CFO magazine recently released results of a survey it conducted of mid-market CFOs which found that almost half (49%) were experiencing adverse impacts from the inability to attract and retain qualified technology talent. To address this gap, many are outsourcing IT services, and finding pros and cons to the situation. In today’s article, we will share which of these positives to take advantage of, the negatives to watch out for, and how to balance them with your company’s specific needs and business goals.
First, the good news. Service providers can provide several positive benefits that you’ll want to strategically take advantage of, namely:
- Free-up internal resources for more strategic work. There is definitely something to be said for replacing tactical tasks with strategic work that directly impacts business goals. However, be cautious that you aren’t just adding overhead, as many of these tasks don’t even need to be done by another person, but can be automated with technology. This is one reason many organizations are moving to DevOps automation in the cloud as it streamlines manual work previously done by IT, allowing them to focus instead on strategic initiatives. For organizations with limited skills and/or bandwidth, companies like Flux7 will help design and build IT automation as well as provide the necessary knowledge transfer so that the organization can successfully manage it themselves moving forward.
- Gain access to world-class capabilities. External service providers can certainly be home to world-class talent who have the latest and greatest technologies at their fingertips. As specialists, they are able to adroitly apply process and technology to a variety of use cases -- including maximizing these capabilities for your organization’s benefit. To do so, make sure to regularly ask if the newest features, functionality and tools apply to your business.
- Increase efficiency for time consuming activities. If you’ve wisely chosen a service provider, they should help grow your efficiency and effectiveness through process improvement, automation, and the application of best practices. As the system gains efficiency, it becomes a virtuous cycle where you have more time to tackle other tasks, like those time consuming activities that always seem to fall to the bottom of the crowded to-do list.
- Reduce and control costs. Just a few years ago, this was the leading reason organizations outsourced their IT functions. However, according to CFO, it has become the least-ranked reason to do so. Reduced costs has frankly become table stakes and should be a natural outcome of the above-listed benefits. Yet, cost can be a double-edged sword if not managed and controlled appropriately.
That’s the good news. Now let’s discuss the drawbacks and how we might mitigate their impacts:
- Ability to understand the business and key systems. Just as service providers can be a boon for their deep technology expertise, they are not expert about your business or the key systems that support it. There are a couple models that can help address this lack of business understanding. First, we recommend a thorough assessment process in which the business needs and goals are explicitly discussed as well as the key technologies that support these goals today. From here the assessment should cover how technology and process improvements could more effectively and efficiently support those goals moving forward.
Second, a partnership model in which the service provider and your team work hand-in-hand is also very effective for teaching the consultants more about your business, and the consultants in turn educating your team about the tools and technologies they use. If the service provider lacks understanding about your business, it may be very difficult to reach the quality of service you expect.
- Risk associated with a partner security breach. As security breaches hit the headlines with alarming regularity, organizations are definitely right to think through the risk of a partner security breach. To help mitigate the risk here, organizations should do their homework and make sure they are working with a service provider with a solid track record. We advocate a Security by Design approach in which security is built into all systems from the very earliest stages. This approach should apply equally to a service provider’s customers as it does to itself. There is no room for the proverbial cobbler’s children when it comes to security.
The Caveat: Core IP
We have one big caveat to this entire conversation, which is that you simply should not outsource your core IP. And, when technology is core to what you do and your competitive advantage in the marketplace, you have to judiciously choose what you outsource. Certainly, it does make sense to have some systems managed (e.g. managed gmail may make sense for your business) but when a technology enables a core business advantage, function, or capability, you really want to retain agility by managing it yourself.
So, how do you balance a gap in talent with the need to retain ownership of critical business technologies? We are seeing more and more companies choose to undergo digital transformation, moving their systems to the cloud and adopting DevOps processes that maximize automation and reduce the number of systems under management. These companies are insourcing their technology and adopting a DevOps approach as a way to become more agile and achieve business goals faster.
You can’t leave your core business differentiator to a third party. However, you can find a third party who will help you adopt new technologies and processes that will grow your productivity, and who will teach your team how to more effectively use these new tools to manage their systems in pursuit of business excellence.
Interested in potentially taking the first steps to AWS DevOps? We recommend the following reading to delve further into how you can effectively adopt DevOps in your organization:
- The Flux7 Enterprise DevOps Framework, a model for marrying DevOps process improvement with digital transformation.
- Seven Steps to Successful and Sustainable DevOps Transformation
- The Socratic Approach: Why We Start DevOps Projects With “Why?”.
- Why We Teach Our Customers How to Fish
- DevOps Case Studies