Can outsourcing IT departments increase SME profits?

Posted by Rob Kendal on 30-Nov-2015 08:00:00

Outsourcing IT departments: can it really increase profits for businesses?

Outsourcing is often a hot topic in general when it comes to business as it can mean job losses, downsizing, or it can be a knee-jerk reaction of struggling businesses as a way to quickly cut costs or free up resources; done wrong, it causes more problems and costs more in the long run as, often, quality starts to slip.

However, done right, outsourcing your business IT needs, or at least elements of them, can be a great way to boost profits, make your business more productive, and remove some of the costs associated with your IT infrastructure.

We'll take a look at some options for outsourcing IT departments, or elements of your business IT set up to maximise your profits. 


Image representing outsourcing an IT department to increase SME profits

When it comes to business IT, the reality is that your IT set up is affecting your bottom line: it could be impacting on productivity, which in turn is damaging office morale, which ultimately is cutting into your profits as less work gets done.

Alternatively it could be that the sheer ongoing, ad-hoc costs of replacing broken machines., or paying for in-house servers and backup solutions is eating away at your bank account.

Outsourcing to the rescue!

My IT department is amazing, I don't want to lose them!

That's great! An IT department in your business can be a huge bonus and is likely to be essential if you have a substantial sized staff or run a specific business (such as a software house where a Dev Ops team is commonplace these days), but we're not looking at getting them to box up their belongings and ship out to find new jobs just yet.

We're really here to look at two things, depending on your business' size:

  • For smaller businesses (usually without a dedicated IT team) - how outsourcing your business IT infrastructure can align with your budgets, save money, improve productivity, and increase profits
  • For larger businesses (perhaps with an internal IT department) - how you can introduce elements of outsourcing, such as cloud computing, to reduce running costs and address the hidden costs of IT operations

What does 'outsourcing' mean for my business IT?

Well, it's a little more complex than just having 'someone else look after it' and shift the entire operation to a separate provider, although that can form the basis of an outsourced IT approach.

Instead, there are a number of ways that your computer systems and IT processes can be outsourced:

  • By moving part of your work processes to a matching cloud based solution - this might be something like Office 365, or Google Drive
  • Swapping your physical hardware and software to a hosted desktop - your 'desktop' is hosted on a remote server and you simply access it from wherever you are on a variety of smaller, less powerful hardware
  • Working with a third-party IT provider to supply, maintain, and support your company's IT needs

Let's go through these different approaches to see what they are, what's involved, and how they can reduce costs.

Moving processes into the cloud

Cloud computing isn't a new phenomenon: the term 'cloud computing' and various cloud-based solutions to many business scenarios have been around for many years. Indeed, many IT and software development firms have been taking advantage of Amazon Web Services, or Microsoft's Azure platforms for their applications and software offerings.

In fact you've probably been using some of them for a while without knowing; ever played Angry Birds? Well, development house Rovio's data needs are run from the Google Cloud Platform.

Image showing the benefits, by statistics, of outsourcing your business ITHowever, it's only more recently that many cloud computing solutions have started to become more widely adopted by businesses across different sectors. And, my, what an uptake!

Statistics from 2014-2015 show that 65% of businesses with less than 100 employees have adopted the cloud in one form or another (source: PCWorld).

For example, one of the major uses for the cloud is email hosting, adopted by 69% of businesses.

What's more, companies interviewed reported the following benefits:

  • 51% said they spent less time managing their IT
  • 94% said moving to the cloud produced security benefits
  • 96% worried less about outages or IT downtime

Sounds good, but 'what can my business do with the cloud and how will it make a difference to my profits?''

Glad you asked.

