We hear a lot about IT outsourcing these days, but how does the practice apply to small and medium-sized businesses (SMBs)? What is its value? And, if you do choose to fully outsource, what’s the best way of making it work?

The promise of cost-savings are the most compelling

reason for handing off services such as Web site and e-mail hosting, data storage and back-up, intrusion detection, business continuity and disaster recovery.

Major investments are required to maintain redundant systems, a network infrastructure and other technical equipment. For larger firms, environmental monitoring, fire suppression, diesel generators, electronic security, 24x7x364 staffing might be needed. No SMB could — nor should — try to duplicate the security measures offered by the most ordinary of hosting firms.

And it’s not just about technology. You also need the very best technical staff. By outsourcing, SMBs can access first-rate technical expertise without having to compete with multinational corporations to attract and keep them.

But it would be a mistake to select a provider on cost alone. Outsourcing is a strategic corporate decision, rooted in core competencies, dedicated expertise and — most importantly — peace of mind. Some fear loss of control, but outsourcing in fact translates to greater control over the risks of data loss or theft, outside attack, security breaches and even technical obsolescence. Outsourcing involves paying someone to do something they do exceptionally well so you can focus on the things you do exceptionally well.

Of course, a little initial uneasiness is understandable. To ensure success, clients have to manage the outsourcing relationship carefully.

Treat outsourcing as a program, not a one-time event. Build a long-term relationship and devote time to face-to-face meetings for periodic updates — even when all is well. Dedicate staff to work directly with the vendor’s staff, preferably at a peer-to-peer level. Communicate openly and directly if you see something that needs to be fixed and, conversely, tell them when they’re doing a good job.

Build flexibility into your agreements, recognizing that businesses, people and technologies change. Choose a partner that will accommodate you if you need less support at certain times. Some service providers offer a utility model, where clients pay only for the services they use.

Remember that service-level agreements are integral to successful outsourcing. Both parties need to understand what constitutes success and failure. You should expect regular reporting and a real-time view of your environment from your service provider so you can see for yourself the status of your network. Expect firm commitments on how long it will take to start working on a problem and insist on penalties if those commitments are not met. All of this should be stipulated in your service agreement.

Evaluate both technical expertise and physical facilities. Selecting an outsourcing provider is an exercise in due diligence. Ask about worst-case scenarios. Demand to know the company’s record at meeting other clients’ service-level agreements. Obtain references. Verify the vendor’s financial health. Speak to clients who’ve overcome challenges similar to your own. The contract you sign will govern your relationship for years to come, so get your lawyer involved early and spell everything out.

Finally, evaluate the vendor’s people, processes and technologies. The latter are very important in an industry where much is automated. But as with any other business, people are what matter most. Find out about their expertise, commitment to training and their trustworthiness. You want to work with people who do what they say they’re going to do.

In the end, outsourcing involves putting your very valuable assets — your data, your systems, your reputation — in someone else’s hands. In that context, nothing matters more than trust.

Stephen McWilliam is director of alliances and partnerships at Fusepoint Managed Services, a secure information systems provider with state-of-the-art data centres in Vancouver, Calgary, Toronto, Montreal and Quebec City. He can be reached at sjm@fusepoint.com.

Got a question for our experst? E-mail smbexpert@itbusiness.ca.

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