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5 Hidden Costs of Outsourcing IT Services

Many organizational decision-makers choose to outsource because they see it as an easy way to cut costs. What they fail to realize, however, is that it’s rarely ever that straightforward. And since there’s little motivation for service providers to be transparent about these financial risks, business leaders must be diligent about identifying and accounting for these additional expenses. In many instances, it’s actually far less costly to keep IT services in-house. If you are considering an outsourcing arrangement, keep the following hidden costs in mind.

Change Orders

When it comes to outsourced IT services, just about every minor change comes at a price. Those managing outsourcing agreements must stay aware of what these change orders entail and how much they’re going to cost in the end. This can all be avoided, of course, by bringing IT on premise, where fixed IT staff can make changes to how work is performed and take on special projects at no additional costs.

Consulting

Another factor that can send costs spiraling out of control unexpectedly is consulting. These days, nearly all IT and digital engagements are led by consultants, which can skyrocket expenses far beyond what was originally anticipated. While some areas of IT service have moved to outcome-based pricing models, the consulting piece is still typically assessed on the basis of time and materials, which can vary. And while some organizations appreciate the added value, others may find the additional expenses difficult to justify.

Loss of Control

Over time, things change. Business leaders rotate, companies evolve. As a result, criteria originally agreed upon in the outsourcing contract can become obsolete. It’s imperative that someone holds the service provider accountable to deliver what was agreed on and paid for. It’s also important to audit and eliminate services that may no longer be needed. According to ISG, the average outsourcing contract loses anywhere from 5 to 15 percent of its value because the client is paying for more than what is actually being delivered.

Lack of Agility

One of the costliest things about outsourcing, and sadly one of the most often overlooked as well, is how these contracts can stifle a company’s ability to innovate and therefore compete. Far too frequently, a client will find themselves locked into an agreement at a time when dynamic change is occurring all around them. As such, they become locked out of next-generation technology opportunities, like robotics, AI and deep learning. Likewise, many traditional sourcing models don’t support things like data analytics and mobility. Adapting an existing outsourcing relationships to account for these changes can be incredibly costly, both in terms of time as well as money.

Employee Disengagement

When the costs associated with outsourcing are discussed, one thing many fail to consider is the impact such an arrangement can have on staff retention – particularly during the initial transition period. When IT employees have to make the shift from performing the work to simply managing it, there can be a sense of frustration. This is especially true for highly technical resources. The change in focus can lead to a feeling of being out of touch, and the inability to roll up their sleeves and get their hands dirty can cause a spike in attrition levels. Along with that inevitably comes the cost of hiring and training.

In conclusion…

At first glance, outsourcing IT services can seem like a great way to cut costs and stay competitive, but if you’re not careful, it could end up having the opposite effect. Decision-makers considering outsourcing should carefully weigh the financial risk – including the hidden costs, such as those listed above – to determine whether such an arrangement is truly a viable option.

On-premise IT services, on the other hand, can be surprisingly cost-effective, particularly once all the true costs of outsourcing are revealed. For instance, with on-site IT, changes can be made without additional expenses incurred and there is no need for costly consultants. And with internal control comes the ability to scale and adapt to changing technological landscape. Employees are happier and the company is able to compete at a higher level.

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How to Keep Data Secure When Outsourcing

How to Keep Data Secure When OutsourcingAn estimated 300,000 jobs are outsourced annually from the US alone. Businesses of all sizes have been leveraging this option for decades in an attempt to cut costs and gain access to a global pool of talent. But while tapping into external sources can be beneficial in many ways, it can also open the door to cybersecurity risks. The good news is, with the right approach and proper preparation, your organization can enjoy the advantages of outsourcing while also keeping your network and data safe. Here’s how.

Start In-House – Before you even think about passing on some of the workload to an external provider, make sure you have a solid cybersecurity incident response strategy in place. The most effective plan will cover every end of the spectrum – from detection to automated response to remediation and recovery. If you don’t yet have this type of protection in place, the time to do so is now.

Choose Wisely – The next step in ensuring adequate security of your network and data requires that you are very careful when selecting the vendors to whom you will be outsourcing. Make sure that they too have strong security policies and procedures in place and that they have a good track record of keeping their clients’ data safe. Do your homework or risk a potential breach.

Apply the PoLP Rule – The Principle of Least Privilege (also sometimes referred to as the principle of least authority) is an IT security rule that limits the access of users based on their job duties. It basically states that only those who have a direct “need to know” will have access to certain systems, computers, files, networks, etc. This is important, particularly when it comes to cybersecurity with outsourcing. Make sure you are only granted the necessary amount of access and keep a close watch at all times.

