What is Infrastructure Outsourcing? 10 Benefits & 5 Facts

Are you looking for ways to save money but at the same time increase the efficiency of your business? Or maybe you just want to reduce your overall operational cost.

Infrastructure outsourcing, also known as off-shore development is one of the most cost-effective ways for businesses to reduce their operating costs and still maintain a competitive edge over their competitors.

What is Infrastructure Outsourcing?

Infrastructure outsourcing is a subcontracting service whereby a third party manages the Information Technology (IT) systems and applications of a company.

While these services have grown increasingly popular in recent years, outsourcing is not an altogether novel notion. In reality, firms such as EDS, IBM, and Unisys initiated the infrastructure outsourcing trend in the early 1990s by assuming complete control of client companies’ staff and IT assets.

What is Infrastructure Outsourcing?

The IT infrastructure and applications of a corporation are frequently managed remotely, typically in the data center of the service provider. Some opt for local facilities, while others select offshore outsourcing.

In a typical arrangement, the contractor takes a number of preventative and corrective measures to guarantee that the client’s IT assets are constantly accessible to its consumers. This availability applies to more than simply servers for the majority of businesses.

A corporation may obtain administration of its network routers and switches, security methods, desktops and peripherals, disk storage, and bandwidth as part of an infrastructure outsourcing arrangement. In an ideal scenario, the service provider collaborates with the customer to develop a personalized, scalable solution that meets their specific requirements.

Due to the fact that the contractor normally controls every part of the infrastructure, this sort of arrangement may free up a company’s time to focus on its main activities, therefore significantly enhancing the organization’s business efficiency.

In the majority of instances, infrastructure outsourcing strives to alleviate the pain, uncertainty, and expense complications associated with IT service delivery for businesses with few or no dedicated IT staff.

Even businesses with an IT staff may profit greatly from the potential to control expenses and monitor where their financial resources are going while acquiring the necessary IT services. An business has the ability to drastically simplify its infrastructure and lower the cost of IT operations with the proper solution.

By freeing up time and internal resources, infrastructure outsourcing may accelerate a company’s growth by allowing it to focus on its core skills. This relies entirely on the service provider.

What is Infrastructure Outsourcing?

Organizations in need of any form of business process outsourcing are advised to seek out reputable contractors with a proven track record in the sector and who employ only the most effective IT techniques. The choice of a partner to entrust with infrastructure management is crucial and can have long-lasting effects on the organization.

5 costly mistakes in infrastructure outsourcing

There are advantages to outsourcing your infrastructure to a managed service provider (MSP). Among the benefits most desired by organizations making the transition are lower support expenses, variable resource unit costs, and shortened cycle times for delivering project resources.

However, outsourcing infrastructure has the danger that an MSP may provide exactly what you request, not what you need, and at a larger price than anticipated.

Here are five frequent and extremely costly mistakes that enterprises make when outsourcing infrastructure to MSPs, as well as ways to prevent them. Being aware of these risks and proactively mitigating them will position you to achieve the advantages of outsourcing while protecting and even increasing the business case for outsourcing.

1. Not knowing your base footprint before going to market

Frequently, organizations enter outsourcing projects with the assurance that they have a clear and accurate grasp of their base footprint, only to be surprised when someone comes in to audit or inventory what is physically present.

It is of the utmost importance that you do your own inventory so that you may go to market with the correct amounts, hence obtaining the finest support pricing and unit metrics related with that support.

If you neglect to consider the backend before to entering the market, you may end up picking a vendor believing you understand the cost, only to discover that your assumptions about the base footprint were incorrect and that the expenses would be greater than anticipated.

When you need to add to your previously mentioned numbers, you also lose leverage in terms of your ability to alter pricing points for supporting this footprint.

What is Infrastructure Outsourcing?

You should not immediately apply additional resource charge/reduced resource credit (ARC/RRC) cost adjustments after selecting a vendor, as doing so could put your business case at risk and force you to ask yourself, “Do I still have an appropriate business case with these updated baseline numbers and the corresponding cost changes?”

