In the early part of an otherwise satisfying growth spurt, Boats.com became aware that too many unexpected demands were being placed on its IT infrastructure, particularly in the areas of networking and security. “”For the last three years, we’ve
been growing like gangbusters,”” says vice-president and CTO Jorge Bracer, reporting that average annual growth of 40 per cent recently rose to some 60 per cent. Before long, the company was in the market for a service provider that could take over some infuriating IT headaches.
“”At first, we had our own networking and a couple of thousand dollars of Cisco equipment,”” Bracer says. “”We had to send these functions out for purely economic reasons. We got to the point where we were leasing Cisco equipment at $18,000 per month. That was very expensive, and we were having issues hiring the right personnel.””
Costs are hugely important to smaller enterprises considering IT outsourcing. According to Forrester Research senior analyst Robert McNeill, prices have fallen almost 15 per cent in the last two years, making an outsourced solution particularly attractive. “”Outsourcing operations have become more commoditized,”” he says. “”With that has come price deflation and service improvement, while at the same time outsourcers are looking to new markets.””
With improved network bandwidth and compression technologies, as well as mature client management tools that ensure delivery without the necessity of a desk-side visit, IT outsourcing has evolved into a viable option for more businesses.
“”The value proposition for SMBs can be even bigger than for the big guys,”” says Stephen McWilliam, director of partnerships and alliances for Fusepoint, the Toronto-based IT outsourcing firm Boats.com finally turned to. “”The big guy has the big IT team. The small company has trouble finding those resources.””
Indeed, SMBs have great trouble finding, developing and holding onto IT talent. Training people can be extremely time consuming and expensive. Unfortunately it’s often just as costly to hire skilled IT professionals. As a result, for a company with 10 employees, quickly scaling up or down is difficult.
That’s why McWilliam insists it’s only a matter of time before the outsourced IT department is the rule, rather than the exception, in small business. “”The technology allows us to increase a customer’s footprint without increasing his physical footprint,”” he says. “”This will be the de-facto way of doing business. Small companies will look to partner with companies like Fusepoint as a natural extension of their IT team.””
McNeill isn’t sure it’s so cut-and-dried, arguing that SMBs typically trip up when it comes to outsourcing their IT-driven business processes because they don’t really know what those processes are. He says some small firms are run by the seat of their pants – not using flow charts. “”A lot of processes are not repeatable,”” he adds. “”That means that they’re not standardizable and thus not amenable to outsourcing. Outsourcing needs processes.””
This is not to say that SMBs can’t outsource. But, according to McNeill, they should choose when they do quite carefully. He says specific projects, like upgrades and data migration – rather than something like long-term maintenance – are more of a strain on an SMB’s IT department because they entail the quick location and hiring of good people. “”Project-based work is easy for SMBs to outsource.””
Firms like Toronto’s Pinnacle IT Force step in to provide qualified help to small and large enterprises. “”Expertise is critical,”” says Pinnacle IT Force president Robert Berger. “”If you’re rolling out an enterprise software solution, then you want to bring in a hired gun who has experience with rollouts. That’s where a staffing firm can count.””
Outside staffing can be a particularly attractive option for companies that have pared down their IT departments to suit leaner budgets. As Berger notes, a firm that finds it difficult to justify a new permanent hire may be able to contract out a project. Moreover, it often doesn’t make sense for a company whose IT department works like a well-oiled machine to then send the whole operation to a service provider for a software implementation.
“”It saves the trouble of training, and that can be a big deal,”” Berger says. “”And the truth is that, if you’re doing an implementation, you don’t need to have an implementation expert around once the solution has been implemented.””
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