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Introduction

The objective of this brief paper is to give the owner, managing director or finance director of an SME (10 – 500 employees) some thoughts about how to maximise the value from their Information Technology and Communications (ITC) investment. Many SMEs outsource ITC because they do not have or want the expensive in house resources required to support an ITC infrastructure. In many cases this is done through local providers as the major players in the ITC outsourcing market tend to focus on large corporate or governmental agencies. In principle this is a good strategy i.e. do what you’re good at and let somebody else do what they are good at on your behalf.

However, in outsourcing their ITC many companies do not really fully exploit the opportunities that this approach brings, rather it can be seen as a grudge purchase with the emphasis on cost. As an SME the authors can identify with this, however, for what is in real terms a small premium one can attract an outsourcer that not only supports your business but can make a positive contribution to it.

The Business Requirement

At the time of researching and writing this paper the UK economy is in a delicate state. It depends where you are as to whether or not the economy is in recession. However, the current environment does bring into sharp focus the need for:

1. Cost Management – Absolute control of the cost base
2. Easy to manage budgets – To support the point above the knowledge that your spend is fixed over a given period allows time to devote to wealth generating activities
3. Return on Investment – The best possible value return on any investment
4. Cash Conservation – Invest only in items that really add long term value, rent anything that devalues quickly
5. Profit Protection – Cash is king, but companies are still measured by bottom line performance
6. Organisational Flexibility – The ability to flex the organisations business infrastructure at the best cost
7. People Productivity – Remove distractions and productivity eaters
8. Quality of Service – Focus on the customer

In addition to these fundamental requirements organisations want their outsourcing partners to be proactive, innovative and flexible. They need their partners to understand business, not just technology.

Selecting your Outsourcing Strategy

A number of business see outsourcing their IT as just a way to reduce costs. If you view IT is a necessary evil this is the way to go, and for some companies it is the right way to go. All you need to do is to find a company to sweat your assets, to provide you with adequate support and does it cheaply. Do however keep an eye on the change control clause(s) in your agreement as these are where a cheap deal can become expensive.

As stated in the introduction there can be more value to be had from outsourcing ITC than just cost reduction. However, this entails a different selection strategy and this means selecting potential partners who can help you achieve a value based relationship rather than one which is purely cost based. The term value based is not a euphemism for expensive; in essence it means that the ITC Partnership, not a vendor and buyer relationship, delivers a broad range of tangible business benefits across the whole requirements spectrum as opposed to just cost savings. Many SMEs have little or no IT capability and the Manager Owner, the Finance Director or just someone with a passion for the topic is the “IT Manager”. This can be seen as a problem in the selection process but it is not, in fact discussions with potential partners should rapidly highlight the fact that IT is not the issue, it is business that is the issue.

Why a value based relationship?

It is quite simple really, a value based relationship drives a better quality of service to you as a customer and this is manifested through:

• A Partner will be more responsive: they will be more aware of your value as a customer, the lifetime value of your business to them and the impacts of losing you than will a cost based supplier
• A partner will understand your business, not just the IT part, and as a result will be better placed to provide you with solutions that help you grow, stay on an even keel or if times get tough help you manage the impacts of a downturn
• A partner will provide you with impartial advice; create relationships to meet your requirements that they cannot fulfill and will manage those on your behalf. They will provide you with a central contact point for your business infrastructure simplifying your external relationships thus protecting your valuable management time, and
• A true partner will always provide you with best value for your investment with them.

Selecting your outsourcing partner

If you have chosen a cost based relationship the selection process is covered in the strategy above. We use the term partner carefully as that is what many organisations say they want. Partnerships are about sharing, creating lasting relationships, sharing the benefits of success and stripping out risks from a business. They are not about using the word as a mechanism to extract discounts. Many suppliers become wary of potential clients who talk of long term relationships and then act in the short term. If you want just cost savings then say so.

Your first meeting with a prospective partner is a major decision influencer. In this you will be able to decide if they are partner or a vendor. A potential partner’s questions should be about your business, your objectives and strategies and about your issues. Their opening question on IT should be about how it serves the business and supports your strategies, is IT an enabler or a restriction on your plans? They should then carry out a discovery phase that understands your ITC infrastructure which will identify its strengths and weaknesses and not just its components. Only then will they be in a position to make a proposition that supports what you want your IT to achieve for your business. In our experience a vendor which focuses on the IT components will suggest changes, but just from an IT perspective and wont include your business and its operations.

In reviewing a proposal from a potential partner you should consider how they address the general business requirements identified above plus your own specific ones. In general terms:

• Do they use ITC speak or do they talk your language?
• Do they talk about quantifiable business benefits?
• Can they show you where they have made a positive impact to a company’s strategy and performance?
• Can they demonstrate an early, acceptable return on the investment they are asking you to make?
• Is their proposal innovative, and flexible?
• Will their proposal leave you to manage your business rather than worry about your IT

In specific terms and against the business requirements, does their proposal demonstrate the following?

Conclusion

Be clear about what it is you want from your outsourcer and be open and honest with them. For SMEs cash preservation is the critical success factor. However, a cost based provider is not the only way of preserving cash and reducing costs. This approach can be a false economy it really depends on the value you place on IT in your business. If you believe IT is critical to your business success then go the partnership route. A good partner will always deliver best value this being a combination of cost and cash management together with business effective IT solutions.

About Quostar Solutions Limited

QuoStar Solutions is a premier-level IT outsourcing, consultancy and cloud service provider. QuoStar’s capabilities include technology consulting, managed services in IT security, help desk, network integration and support on a national and international level. The company’s customer base of small and middle market companies represents a wide variety of industries. Headquartered in Bournemouth, Dorset in the UK with a support office in London, QuoStar Solutions Limited is a rapid growth, privately held information technology service, support and consultancy firm. The company’s core value of delivering results to its customers beyond simply IT continues to ensure a large percentage of growth and a 100% customer retention rate.