The value of integrated outsourcing Featured

7:00pm EDT November 25, 2007

Like any of a company’s resources, computers and software have a life cycle that must be managed. In the IT arena, that life cycle can be broken into several discrete steps: product acquisition, configuration of the computer for the user’s special needs, deploying the unit to the user’s workstation, supporting the computer through its active life cycle and disposing of the product at the end of its useful existence.

Most companies deal with each step of the cycle as if each is a separate, compartmentalized event. However, Barry W. Savage, vice president of strategic sales with Pomeroy IT Solutions, Inc., says there is solid value in managing the life cycle as a unified process, taking a holistic view of management.

Smart Business talked to Savage about what he calls “integrated outsourcing” or “computer life cycle services.”

How far should this integration go?

When you step back and view a computer’s entire life cycle as a single event, and tie all of those separate steps together. This process will enable additional savings in the process. A good outsourcing partner provides support for each step in the management of all of a client’s technology assets throughout the life cycle.

In a world where this life cycle is conceptually integrated, strategic sourcing, configuration, deployment, ongoing support and disposal create leverage points that allow a single authorized outsourcer to support this entire life cycle. This linkage allows savings by eliminating internal and external costs that show up when a customer supports systems in silos.

Thus, the elimination of those silos should extend to the entire life cycle. This view allows IT shops to gain savings and efficiencies by reducing support personnel, leveraging buying power of your outsourcer, and recouping dollars on the sale of your old equipment.

What are some other places where a client gains efficiency?

Right from the start, a good outsourcing partner creates a competitive environment that allows sourcing equipment at a better price. A client can typically save 2 to 4 percent there. Those savings continue through the computer’s entire life cycle. Your outsourcer can also leverage costs of configuring your assets by doing the work with lower cost resources, saving another 2 to 4 percent.

The other interesting concept is that if you use an outsourcer who can leverage break fix and help desk resources, the savings can be as high as 20 to 30 percent versus doing this support internally. Then, at end of life, the owner has a record of that unit’s life. Rather than dumping or recycling the computer, it is possible to resell it and regain some of its value.

Through its business networking links, a good outsourcing partner will have many more resale contacts than the typical manufacturer or service provider. That means better return at the end of life for the seller and, perhaps, a bargain for the buyer.

How about specific areas like integration and distribution?

Good outsourcing partners will have a guaranteed order turnaround and delivery program. Since they do volume shipping with several major carriers, they will pass along the value of lower freight costs. They will also have Certified Stock orders placed with all the big-name vendors, such as HP, IBM, Dell, Cisco, Nortel, Microsoft and Symantec. An outsourcing partner can stock product in its safety inventory — in effect, acting as the customer’s warehouse without the customer having to manage the inventory or pay the square-foot cost, which is considerable in any downtown office.

Should a company expect a dedicated team to work its IT all the time?

It really depends on what is needed to solve your business problem. ROI is also a consideration. For some customers, a dedicated team is the best solution. Others can take advantage of lowered costs through a shared resource model. It goes back to what is the best fit for you.

How do you get the service you need?

Service Level Agreements (SLAs) are guarantees of response times for various situations, which helps set and manage expectations for both the client and the provider. The SLAs have to be tied to the client’s business objectives because they drive the specifics of the SLAs. If it is a key business function, then it might be reasonable to call for 24-7 help desk service with a four-hour, or even one-hour, fix time. But that will be expensive. Other business functions may only require a 12-hour fix time. Make your SLAs appropriate and reasonable for your business. Specify critical functions and have separate SLAs for them.

What sort of dollar savings should I expect?

Assuming that you execute a complete life cycle solution, I would expect anywhere from 15 to 50 percent of your current costs could be realized. Again, you might save 2 percent on purchase of equipment, but if you incorporate all of the life cycle into a complete solution outsource you can achieve 15 to 50 percent cost savings.

BARRY W. SAVAGE is vice president of strategic sales at Pomeroy IT Solutions, Inc. Reach him at (512) 738-6074 or