Picture an organization with dozens of locations, supporting
portions of the business, and have no standard operating processes across the
board for service requests, incident, and change management, causing
inconsistent service levels and redundant services.
Or, perhaps envision a company with a FTE staff overwhelmed
by the effort it takes to manage the day to day support of the business
critical applications, much less execute on the critical patch releases or
upgrades.
These are just a few reasons with large IT departments turn
to consulting firms such as Source One. Costs can quickly spiral out of
control, especially for IT groups within a company equipped with massive
application portfolios across their enterprise.
If a company is already outsourcing many of its application
support functions to a managed service provider, because of a perceived
expertise in a certain area (ERP, HR, Marketing, etc.) the vendor ecosystem may
have grown to the point where the soft costs, like contract management, SRM,
and SLAs are taking up a large portion of your sourcing and procurement group’s
time.
Application management is an expensive proposition. A large
company can have thousands of applications at various stages of a lifecycle and
keeping them available and running at peak efficiency, especially in an in-house data center is necessary for both
internal and external customers. As a result, the expense can be justified as
simply a part of doing business.
It doesn’t have to be this way.
Outsourcing application support services has been something
companies have been doing successfully for years. And I don’t necessarily mean
outsourcing to an off-shore facility, although that certainly does happen
often. There are hundreds of companies who specialize in this service. Some are
recognizable global brands, while others are more niche companies that do
specialize in specific support activities like ERP or service desk. The
advantage of the large base of vendors is that an organization’s model can be
specifically tailored to its needs.
Maybe an organization wants to supplement their regular
FTE’s with off-shore support during off-hours so their staff can enjoy their
weekend without having to VPN into the office to address and clear an
application alarm.
Some companies find it beneficial to have an
on-shore/off-shore model where business critical applications receive a certain
amount of in-office support while other applications receive support from a
remote facility.
In whichever way a company decides to build its application
support staff, the benefits can be almost immediate. Consolidating support
vendors, eliminating redundant activities, improving customer satisfaction,
and streamlining service levels are all wins a company will see, in addition to realizing cost savings.
And, for most, the savings are significant. Source One has
seen a minimum of 20% of hard dollar savings on these type of initiatives, and
depending on the scope of applications and activities supported, an ROI within
12-18 months.
From a Strategic Sourcing perspective, the RFP that would be
issued for an application outsourcing project would be a fairly straightforward
document, but only if the data collection process is done correctly up front. A
good RFP will thoroughly document the application inventory, service catalogs,
ticketing data, existing service levels, etc.
Queue the involvement of IT. To help the bidders make their
best effort in putting together a proposal, there should be a clear definition
of business requirements, the scope of future services, and service level
requirements. Business stakeholders and company executives must
be included in these discussions. Nothing will put the brakes on a project like
this quicker than some VP learning second hand that IT is contemplating
replacing their incumbent support team. Just trust me on this.
As the sourcing process goes through its normal course of
activities, the organization will want to complete a considerable amount of due
diligence on the handful of vendors that have been short-listed for
consideration. This should include a visit the vendor’s off-shore facilities. Complete a deep dive into the potential vendor's references and independently discuss with those references the vendors’
historical performance. Are they sticklers for the agreed upon terms and
conditions in the contract or are the flexible enough to provide an extra
resource or two during peak periods of activity without a change order? Do they bring innovation and emerging technologies to the table as part of their routine service or will they constantly be trying to sell new services during the course of the contract.
At the same time, be sure to provide vendors ample
insight into your organization. Take the time to answer every question they have and sit through their process workshops so there is a clear
understanding of how they will support your technology. Answering their
questions early on indicates to vendors your seriousness in working with them,
as opposed to simply shopping around for pricing and allows them to better
communicate how they can excel
within your organization. This two way
communication promotes a strong relationship between your company and the
contending vendor from the beginning.
Outsourcing application support can provide great benefits
to a company, particularly for larger companies with a complex portfolios and
direct interaction with customers. Sure, it can be a challenging initiative,
but with proper planning, executive level buy-in, and the right strategic
consultants, it can quickly help a company’s bottom line.
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