Whether you're subscribing to web-based applications, on-demand services, or utility computing infrastructures, there are countless variations on the outsourcing theme – renting software instead of buying it. All offer ways of letting companies balance their internal and external IT investments to meet their business requirements – and software vendors are certainly pushing harder on the rental model (just look at Microsoft with Office 365, or Adobe and Creative Cloud).
As a technology or business manager, how can you cut through the hype to tell whether and where application outsourcing might be right for your organisation? And what caveats should you bear in mind? We’ve got some advice for you in the form of 10 handy tips.
1. Define your expectations
Outsourcing applications has real benefits if you map out your objectives clearly. View outsourcing as a business solution to augment your current operations and create efficiencies, not as a rip-and-replace technology. Translate your expectations into financial terms, then calculate the savings in reduced cost and complexity or better time to market.
2. Be realistic
Web-based apps may not have interfaces which are as smooth or customisation options as plentiful as those of desktop applications. Can you live with the level of support provided? Figure out your workflow requirements and move forward when you find an app that addresses them all.
3. Assess yourself
Quantify your baseline bandwidth, storage, and reliability requirements and usage. A hosted service can offset the costs of underutilised resources. Establishing that you're rarely hitting peak usage levels will go a long way in determining whether you'll achieve benefits from flexible hosted services.
4. Identify your strengths and weaknesses
Can you isolate the highest impact but lowest risk projects in your operation? This will help you determine which noncore lines of business are best suited for outsourcing.
5. Follow the money
Make sure that a subscription fee is cheaper than traditional software. Get your finance gurus to come up with valuation metrics and fiscal models that will quantify your current payment model compared to that of a hosted service. Also take into account your current infrastructure, maintenance, administration, and upgrade costs, and compare them against the cost of migration and subscription fees.
6. Do your due diligence
Just because you go the hosted route doesn't necessarily mean that all vendors will have identical service delivery formats and infrastructure requirements. Consider a third-party audit, which should include security of transactions and data. Evaluate the vendor's experience, technical expertise, and scalability options.
7. Plan migration paths
Have a path for data migration and integration with other systems from the start and a plan for termination. This will help avoid locking you into a single vendor.
8. Involve your legal team
Make sure a lawyer is on board to review the licensing issues and intellectual property rights. Legal representation will also be of value during contract negotiations.
9. Control your services
Assign yearly budgets and resources. Establish ongoing ROI and performance metrics to determine whether the service achieves efficiencies. Apply the same disciplines of management to your other internal resources as you do for your hosted services.
10. Maintain open communication
Keep everyone apprised of goals and listen to their concerns. This way, you will build trust and ease the cultural migration to hosted services. Bear in mind that your provider and its reps are now an integral part of your business, so treat them as members of your team.