Today we are going to talk about the difference between In-House vs. Outsourced I.T. It is important to have clarity what an in-house IT or Outsourced I.T can provide value and where an outsourced provider can provide value.
Todd Nielsen: Okay, welcome to the Business Innovation Technology Experience by JMARK Business Solutions. This is Todd Nielsen. I have Thomas Douglas, Kristina Coons, and Dax Bamborough with me today. Today we are going to talk about the myth so to speak or the topic of should you have outsourced IT? Should you have in sourced IT? In source IT is better, outsource IT is better. It’s kind of a myth that a lot of people don’t quite have right. What have we learned? What do we know? What’s better?
Thomas Douglas: So certainly there there is a place for both in the right environment. I think it’s important to have clarity where an in-house IT can provide value and where an outsourced provider can provide value. The difference is in my opinion, are pretty clear. Inside people, in sourced if you will or hiring an IT department should be focused on proprietary knowledge around the business, driving a specific application, creating custom reports, developing technologies for a business that you really can’t outsource because it requires proprietary knowledge within day to day operations of the business, where you can attend all the meetings and go to all the things.
Thomas Douglas: In those environments, it’s valuable to have someone on the internal team. However, as soon as you shift to an environment where you’re talking about the the nuts and bolts of the network, the servers, the workstations, the technologies that creates the backups, the security infrastructure, your telecommunications at that point, you need to shift to an outsourced provider who can stay current with the best practices, who has the resources to put the depth of subject matter experts in place, who really can make the whole network hum and create the dial tone experience, if you will.
Thomas Douglas: Then that creates permission for an internal resource if necessary, to drive a specific application towards an outcome. One of the big differences that I like to describe for for businesses when I’m having this conversation is if you have an internal IT person who’s focused on infrastructure, all you’re going to get is best effort. They’re probably a good person, they’re going to work really hard, and they’re going to do their best. But at the end of the day, that’s all you’re going to get. When you outsource to a company, you have a contract for a guaranteed outcome. If you don’t get the outcome, you can fire them. There’s a process to go through, but you can fire them. Having that contract for a specific outcome is vital in making sure that a business stays relevant in today’s world.
Todd Nielsen: When I’ve gone to trade shows, this topic has come up quite a bit with business owners in that it might be the right decision to outsource. It might be the right decision to in source, but oftentimes the answer is right in the middle. Depending on the size of the organization and the industry that you’re in, and the focus, what is your strategic direction is, it might make sense to have that internal hands on person that’s dealing with possibly workstation issues or something else, or applications.
Todd Nielsen: Then having an external IT company that’s more mature, that has the strategic direction at heart, that understands the risk, that has the breadth of expertise, I mean, that’s a topic in and of itself, that one person one or two people can’t understand, can even have that knowledge base of preventing every possible risk. That’s where an outsourced IT company that is mature and really understands that and has that expertise can greatly aid an organization. So that’s what I think surprises a lot of people is some people think it’s one or the other. It’s often both. We had a prospect recently, if I’m not mistaken, that had a bad experience with IT. They brought an internal IT person in. Now, the story in their mind is that external IT doesn’t work. What would you say then?
Thomas Douglas: Well, a couple of different things. Two comments that I would make is that there’s a reason that the vast majority of the Fortune 500 companies in the world outsource IT. That’s because they get the contract for a guaranteed outcome. They don’t want to be distracted within their business and their mission by the IT. Now to your point, they’ll have a specific team that has specific responsibilities i.e. get this application out, get certain things done. Excuse me, customizing experience for people, become the subject matter expert on the business rather than on technology. The other suggestion, though the other comment that I would make around that is that when a business is formed, is the time in which they need outsourced IT.
Thomas Douglas: In my opinion, from the very beginning of a business inception, you need outsourced it. It’s at what point do you need internal IT? When when the applications get to a certain level of sophistication that you need that subject matter expert to help tie the business outcomes to the applications capabilities, that’s when you need internal IT. But in today’s world, you always need outside IT because you can’t hire enough resources inside your organization that create that breadth of knowledge that subject matter experts. We’ve talked about it in the past where we used to be able to be a jack of all trades and master of most.
Thomas Douglas: It’s just not possible anymore. You have to have the subject matter experts on security, on servers, on database management, on network architecture, on LAN, on firewalls. Every component of a network now needs to have a subject matter expert associated with it because it’s just too complex to lead to a generalist.
Todd Nielsen: So I never thought about it that way. In my mind, it’s always been in source, outsource or both at some level, but it sounds like it’s outsourced or both.
Thomas Douglas: Yeah, that is my 100% belief. The reason for that is what we’ve described is that you need a team of people to come to the table on a small business that say has five employees, 25 employees, 50 employees, they can’t justify having a team of 10 people that run IT. That just makes no sense. That’s really the the number of subject matter experts that are required at a minimum to have the breadth of knowledge to keep a business running in today’s world.
Kristina Coons: So what would you say to a business owner who thinks it might be a little bit too complicated to do the hybrid, have both?
Thomas Douglas: Yeah, well, it takes some mature managed service provider to facilitate it. We describe it as co-managed IT. The reason that it takes a mature managed service provider to facilitate that is because you need to have gone through the experiences, screwed it up, figured out what works and what doesn’t in order to create a partnership with the outside provider and the inside provider. So that that the outcomes are there.
