In-source, out-source or hybrid: what's best for your business?
What to think about when choosing a model
Which delivery model is right for my business? Where should the responsibility of technology fit? Should we out-source everything, have an internal team or do a bit of both? These are some common questions we get asked by customers. The answer to this is challenging and complex, as no two businesses are the same. What works for one company doesn't necessarily work for another.
So, how do you work out what the right model is? Well, let's take a step back and think about how developing technology is going to impact this decision.
These days, with the continued adoption of cloud-based solutions, the traditional function of an IT team is changing. There is less of a requirement to have a team (internal or external) managing the core server infrastructure of an organisation. This trend means that technology function has shifted from keeping the lights on to having a seat at the executive table, assisting the business deliver objectives through technology enablement, innovation, and getting involved in R&D activities.
With this in mind, understanding your current technology landscape, strategy and roadmap is imperative to design the right technology delivery model for your business. If you're about to undertake large transformation activities, what skills and experience do you require in the short, medium and long term? Having this understanding is core to getting the model right and without it, there will be a constant challenge to deliver successful technology solutions, foster strong vendor relationships and service your customers efficiently.
We hear you saying 'yeah, yeah, I know my technology landscape and we have a strategy. What's the best model for me?'. Answering that depends on your business, and its current technology, people and strategy. So to help you decide, we've listed some considerations for each model.
In-sourced
This is the traditional model and one where very few businesses are retaining or moving to. The typical delivery structure in this delivery model is headed by a senior manager within the business, possibly a CIO or another senior representative. The team is usually comprised of an IT manager, service desk staff, and system administrators.
Advantages:
The organisation maintains complete control of the technology landscape
No restriction on how services are delivered
A dedicated team focused entirely on the delivery of technology to staff
Disadvantages:
No coverage during periods of staff leave
Sometimes costly investment into IT systems and tools to manage and maintain the environment
Difficult in retaining suitably skilled staff
Management and people oversight is needed
Out-sourced
In this model, the business would employ external technology staff, who are monitored and held accountable by a senior manager. This role is typically assigned to a CFO or COO within the organisation and entrusts responsibility for vendor management, reporting, and delivery.
Advantages:
No internal costs for technology staff including management costs such as training
Services are delivered to an agreement with defined service levels and fees
A more scalable and cost-effective approach where you pay only for what you need
Disadvantages:
Typically a non-IT skilled senior manager is responsible for managing the provider, delivery, and vetting the technical solutions
Heavy reliance on the service provider to deliver in the best interests of the organisation
Usually, the internal staff have limited experience delivering technology projects and risk the successful delivery of new initiatives
Hybrid
This is the contemporary model of delivering technology services to an organisation. A hybrid approach can take many different forms, but a common strategy is to have a technology manager within the business that is well versed in vendor management, service delivery, business, and technology strategy and transformational activities. Depending on your business and its requirements this may be a part-time role. The role may also be supported by other internal staff that it makes sense to keep in-house, such as application administrators or developers.
The real trick with this model is to decide which services can be off-loaded to a service provider and which ones shouldn't be. Ultimately, the goal here is that your business is not being bogged down by daily activities and your time is focused on supporting company objectives.
Advantages:
A focus on business strategy, innovation and growth, and not getting caught up on 'keeping the lights on'
If the team structure is designed correctly, this is a flexible model that allows the business to scale up and down in specific technology skills as they're needed without disruption to the business (a clear strategy and roadmap are key here!)
Better value delivered from suppliers since there's a suitably skilled person managing performance, projects, and relationship
Disadvantages:
Your business may only have a part-time requirement for a Technology Manager
It may be difficult finding and retaining the right person with the right skills
If you would like to discuss what model will best suit you please don’t hesitate to contact us.