The Outsourcing Continuum, Part II: In-House Managed

By Mike Scheuerman

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This category of outsourcing is probably the least costly because what you’re paying for is remote expertise. In this model, you own the equipment and physical environment it sits in. What you don’t have is a bunch of hardware engineers on your staff. You get those experts sitting at your partner's site.

In this environment, your partner will have connections to your on-site systems. They will monitor and manage your systems as if they were located in your office. The great thing about this model is you don’t have to hire the specialist you may only need occasionally. The cost of that expert is spread across multiple clients and you’re only paying for a tiny portion of the cost.

The down side is you may not get quite the same level of response to requests for service that you might with a dedicated resource. You don’t get to run down the hall to IT when you have a problem. This can be mitigated by negotiating a service level agreement (SLA) that provides for the response time you need and can afford.

The scope of work covered by under the SLA should include the following:

Network administration including:

In the event of a network failure, the partner will provide all labor required to restore the network to proper operation. Action will be taken immediately to regain operational status within a defined time (e.g., 4 hours). Labor to assure that the network is secure and stable. This includes:

Response via email or phone within a defined time (e.g., 30 minutes) of being contacted. This includes:

What You Won't Get

You don’t get the security of having your servers sitting in a hardened data center in the event of a disaster. You still have to pay for the power and physical improvements to accommodate the equipment in your office. You still have to negotiate with the communications company to get the appropriate bandwidth for your needs and arrange to have it installed. You’ll still have to buy the hardware and pay for the installation and maintenance. You still have to buy the operating system software and any applications you want to use. You’ll still have to make sure you have someone on staff that has responsibility for managing the relationship with your service provider and making sure that you get what you’re paying for. And, finally, you’ll still be responsible for making sure that the backups of your data and systems are done regularly. Somebody will have to put the tapes in the tape drive and rotate them to off-site storage. You will have to develop, maintain and test a Business Continuity Plan.

What it Costs

The costs for this kind of outsourcing are usually based on the number and type of machines that are being supported. For example, if you have 6 servers, 50 desktops, 20 laptops and a handful of PDAs your costs might look like those in the following table.

As you can see, this is less than the annual cost for a single good network administrator and you get much more value for your dollars. With in-house managed outsourcing, there will still be plenty for your IT staff to do, but they will be focused on adding business value not maintaining the power plant. It also means that you may need to have a different kind of person in ITone who understands your business and how technology enhances and supports that business.

In the next article, we’ll examine more of the details of the co-location outsourcing model.

Mike Scheuerman is an independent consultant with more than 26 years experience in strategic business planning and implementation. His experience from the computer room to the boardroom provides a broad spectrum view of how technology can be integrated with and contributes significantly to business strategy. Mike can be reached at mike@scheuerman.org.