Business service management practices are about understanding your costs and the value of services to the business so that IT manages as services appropriately.  I can hardly read an article these days that isn’t cloud or as-a-Service related.  I enjoy these and the transformation it is driving as it is long over due for most IT organizations.  When I wore an analyst hat and I would field inquiry calls regarding outsourcing, I would always start by saying you don’t outsource for cost savings.  I find these days with the flexible payment and contract options that we are being short sided and seeing these offerings as the low cost option.

Unless you are hideously inefficient, it really isn’t cheaper.  You outsource for change or to right source the services in your organization and drive standards.  Let me explain a bit more.  When you move portions of your IT to the cloud, a service provider, as-a-Service option, to a managed service provider or a full service outsourcing organization, they are still in the business to make a profit and you need to factor some time and resources (costs) to manage the provider.  The estimate to manage the provider is 3-7% of the cost of the contract, generally.  So this is one piece to factor into the overall cost, but change that is too difficult to create in your environment is another factor.  Short story of it, implementing standards.

So in some cases it may drive down costs with lower cost resources and standards, but that isn’t an apples to apples comparison to your current service offering.  However, it is the right reason to move the commodity to a service provider because we come full circle – not all services are created equal.  In-house data centers find themselves staffing the services with expensive resources and managing the services very similarly across the board.

So this is the driving down cost of the equation in right sourcing and creating change and standards, on the other side of the coin I read a lot about supporting the devices of our employees.  By not taking on the capex of buying smart phones, tablets, etc., but taking on the expensive support cost to support the devices of our employees.  I can guarantee you the service providers will tax you for this non-standard practice.  I can see the debate on both sides, you deemed they didn’t require the device or accessibility for their role, but they allowed themselves to be accessible if you support the device.  I would caution against this practice without fully evaluating the security and support costs of doing so.

We are in the midst of great change and there will be an ebb and flow as budgets loosen.  I find it exciting times and also find that there will be real success stories and others that may not enjoy the same success.

Are you right sizing your services and sourcing options?