It is usually preferable to create your basic footprint in advance so that you can confirm your business case and take it forward unchanged as your process matures and you eventually pick a vendor.

2. Putting too little energy into forecasting your demand

Properly predicting your demand is crucial from a variety of perspectives, but most importantly, you must be able to anticipate the costs associated with your base footprint and apply the adjustments to that cost structure throughout the term based on your expected demand.

Utilizing this baseline and expected demand affords MSPs access into the base revenue and incremental revenue associated with the forecasted demand. When suppliers have this level of transparency, they will be more competitive with their pricing and discounts.

Understanding and supplying your provider with this visibility will aid in defining the first pricing points that will serve as the anchors for building the appropriate ARC/RRC model for deviations from your baselines during the term. Your business case will deteriorate over time if demand is not accurately projected.

3. Ignoring past performance metrics

Don’t make the mistake of going to market with simply projected performance goals, regardless of whether you now maintain your infrastructure or a third party does and you’re looking to transition. Present both current and historical performance indicators for a minimum of six months.

Going to market with objective data demonstrating the performance of your systems, incident response times, and service request performance for at least six months will facilitate the negotiation and acceptance of the current state of performance and future performance expectations with your selected or evaluated providers.

What is Infrastructure Outsourcing?

In addition, it creates the capability to bring you to this baseline more quickly when there is a minimal ramp-up time and no penalties associated with the service level agreements’ support and assurance of service.

4. Forgetting to update your documentation of current services

In the same way that you should be aware of your base footprint before coming to market, you should also ensure that your documentation of all already provided services is up-to-date before moving forward. Appropriately estimating the cost of your service requires a comprehensive inventory, assessment, and approval of all current services.

Take the time to determine what additional duties or services you want to add to the scope of your outsourced services that you do not already perform or want to be performed differently. It is not often essential or even viable to describe every conceivable daily duty that you want your provider to complete.

Consider using terms such as “including but not limited to the following” or “a sample of the activities associated with this obligation includes” when documenting the scope of outsourced services. It is crucial to document the scope of services in advance, since any omissions will allow your service provider to present a modification order later on.

5. Letting MSPs control the narrative throughout the evaluation process

You may reduce the bulk of risks associated with scope creep or inconsistent proposal replies by managing and controlling the narrative surrounding the scope of services and how you will cost/assign variations in that service to predefined criteria.

It is crucial to monitor, collect, measure, and standardize the condition of your infrastructure in terms of the number of servers, their classification, the number of router switches by series, tier (small, medium, or big routers), wireless access points, and similar factors.

By understanding these indicators and being able to correlate them with your demand estimate, you can go to market requesting certain price points based on your measurements and environment quantification.

Providing all possible suppliers with a full and detailed request for proposal, baseline data, and anticipated demand will enable you to receive normalized offers that you can then compare apples to apples across providers.

What is Infrastructure Outsourcing?

This will help you make better educated selections about which service provider is the greatest fit for you, not just in terms of service commitment but also in terms of service pricing.

When it comes to infrastructure managed services, it is crucial to begin your journey with this sort of preparation before to going to market in order to avoid costly errors after awarding and contracting services.

The adage that preparedness is the greatest form of prevention is accurate. In this situation, preparedness will aid in mitigating a portion of the risks connected with outsourced infrastructure managed services.

Why Is Infrastructure Outsourcing So Important?

It Saves Money

The outsourcing of IT duties results in cost savings.

Approximately 80% of small enterprises with fewer than 300 employees save a significant amount by outsourcing.

Companies that provide infrastructure outsourcing have sophisticated software and hardware. The majority of entrepreneurs would certainly want a business loan to acquire them.

It Saves Time

The absence of internal IT concerns allows business owners to concentrate on other areas of their operations.

IT is more often than not a support function for the business, rather than the company’s primary objective.

