advantage of. Data backup options are numerous, with safeguards like firewalls, encryption options, and user access tools always given by vendors. And these options are made more powerful with certifications obtained by the IT specialists employed by managed service providers.

The risk of downtime is also essentially removed. You’ve already likely seen the slogans saying “We offer 99.9% uptime guarantee!” This is because IT outsourcing vendors heavily invest in the most resilient systems that handle disruption better than less powerful systems can. Robust systems in place to backup and recover data also reduce the risk of losing anything if there is a technological failure.

And when you need to take a strategic change in direction, IT outsourcing can provide the much needed flexibility to scale up and down. Completed projects are only charged to companies for the agreed upon completion time, and new ones can be created at any time.

       4. Enhanced Employee Morale

If you’re dealing with a stand-up company that fits right into your own company culture, it’s likely that overall company morale will noticeably improve. When employees know their data is safe, that they don’t need to work about any downtime, and that they no longer need to worry about handling extraneous IT functions; considerable stress is removed. Especially for non-IT employees who have had to put effort into putting out IT fires.

When a company specialist is able to focus all their energy on doing what they do best, more satisfaction is gained from a job well done.

       5. Reduced Costs with IT Outsourcing

And of course, the most well-known driver for companies to outsource their IT needs is the significant cost savings. Many companies report savings as high as 40%, with authority sources like Gartner reporting the occurrence of significant savings by simply outsourcing your email service.

Another valuable advantage is the reduction of Cap ex and Op ex from the accounting end from companies outsourcing their IT. Outsourcing removes the need to purchase physical hardware and space to keep the hardware. Additionally, expensive employee salaries can be bypassed with much more affordable vendor contracts. And these contracts span a massive spectrum of services from cloud computing to application development.

Key Insights

Of course, the advantages of IT outsourcing are not completely without risks. Some vendors may not mesh with your company culture, or they may not provide the transparent help you need. Unless you completely trust a provider, you’re better off continuing your search elsewhere.

But with properly managed IT outsourcing, small to medium businesses can truly thrive, in many more ways than simply saving money on unnecessary IT expenditures.

To see if we fit into your image of what a great managed service provider is, shoot us a message here.

 

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What is IT Due Diligence and Why Does it Matter?

due diligence

IT due diligence is the process designed to find a clear and comprehensive picture of the Total Cost of Ownership (TCO) of a company’s IT infrastructure as well as the risk associated with any future mergers or acquisitions.

There are four steps to the IT due diligence process:

  1. Assessment of the company’s standards, inventory, and systems
  2. Assessment of all databases and applications in use
  3. Assessment of current IT support services and vendor operations
  4. Analysis of the IT company’s structure and how it enhances their core business activities.

Importance of IT Due Diligence?

The system of “Due Diligence” really hit the mainstream when the U.S. Securities Act of 1933 was passed. And since this Act was passed the phrase “due diligence” has become somewhat synonymous with the orderly investigation of many different facets of business, one of such is the sub section of “IT Due Diligence”. This Act essentially passed on the responsibility to disclose all information about the materials being sold onto dealers and brokers who would then release that information to potential investors. If they did not pass on this information, they could be criminally prosecuted. But those who passed the act knew that it would be unfair to prosecute the brokers disclosing this information if they could not gather a piece of the required data. Thus, the Act included a section labeled “Due Diligence” to cover this possibility.

 

Instead of discovering the failures of a company after a big contracted merger, many companies choose to avoid the frustration and have a professional IT due diligence assessment done beforehand.

 

With the various different ways to conduct an IT Due Diligence evaluation, this guide is generally regarded as the most trustworthy method consisting of modern practices. Many professionals follow this guide, and after you’ve had a professional take a look at your company we usually also recommend you take IT due diligence a step further and have a comprehensive security analysis performed.

Instead of only getting a look at how the company operates and their level of material investment, doing the security analysis will give you insight into any potential security threats. Doing this security assessment lets you see all the sensitive date that may need to be protected, where the data is currently being held, and what level of protection the company is currently employing to cover that data.

Having a professional to handle the IT due diligence assessment of a company is generally simple, as specialists build their experience to fully explore and analyze the IT portion of businesses over many years.

IT due diligence for Mergers and Acquisitions

IT Due diligence is an imperative activity companies must engage in that is a sub section of conducting a due diligence assessment, which could take up to several months to complete if the company is on the global scale. The team assigned to IT due diligence is sent to discover how much the company they are assessing is worth in tangibles and intangibles along with the risk associated with that company.

Conducting a mergers and acquisitions IT due diligence assessment requires considerable skill and expertise from the professionals assigned to the assessment.

Find out more about what were capable of at ERGOS here.

 

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2016 IT Outsourcing Trends – How they scale up businesses

serversWith an increase in standardized services and streamlined practices in the vast world of IT outsourcing, we’ve seen some trends rise to the top in 2016. These trends are the product of intense competition to be the most secure, the most cost efficient, and the most effective at producing results.

The first product of this competition is…

Full service has become standard

IT outsourcing vendors are quickly moving towards further centralization in the way they deliver IT to clients. This centralization causes IT services to being outsourced at a lower overall price and a raise the productivity level of agency workers. Centralization causes this because companies using IT outsourcing are beginning to rely less on multiple vendors and are instead looking to a single IT service company to solve all their IT issues.

This increasingly common trend is seen in leaders like IBM or HP. They’ve moved from a fractured system of IT service to a more centralized, single service contact point.

This shift allows services to be deployed more quickly across the board. When employees on both sides of the IT exchange expect a predictable and standardized operation, efficiency is increased.

And this trend is the natural progression of companies adapting to the demands of the industry to become more scalable. Without this centralization, scaling up would be heavily hindered.

Further Evolution of Hybrid Cloud

Using the hybrid cloud model has become recently hugely popular because of the unique benefits it offers companies. Using a mix of private and public clouds gives instant access to business processes with amplified security due to the private cloud options.

But companies are still juggling the balance of how to allocate their public and private server investments. This balance will be shifted by the increased importance of big data analysis requirements, system flexibility, data security, and IT governance.

Most cloud specialists say that in two years from now, half of all IT spending is going to be funneled into the cloud. This is compounded by the fact that the cloud provider industry is set to grow to $139 billion in two years. So now large and small cloud providers alike are signing more hybrid deals, like IBM’s recently signed contract.

Even the Vice President of Oracle states that hybrid cloud is their priority focus and that all their products are in the cloud right now.

Machine automated IT outsourcing

Reaching a plateau on cost-savings through employees, many IT outsourcing companies are looking to machines to automate as much labor as possible. Some buyers are likely going to be looking over their contracts again this year after the work they are paying for has been moved from humans to machine automation.

IT processes like big data analytics with cloud computing are going to be automatically handled solely by computers more and more. And now that the public is becoming more aware of this change, clients will be asking about automation options before employing new vendors.

As traditional human jobs become performed more commonly by machines, new job requirements and skills will be defined. This will also change the level of flexibility between contracts with vendors and buyers.

Want to hear more? See some of the ways we outsource IT here.

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