Thomas Douglas: Ultimately what we want is we want to deliver an experience. There’s a specific experience that every business wants to achieve, and we can do that. But it means delineating the responsibilities pf both the outsiders provider and the inside, and who’s responsible for what, how we’re going to work together, because oftentimes, there’s overlap. But there’s a standard set of tools, there’s a standard way to handle change management, there’s a standard way to make sure tickets are managed and documented inside the business.
Thomas Douglas: If you don’t have the processes and the maturity in place to make sure that that is adhered to, then then you’re going to see things break down, and that’s when that outsource versus is to in source starts to break down inside the business and fail the business owner.
Dax Bamborough: I’m interested in this idea. I think, Tom Tom, you both mentioned it a little bit in what you said. But that having your outsourcing frees you up to let your in house IT team be very tactical and specific in what they’re doing. To me, I think that was an interesting point of that sort of freeing them up to be a bigger asset in very specific ways to a company in the goals that you have.
Thomas Douglas: Yeah. Todd, were you getting ready to jump in there?
Todd Nielsen: Go ahead.
Thomas Douglas: You’re you’re exactly right, Dax. It happens in full force. I call it the commodity piece of IT. It’s the frame the foundation of the of how IT operates in the business. It’s changing very quickly. There is no way a single person or three people or five people can keep up with all of those dynamics. It takes an R&D team. It takes people who are working directly with Microsoft and Cisco and the latest and greatest in the industry to bring HP and to provide this specific training.
Thomas Douglas: If you don’t have the capabilities to do that, you’re going to miss the foundation. If the foundation breaks down, then the whole house comes crumbling down around it. So our view is that by building the foundation with the right partner, it guarantees an outcome, then that subject matter experts inside the business can create more value because they’re able to speed up, they’re able to concentrate on the things that actually create innovation in the business, who create efficiencies, who empower the employees to get more done in less time, so that they have a better quality of life.
Thomas Douglas: So the multiplier effect that can happen when this is all figured out is quite substantial. We’ve been fortunate to see it, and when it does happen, and it’s always a little bit turbulent going through it, but once you get through that and you figure out the processes and the communication paths, man, it’s neat to say, businesses really accelerate.
Todd Nielsen: So this idea is of the subject matter expert. I’ve talked with so many business owners that just has a singular perspective of IT. Let’s talk about what is the complexity of IT basically now. I mean, rapid fire, there’s policy management, there’s antivirus, there’s servers, there’s networks, there’s cloud, there’s a strategy, there’s compliance. What am I missing?
Thomas Douglas: There’s wireless, there’s mobile device management kind of technologies, there’s specific applications. There’s database management, there’s disaster recovery plans, there’s business continuity plans, the backup plans. There’s all these components within a business that it becomes so overwhelming and complex that it can it can drown you. Literally, it’s overwhelming when you think about it. We have a team of people who do nothing but develop the standards and create the policies in order to make sure that we do things in a repeatable way.
Thomas Douglas: Organizations that operate with this view that one to five people can facilitate that is just all wrong, it cannot be done anymore. You don’t take your vehicle to brake shop and hope that they can do the transmission work. It just doesn’t work. The same if you do take it to a dealership, it’s not the same technician who is changing the tires that’s replacing a transmission or troubleshooting a computer in a vehicle. It’s just not the same because there’s different levels and different levels of expertise required within within anything nowadays. Everything has gotten so complex when it comes to technology to include a vehicle that the subject matter expert needs have gotten to the point where you must rely on a partner to drive success in your business.
Todd Nielsen: Even if it weren’t complex, I mean, somebody goes into business because they have the passion. They have the skills to do something particular. Whether that’s architecture or healthcare, whatever it is, and you can’t be distracted by this massive wave of things that could just overcome you and destroy your business or you need these subject matter experts to really help you be more successful in your passion.
Thomas Douglas: Yeah, well, when you think back over time, businesses used to say that they needed three core partners within their business, they needed a good CPA, a good law firm, and they needed a good insurance provider. Those were kind of the tenets that they used to go to, well, how many businesses do you know, go out and hire a lawyer as soon as they start or when they have 20 employees and bring them on and put them on their staff? I mean, it’s the same concept.
Thomas Douglas: You just don’t do that because you don’t need that in the day to day operations of your business. What you need is you need to provide a guaranteed environment so that you don’t have to worry about it. They can just operate and get going down the road, just like a lawyer creates the foundation of your Articles of Incorporation or whatever it may be. Then that gives you permission to operate as a business. IT does the same thing. You create the foundation, you put the building block in place with the right design, the right infrastructure, and the right management over time, you can accelerate the business and that gives you permission to concentrate on the future of your organization.
Todd Nielsen: Awesome. There’s been a great discussion about the myth of insourcing versus outsourcing. We’ve learned and talked about how it’s either outsource or insource and outsource you can’t be successful with just in source because of the number of subject matter experts you need. Great discussion, and a lot to think about, and a lot to ponder about. If you’re out there listening to this or watching this. Don’t get depressed. Good stuff. Until next time, take care.
Thomas Douglas: Thanks. See you.
Kristina Coons: Bye.
Dax Bamborough: Bye.
