It can sometimes be challenging for CIOs, IT Directors and other Senior IT Managers within the business to get the CFO or The Board’s buy-in for an IT project. Many find it even more difficult when they are considering proposing a managed service model, where the third party manages the IT Service Desk and/or parts of IT support, taking over an in-house function.
The CFO will want to know what the benefits are especially in financial terms: how does it save the company money? What are the risks involved? And finally, why would using a provider be better than keeping the activities in-house?
It is not difficult to show the return on investment if all the factors are accounted for. Often the perception in the market place is that a managed service trades in-house knowledge and control for greater cost. This is particularly the case when the organisation does not present the correct business case and/or is unaware of the true expense of its IT Service.
With this in mind, the very first step in preparing the business case for the CFO to review is consider all the financial implications of having an in-house solution. Armed with this knowledge, one can now consider the business case profile for the CFO.
One of the most tangible benefits of a managed IT service is cost. Expenditure related to managing the IT Service Desk can be extremely variable. It includes HR costs, sickness and holiday cover and training, as well as the design and implementation of new strategies, best practices to ensure service efficiency and continual improvement.
With a managed service, all of this becomes a fixed monthly cost, smoothing out the expense and providing known, quantifiable out-goings. It also lowers the risk profile of the service to the business with defined services metrics. The managed service provider will also take on the absence cover challenges and staff training.
There is often a general apprehension amongst companies in having a third party take care of an internal function, particularly one that is viewed as the face of IT to the rest of the organisation. It is important to note that with a managed service, the organisation always retains a level of control over the outsourced function, which allows them to focus on strategic business decisions, rather than grappling with the day-to-day management of the service desk
Unlike full IT outsourcing, in a managed service the organisation normally retains ownership of all hardware and software as well as locating the service desk within their premises rather than elsewhere. The organisation sets the Service Level Agreements (SLAs) and if these are not met, there are implications such as financial Service Credits back to the business. These SLAs are constantly refined and honed as the business grows and changes.
It is easy to see that, in the end, it is the Service Provider that risks the most. If they fail, the organisation can find another provider or return to in-house provisioning, but for the provider, this failure will damage their reputation and affect chances of future business.
The key benefit to using an IT service provider is that your organisation benefits from their knowledge and experience of working across other sectors and the Best Practice processes and disciplines they can bring. Defined metrics such as SLAs, formal Continuous Service Improvement initiatives and plans and a formal engagement structure will all help improve service levels and ultimately end-user productivity. Additional benefits include the immediate access to skill-sets and expertise which may be in short supply or not present internally.
All in all, a managed service is a cost-efficient solution that can increase an organisation’s competitive advantage.
There are different models which can be adopted: an organisation might only outsource its helpdesk or desktop support staff, the out-of-hours function, or use the provider for its flexibility in providing an amount of temporary staff for seasonal increase or holiday and sickness cover.
With the right model, tailored to the organisation’s specific needs, IT can become a cost saver and a real value-add. Managed services can not only support the business but also help it grow, flexing with the needs of the company and allowing the CFO to invest finances in other areas and projects without having to worry about unexpected IT support costs any more.