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The future of IT is not in building and maintaining technology, but in the application of technology in solving business problems. This new IT organization should not be focused on maintaining a technology infrastructure, but in using IT as a value-added tool to enhance the operation of the business. Making the switch to concentrating on the ‘information’ in Information Technology will be challenging for many of today’s IT managers. They have always worried about the ‘speeds and feeds’ and less about how the equipment under their control provides good support and value to the people who use that equipment to do their jobs. Infrastructure management is necessary but not sufficient to provide business users and managers with the information that they need to make critical business decisions each and every day.

A better approach is to organize the IT department to emphasize the information and downplay the technology. To that end the new face of IT becomes the business analyst and project manager. The role of infrastructure management falls to outside vendors and someone in IT will have the role of vendor relationship management for those service providers who are providing and maintaining the computing power that the business technology uses. Managing SLAs becomes the primary goal for this group.

Within the Business Analysis function, there are 3 major components. Project management provides the methodology for getting things done in a timely, cost effective way. Business unit expertise is used to provide knowledgeable individuals who know the business processes within a particular department. This expertise allows them to provide sound advice on how technology can be used within that business unit. Since this group falls within the overall business analysis function, they can also provide the cross-functional view that is missing so many times in projects. Helping to avoid the unintended consequences of system changes is a side benefit of this cross-function view of the world.

The third component of business analysis is that of Business Intelligence. This group is focused on the information that is needed to make timely and well-informed decisions by business management. This group is the keeper of the Key Performance Indicators (KPIs). These KPIs are the dashboard that every manager sees daily to determine if the business is running the way they expect. Business Intelligence provides the controls that keep the ship of business afloat and on an even keel.

The challenge to implementing this model is developing a true cost model of the current IT services so a reasonable comparison of costs and goals can be achieved. Today the cost of IT is calculated largely on the personnel costs and the capital costs of the assets that IT provides. In truth the opportunity costs of not providing more effective utilization of people in the business units is unaccounted for. The cost of not being able to determine the state of the business in a more timely way is left out of the equation. And the cost of decisions being made with incomplete information is missed. Putting real dollar figures to many of these missing items is difficult, but the risk to the business is too high to not make an educated estimate.

Most business managers never think about the technology they use every day and how lost they would be without that technology. They also are concerned about the cost of the technology and how it is not providing them with what they need to run the business. These are real concerns. If business management can step back and think about IT as a utility they will begin to see that trying to keep the IT infrastructure running is like buying and maintaining your own power plant. You wouldn’t do that because you can’t justify the cost. You use the power to run your business and focus on the things that make your business successful, you don’t worry about buying coal to keep the power plant running. IT should be viewed the same way, it is an information utility. The real value comes from the information that is generated by the plant, not in the electricity flowing through the wires.

If you are a company with less than 100 employees you’re probably struggling with the IT infrastructure. It doesn’t do what you want it to do, but you can’t justify hiring more people to make it work the way you want. Why are you wrestling with this problem? It’s not your area of expertise or interest, but you know that your company couldn’t survive without it. So OUTSOURCE it! Let somebody who likes the challenge and is good at it take those headaches away.

I just had a conversation with a CEO of a small company that has an in-house managed technology infrastructure. He was complaining that he can’t get his IT guy to do the little things that need to be taken care of like giving a new PC to a new employee. There’s a double whammy – a new employee that’s not productive and an IT guy that you’re paying to help get employees productive. I asked him what he was paying for the IT in his company and he didn’t know but he knew that he was paying his IT guy about $60K. I looked at him and said “why are you spending your money that way?” He has less than 50 people that use PC’s and can outsource the entire infrastructure support including PCs and servers for less than $100/month/user. That comes out to less than what he’s paying for one guy who’s not doing the job and he gets a whole company that is dedicated, trained and has incentive to provide him with the level of support he wants and expects.

The challenge that most small companies have is that they built their infrastructure over several years and have never looked at where they’re at today versus where they’ve come from. The rest of the company is typically focused on building product and value where IT is just the foundation on which all that building and value rests. The organic growth of companies leaves them little time to sit back and reflect on the foundations of the growth. One day when the server crashes and it takes a week to get back online, they realize that they have a problem, but the IT guy is working is tail off to get things back to ‘normal’, when normal is not where they want to be. They need a solid, stable, secure foundation on which to grow the company to the next level. Most companies don’t understand how much they rely on the technology to get through each day. It’s become ubiquitous and they don’t take notice of it until it’s not there.

Step back and look at what you’re doing. By now you’ve outsourced your payroll so people get paid the right amount on time. You’ve maybe outsourced your sales process management to somebody like SalesForce.com or Microsoft. Why aren’t you outsourcing the other pieces of business process like IT support to somebody who knows what they’re doing across a wide range of company sizes. They have the experienced staff to solve problems quickly. They can help you put together a disaster recovery plan. They can help you protect your valuable information assets from theft and hackers. Your single IT guy can’t do that no matter how smart or hard working he/she is. Get them some help.

If the IT person has the right stuff, they’ll welcome the help and work on getting the right kind of partner in place. They can off load all those daily crisis projects on somebody else and focus on getting the truly business-value enhancing projects done. If they fear this kind of change, perhaps it’s because they fear loss of control. Tell them it’s not about loss of control, but gaining more control over more resources and lots more influence in the company’s future.

Now that you’re convinced to look at outsourcing, there are some essential elements of an outsourcing contract that you should look for before signing anything. These are typically addressed in the Service Level Agreement (SLA) portion of the contract, but can be contained anywhere, as long as they are there and provide some enforcement mechanism.

An SLA has two major components, Service Levels and Problem Resolution Procedures. In service levels there are two service level metrics that you want to address in order to protect yourself from some of the risk; they are uptime and response time. Uptime refers to the amount of time a system is available for use. It’s calculated as a percentage of the total available time. Response time refers to the amount of time that it takes to get a problem resolved. Both of these are measurable items and any good outsourcing company will be able to give you their averages across their client base. If they can’t, move on to the next potential partner. Also realize that higher uptime percentages and lower response time numbers cost more, so be realistic about what you really need, want and can afford.

The second part of an SLA addresses how problems are resolved when things go wrong. It may be a critical problem where the system is totally down or just a minor inconvenience. In either case you’ll want to know what’s being done to fix the problem. You should have your partner provide you with a set of priority definitions as they apply to problems, i.e. what does critical mean, what is severe, etc. Along with those definitions you should also get a resolution timeframe, who to contact to report a problem, how often you will be updated on progress toward a solution to the problem and who you can call if you need to escalate the problem.

One last caveat, don’t outsource and forget. You need to manage an outsourcing firm just like you would an employee. It’s an important part of your company and you don’t want to just let somebody else make all the decisions when they don’t sit in your seat.

Sure it’s a hassle to find the right company that will give you the service levels that you want and need to continue growing, but it’s worth the hassle and time to get the right partner to share the load with. And just maybe, you might save a couple of dollars at the same time.

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