Maximizing the value of IT dollars Featured

2:52pm EDT April 27, 2004
Productivity gains due to advances in information technology have helped, but cutbacks in IT budgets are forcing employers to ask their employees to do more with less. At the same time, demands on IT departments are increasing.

There are several options for dealing with this situation: Use existing resources, hire or train new resources, outsource to a third party to develop a solution or rely on a consulting partner's recommendations.

Existing resources

It may seem that using existing resources is your most cost-effective option. And in some cases, it is. But before you tackle a major project with your in-house staff, consider your employees' expertise level.

We all like to think our employees are resourceful and competent, but staying abreast of changes in technology can be a full-time job -- and employees are often unwilling or unable to admit a lack of expertise.

Hiring new employees or training yours to bring them up to speed is an option. But make sure you are hiring or building skills that can be used for more than one project. And remember that absorbing new skills takes time.

Be realistic about what can be accomplished, and don't let your expectations be raised to levels your employees will have difficulty meeting.

Outsourcing to a third party

Relying on a third party to develop a solution is one of the most common ways to meet an internal need.

Think about all of the software you have purchased from third party vendors, from your desktop applications to your Web browser. Using each has saved you considerable time because you didn't have to design, debug and rollout a different application for each administrative task. But outsourcing can have its drawbacks.

When you're outsourcing, the meter is running. Teams of employees work for you at a substantially higher rate than your in-house employees. Off-site employees also need time to learn your company's methods, processes and terminology, which translates into more time to manage the project. And since the team is off-site, this can be difficult.

Some companies respond by out-tasking -- instead of turning over entire jobs to third parties, you assign specific tasks to external sources. Out-tasking makes certain parts of a project easier to manage, but third-party management issues can still arise.

Consulting

When companies consider hiring a consultant, it's often difficult for them to look past expenses. Expert advice can be expensive, but more often than not, hiring a consultant is one of the most cost-efficient ways to meet a need, provided the consultant offers good advice that is implemented.

Consultants are normally brought in to increase profits by reducing fixed expenses. They can offer expertise not found in the organization, skills that may only be required for a specific project or for a short period. And because they are not employees of the company, consultants bring objectivity and balance to a project, which can be priceless.

Choosing the best solution

Identifying a project need is often a straightforward task, but justifying the budget is not. Most companies make the mistake of directly equating a consultant or an outsourced team to the per-hour cost of a salaried employee. But an employee's salary is not the total cost of employment.

Employee benefits, training and specialized equipment can add 30 percent to 50 percent to the cost of having an employee, not to mention periods of inactivity when the employee doesn't have much to do but is still on salary. When these indirect costs are figured, hiring consultants and trainers or outsourcing key tasks can be more economical than using your in-house team.

Once you've determined the true cost of using employees to accomplish a task, you can begin to evaluate your options -- training, outsourcing or consulting. Here are questions to ask.

* How urgent is my need? If you need to meet a government or client regulation, or if your production line has gone down, the need may be immediate.

* How specific or unique is the skill set? The more specialized the task, the more expensive a solution may be.

* What proficiency level am I willing to work with? An expert costs more per hour, but can typically complete the task in less time -- and do it correctly.

* Am I willing to pay travel expenses? If your expert must travel more than 50 miles, consider lodging and transportation expenses.

Answering these questions will help you determine your budget -- but how will you evaluate your solution? Sandy Mass is technical manager at BravePoint, a supplier of e-business and enterprise IT solutions to mid-market companies. Reach him at (770) 449-9696, ext. 3045.