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 excelwithin 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.