Here are a few popular examples of how to introduce the power of cloud computing into your business:

  • Data storage
    Traditional data storage and backup solutions for businesses have commonly been a combination of a physical server located in the office with a shared drive(s) used by staff members, and some sort of media, such as CDs or removable drives held in a safe.
    By using cloud storage, however, you remove the need for costly server maintenance and electricity fees, and eliminate the risk of server outages that threaten to take your critical business data with them.
  • Office documents
    Most workplaces are familiar with Microsoft Office - Word, Excel, Powerpoint, etc. - and a lot of offices have piles of documents scattered across company shared folders and drives. That's fine, until your servers fail, or people delete things and there are no recovery options.
    By using an cloud-based service, such as Google Drive or Microsoft's Office 365, you work in the same way with familiar programs, but you can take advantage of automatic backup and document synchronisation. What's more, sharing is made much easier, and there are a ton of automatic data recovery options built in to keep things safe and accessible.
  • Email hosting
    Emails are the lifeblood of business communication. Although we talked about ditching your emails to boost productivity, by moving your email provision to services such as Microsoft Office 365. a Hosted Exchange (also Microsoft), or Google Apps for Work, you can increase security, speed, and most importantly prevent nightmarish loss of email service across your company.
  • Hosted desktop / virtual computer
    By replacing your current desktop computer with a smaller, lightweight machine with Internet access, you can transform your office desktop into a virtual desktop hosted in the cloud. It features all the same services, applications, and documents you had before, but with none of the performance issues or potential random failures and data loss. 

Virtual sanity: outsourcing your desktop

The problem: IT equipment slows down and stops working eventually.

Let's face it, computers are great to start with: they're speedy, make us feel super productive, energised (sometimes!) and get done what we want done in moments. However, over time, even the most advanced computer's performance starts to degrade, taking an age to load, making simple tasks a time-consuming chore.

At home, a lack of computer performance is definitely annoying, but from a business perspective, poor IT performance, faults or breakages cost your business precious time and in turn, money.

Your employees can't do their work, or can do their work but at a much slower rate meaning you're spending money without getting as much work produced in return; what's more, staff can become frustrated and completely demotivated by having to regularly deal with poor IT.

In fact, 51% percent of employees in the Kensington Stress and Technology in the Workplace Survey felt that technology increased their stress levels at work.

 

The net result is poor / reduced staff performance leading to reduced productivity leading to, ultimately, less profit.

To address the problems of failing PC hardware you have a couple of options:

  1. Replace the hardware
  2. Adopt a cloud solution - enter the hosted desktop

Replacing computer hardware

The simple (traditional) option is to just replace the faulty or old hardware.

I've worked in large public sector organisations on tight budgets and for creative design agencies where money is (relatively) no problem, but the same holds true for both:

companies rarely have an ongoing IT replacement policy in place.

This makes sense in practice since upgrading your entire IT infrastructure either in one go, or via a rolling program, will cost a lot of money and need a dedicated department to implement it successfully.

So what tends to happen is that computers are replaced on an ad-hoc basis depending on who shouts loudest, which machines are just plain unusable, or as 'needs must'.

An example I've seen many times:

Problem: Jane Doe's PC is 5 years old, taking 20 minutes to boot up, and she get's nothing done all day
Solution: let's just replace it with a spare from somewhere, or buy a new one

If the machine is swapped out with a slightly-less-poor offering, this only alleviates the problem; the employee will be back in business, but the same problem will raise its head again not to far down the line.

Buying new machines is a better option as you get better performance and it has the added bonus of making the employee happy as they have a shiny new turbo machine, but it comes at a cost, literally.

Ad-hoc purchasing of new IT equipment can leave unexpected dents in your cashflow and your profits, and you can guarantee it'll always be in that one slow month...

Hosted desktops: a better solution

A hosted desktop is a fantastic solution to modern business needs and speaks to the way businesses operate in today's world.

At it's core a hosted desktop is simply your regular Windows desktop environment, with it's familiar applications and software programs, but instead of it being run from the large box under your desk, it actually runs on a server somewhere across the Internet and is merely accessed by your local machine via a web browser or small local application.