Typically, skilled IT professionals remain with well-paying IT companies. The majority of business owners that want IT assistance cannot afford to pay top-tier professionals.

This makes it very difficult to find an experienced staff.

Outsourcing enables entrepreneurs to skip the lengthy search process. Instead, they may focus on expanding and developing their firm.

Modern Technology

It is the obligation of the IT business to maintain up-to-date equipment in order to provide its services. They frequently have the most recent software as soon as it is released to the market.

Moreover, they have the ability to utilize it successfully.

Access to contemporary technology enables IT professionals to do tasks swiftly and simply.

Something that may take a business owner hours to find out might take a professional only minutes.

Security

Security should always be one of the primary priorities of a business owner. However, security goes beyond merely closing the doors.

The failure to secure intellectual property poses a substantial danger. Data loss, data theft, and corporate downtime are all possibilities.

Even staff can occasionally unwittingly break security.

Outsourcing this obligation leaves the safety of your firm in the hands of qualified professionals.

Infrastructure Outsourcing Increases Flexibility

Occasionally, firms develop so fast that it becomes challenging to keep up inside. If a small company begins to expand, it will certainly want additional IT help.

Outsourcing IT jobs removes the burden of recruiting new staff.

IT businesses specialize on a single function. Employers who outsource will always have enough employees to run their businesses.

This degree of adaptability boosts total productivity, which generates more revenue.

Visit our helpful blog to discover more about prevalent IT topics.

What is Infrastructure Outsourcing?

Focus on higher value responsibilities

Infrastructure management is a time-consuming endeavor. And the situation becomes more difficult as the firm expands and more regions are added to the activities. Managing both core competencies and IT infrastructure is challenging. Frequently, the emphasis on operational tasks distracts from infrastructure management demands.

Having a partner in infrastructure management helps organizations to delegate all IT chores while focusing on establishing operational strategy.

Reduced Costs

This is such a no-brainer!! Employing an external partner to manage the organization’s whole infrastructure is less expensive than employing a staff of full-time IT specialists. For this reason, it is recommended for all rapidly expanding small and medium-sized firms that struggle financially.

Small and medium-sized businesses can employ any reputable IT infrastructure management firm and outsource all IT activities at a reasonable price. In the future, they may easily withdraw contracts from the partner and move to another. For them, working with a permanent staff of IT pros is never a burden.

100% IT efficiency

Collaboration and partnership with an IT infrastructure management firm provides timely assistance and rapid resolution of even the most complicated server and application issues. These businesses have in-depth understanding of the industry’s most recent technology and services and offer periodic upgrades for security patches, antivirus, spam defenses, and network security.

Consequently, the IT system grows resilient and potent over time. The company’s uptime is excellent and its redundancy and disaster recovery capabilities are robust.

Smooth tackling of IT challenges

Businesses are frequently obliged to undergo several IT infrastructure integrations, consolidations, and modifications. Working with a firm that provides trustworthy IT infrastructure management services makes these chores quite simple.

Possessing in-depth knowledge, these service providers are adept at handling all IT difficulties and delivering maximum value with lowest risk to the organization.

Improved agility

In the current hypercompetitive environment, it is essential for all businesses to have “speed to market” and the agility to seize opportunities as they arise. And both of these aspects can only be accomplished if the organization hires a trustworthy IT infrastructure management firm.

This is due to the fact that, compared to an in-house IT staff, outsourcing companies offer superior help to rapidly execute new business advancements.

Conclusion

“Infrastructure outsourcing” is a term used by outsourcing companies to describe the practice of providing outsourced support services on an infrastructure basis to customers. The infrastructure in question could be anything from the physical building to the application or database.

Infrastructure outsourcing has become increasingly common over the past few years as companies have moved towards a service oriented architecture and outsourced their support functions to vendors.

Infrastructure outsourcing is seen as a potential strategic growth area for technology companies as they continue to seek more cost effective ways of delivering services.

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Pat Moriarty
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