Audit Regularly – Build in ongoing network monitoring and regular audits into your normal routine to ensure that any potential issues that occur are identified and addressed as quickly as possible. This will also help you determine whether the vendor you’ve chosen is still in line with the cybersecurity policies and procedures that they originally put in place. If not, it may be time to reassess your approach and make some changes.

Optimal Use of Technology – This is important on both ends of the spectrum. Internally, you’ll want to employ the use of the latest in cybersecurity IR technology to provide an added level of data and network protection. Likewise, you’ll want to verify that the outsourcing vendor you’re using is also leveraging advanced technology to ensure adequate security.

Outsourcing can be a great option, particularly for smaller to mid-sized organizations, as it can help achieve a greater degree of competitiveness without the hefty expense of keeping staff in-house. But if you plan on opening your virtual doors to an external party, you’d better make sure you’re taking the appropriate measures to avoid potential data breaches.

Start fortifying your defense today by implementing our powerful automation and orchestration platform and enjoy round-the-clock, closed-loop cybersecurity incident response for your business.

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IT Automation Trends: What to Expect in 2014 and Beyond

IT-automation-trends-2014It used to be that IT was a completely separate, almost stand-alone function in business. Each component existed in its own silo, working independently of others. Today, successful businesses realize that this fragmented, isolated approach to IT is not only dated, but it’s something that can ultimately damage the business in the long run. These forward thinking organizations realize that IT is the lifeblood of any business and IT automation is the glue that holds everything together.

The Rise of the Back Office

When it comes to automation, the back office is where most businesses start off. The reason is simple. Placing humans in charge of repetitive, manual tasks leaves a lot of room for error. Those errors can not only damage a company’s reputation but cost them profits as well. The simplest solution? Let technology do the heavy lifting, reducing error and freeing up personnel to focus on more business critical tasks.

Back office automation is here to stay. In fact, it’s expected to continue to grow as we push further into 2014 and beyond. This is because more and more organizations are recognizing how manual labor is not cost-effective, nor is it scalable. As your business grows, the need for these daily, repetitive tasks will likely increase accordingly. The question then becomes, do we hire more people or find a better solution? The answer to that question is increasingly becoming automation – across just about every industry.

Embracing Collaborative IT Automation

In years past, critical business functions like accounting were left to human workers. The idea was that having living, thinking beings with skills and analytical minds checking the numbers was the wisest choice. It’s becoming increasingly evident that this is not the case. In fact, when you factor in time, resources and human error, you’ve got a recipe for disaster. But we can’t simply turn over all of the important financial functions of a business to a computer, right?

That’s where the concept of collaborative automation comes into play. This combines the power, accuracy and efficiency of process automation with the importance of human input when needed. As part of this strategy, the automation process will run until the point at which a human decision is required. At that point, the appropriate parties are notified. They perform whatever task is required and then automation takes over again.

Cloud = Cohesiveness

Years ago, it would have been nearly impossible to imagine that there could be instant and cohesive consistency across all business functions. This is why we had the silo effect. Nowadays, IT automation has torn down the barriers that kept departments segregated, and allowed for the execution and coordination of every single business process, regardless of department, systems and applications being used and even geographic location. This is due to the rise of cloud technology and the way it goes hand in hand with automation.

This isn’t some fly-by-night concept, either. In fact, Gartner has predicted that by as early as the year 2017, more than half of enterprises in existence will have migrated to the hybrid cloud model. As this begins to transpire, the need for automation solutions will also begin to increase, since this is needed to most effectively connect cloud services, in-house applications and virtual activities. The result will be a completely unified approach to the entire business process, regardless of where or how they happen to be managed.

Self-Service Will Be King

Another trend we’re seeing is that of the increasing push to do more with less. Our society – both personal and professional – is becoming more and more used to getting whatever we want, whenever we want it and it’s something that people have come to expect. This on-demand attitude is making it difficult for IT professionals to keep up with the increasing demands. As a solution, businesses will begin to leverage more self-service options and more comprehensive IT automation tools, thus shifting ownership either to the end-user or to technology.

From a Business Standpoint

As automation begins to become more of an integral part of not just the back office, but all business functions across entire enterprises, the result will be greater standards of accuracy, accountability and speed. Costs will come down even as output and efficiency increase, and entire organizations will run more smoothly because all applications, systems, platforms and technologies will be working together cohesively. This will all lead to increased competitive advantage and ongoing success as we navigate the remainder of 2014, and well into the future.

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