The recent price cut from Google, has brought on the familiar argument about cost-effectiveness, namely:
Which is more cost-efficient, allowing someone else to service your Cloud, or doing it yourself?
As a third-party reseller of used EMC, refurbished NetApp and more, we talk to a lot of storage admins who are weighing the pros and cons of moving data to the cloud. Also, if you’re considering a storage upgrade, be sure to skip to the bottom to obtain a free storage-planning checklist.
This debate was once the focus of many jobs pouring out of the United States and jumpstarting the global marketplace. The leap to outsourcing was motivated by – what else? the bottom line, profit.
The outsourcer contracted to deliver specific IT services at a cost considerably less than what the internal staff was currently costing. As a bonus, the outsourcer often offered to hire the current IT staff to be part of the new provider’s operation.
It looked like a great deal. Cheaper labor costs, and hiring the current staff meant no guilt in the transition.
So what was the outsourcer to gain? The bottom line for the outsourcer was an experienced staff that knew the job, no training costs, but also a redefinition of service. Now the outsourcer/ new owner of the IT department defined exactly what would be done and when. And nothing else. No exceptions, no favors, no bonus – let me help you with that – attitude.
In the boardroom the business decision looked great.
While in the transition, these questions were posed to the customers that chose to outsource.
Is Being Good at IT Strategic to your Business Model?
Some companies really wanted to be good at IT but others just saw IT as a part of the budget they wanted to slash.
Is The Company Prepared to Invest?
Research and development is all about investing. Spending money on good people, good technology, good process and good products is a way of investing in the company development. Research is about finding the right assets to do the job well, and then some.
It was surprising how many companies had no desire to invest, or couldn’t afford the investment, and so handed their IT on a platter to another company.
Can You Live With Loss of Control?
No matter what the situation with your in-house IT staff, your staff and you have control. When you outsource, they have control.
This is where most of the disgruntlement came, if the outsourcer didn’t do things the way you wanted, it was their company and their decision, with your staff, your products, your data, and your applications. You were no longer in the power position.
Perhaps your requirements changed. Perhaps you had a need for a new function or a different configuration. Now is when negotiations got expensive. They had all the power and it was ugly.
Not only did they have the power in negotiations, they chose what they wanted to enhance. If a process was cheaper with less overworked employees, even though there were more errors and fails, they continued the old process even when the customer was unhappy. They were getting the negotiated fees. They could always get more customers.
But what about back home? As businesses ceased to perform to customer expectations the profit margin began to hurt.
Some companies formed deep and meaningful productive relationships with the outsourcers, but those were the exceptions.
The unhappy ones had little choices. Do they pick another outsourcer and risk another disaster?
Or do they start all over again and bring IT back in-house and into the fold. That was an expensive fix.
We have the same parallel with today with public cloud providers
Will companies invest in IT staff to develop their own cloud management?
Or will they outsource to Google, eventually kowtowing to the Google budget of R&D and innovation? Will Google continue to be innovative and customer-focused?
Will History Repeat Itself?
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