Image showing the benefits of outsourcing IT departments and moving your IT to the cloudBy running your employees' desktops in this way, you bring out a huge number of benefits for your business:

  • Reduced (or eliminated) hardware failure
    The beauty of running your office on a remote cloud server means that there are a ton of identical machines ready to leap into action should any of yours experience problems or fail altogether. This usually occurs without you even knowing, keeping disruption to a minimum. 
  • Backups as standard
    Because of the nature of the built-in redundancy mentioned above, you shouldn't have to worry about constantly backing up all your work 'just in case'. This doesn't remove the need for a solid backup strategy, but it does mean that the days of someone losing their entire body of work because their machine decided to pack up for good are behind you. 
  • Always great performance
    The servers you run your hosted desktop on are usually a collection of resources made up of multiple physical powerful machines (servers). Since you're only ever accessing a slice of this overall power, there is always room to grow.
    Your virtual environment won't slow down over time and as physical server hardware is replaced and upgraded, you'll always have access to new and faster virtual environments.
  • Lower costs and better budgeting
    Patchy hardware issues or sudden computer failures means you putting your hands in your company pockets and paying for replacement machines or a series of fixes. Because a hosted computer solution removes the reliance on physical hardware, you remove the associated high costs. As a bonus, the pricing model for hosted IT environments tends to be a per user / per month arrangement.
    This means you can budget more effectively over a longer period, and know what costs will be incurred and when (e.g. when you take on a new employee). 
  • IT that scales up and down with your needs
    Since you'll be operating on a per user basis for hosted desktop services, if you take on 10 new employees, you'll have to spin up 10 more desktops. If 5 people leave, you simply reduce your needs by 5 desktops.
    If you were to purchase the physical hardware, as in a traditional model, then you'd be stuck with 5 additional computers which are essentially sitting there as dead money and degrading over time.

Traditional IT outsourcing via a third party company

Whilst cloud-based services are fantastic and are being consumed by more and more businesses each month (93% of organisations are experimenting with infrastructure as a service - Forbes), it might be that a more traditional approach to IT infrastructure will suit your company needs better.

There are a number of providers out there who effectively replace your existing IT set up with an end to end offering.

They work in a variety of ways and have various pricing levels, but the common features you should expect to see look like this:

  • Supply of IT hardware for your business
  • Servicing, maintenance, and updates for your physical machines and software
  • Hybrid cloud services, such as hosted desktops and dedicated servers
  • Provision of backup solutions - this might be proprietary or an existing service like DropBox
  • Security measures from setup of anti-virus to malware scanning
  • Dedicated support - a bit like having an in-house IT team, you can call on them if something goes wrong and you need it putting right
  • Network planning and installations - connecting your internal systems to each other and your business to the outside world via the Internet

Depending on your specific needs you might find that there is a one-off project fee for supplying and configuring your company's new IT infrastructure, but longer term you should find that most IT solutions companies will offer a range of monthly packages to support you.

 


Explore cloud services for your business and see larger profits

We've explored some ways in how you can boost your profits through outsourcing your IT department.

Introducing cloud computing processes and services can help in the following ways:

  • Reduces dependency on physical computer hardware and associated maintenance costs
  • Introduces predicable, manageable IT infrastructure costs that scale up and down
  • Increases productivity and morale across your staff as they have access to a higher standard of equipment allowing them to get more done in less time
  • Reduces the risk of catastrophic / critical data loss through hardware failure as backup solutions and redundancy is often built-in

By spreading your wings and exploring the world of cloud-based computer and IT infrastructure services you will ultimately see a reduction in operating costs and boosts in productivity, both of which positively affect your business' bottom line.



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Topics: Guides & Infographics B2B Sales

Written by Rob Kendal

Rob has enjoyed a rewarding career in technology, from IT infrastructure through to software development, working with clients such as Virgin Holidays and the NHS. He understands the needs, challenges and logistics involved in making technology work for business and how to market it effectively.
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