In this issue
How to outsource - SUCCESSFULLY
Outsourcing has become increasingly important for improving service quality and reducing costs, yet many organisations are still getting it wrong, or missing opportunities by not even considering it. I have outlined in this article why you should consider outsourcing some business functions, how you decide what to outsource and who to, along with my thoughts on what you need to do to achieve success.
Four billion internet connections and the dramatic adoption of cloud computing means that it’s increasingly difficult to remain competitive if you only rely on staff to undertake all of your required business functions. Many organisations now benefit from outsourcing and/or use specialist contractors, often located offshore.
Almost all outsourcing arises from a desire to address one or more of the following four problems:
1. High operating costs - particularly high labour costs.
2. Key staff members spending too much time on mundane tasks/processes.
3. A lack of skill or knowledge in a particular area – and difficulty recruiting and retaining the skills needed in that area.
4. Key person or skill dependencies where a critical mass of people with a particular skill is required, but is uneconomic to enable (such as holiday/sick leave/weekend/afterhours/training coverage).
Many New Zealand businesses don’t view outsourcing in a positive light, which is unfortunate as outsourcing done well, can be one of the smartest ways of dealing with the problems listed above, and as a result can help organisations improve resilience, efficiency, effectiveness, competitive positioning, and improve profitability.
The major reason for a negative sentiment about outsourcing is the bad reputation generated by a few high-profile failed engagements. Typically, the outsourcers involved are offshoring to inappropriately skilled resources. Maybe you have experienced issues caused by an inappropriately skilled contact centre worker who is based in another country. The fact that the resources are located offshore is not the issue, problems arise when the job skills required along with workers skills are not properly aligned.
It dumbfounds me when New Zealand businesses offshore work to parties that do an inferior quality job compared to what could be done by New Zealand workers. The only reason to do that is to save money but that is simply short sighted, as brand damage is likely to destroy any short-term financial gain, and be more permanent.
It’s easy enough for anyone to reduce the cost of a business function by moving it offshore. It’s also easy enough to raise or lower the quality of work done by moving it offshore. The objective however, should be is to simultaneously lower cost AND improve quality – often easily achieved when appropriately skilled resources are engaged.
Closer to home there are plenty of appealing onshore outsourcing options; for the most part not as financially appealing as offshore options but still offering considerable benefits: largely benefits derived through economies of scale, and the availability of specialist resources.
What to outsource
There has been a great deal of research into the type of functions/processes that are suited to outsourcing and those which should be retained in-house. Whilst the individual circumstances of organisations will vary and therefore outsource decisions will be different, there is widespread acceptance of some “rules of thumb”. These rules of thumb are commonly represented in the matrix below:
Using two key factors when deciding what to outsource: The Strategic importance of the task/function; and the extent to which the task/function contributes to Operational performance, four quadrants are created. Barnes identified a preferred approach for each quadrant:
It is proposed that outsourcing is ideally suited to functions that are of low strategic importance, but which can make a big impact on operational performance. Data centre services and help desk services are good examples.
Whilst the logic of this decision matrix remains as valid today as it was when Barnes created it 10 years ago there have many changes making it much easier to outsource work of all kinds.
There are now in excess of 4 Billion people connected to the internet and it has become increasingly easy to connect with and assign responsibilities to eager and highly skilled workers around the world.
All New Zealand users of AWS, Azure, IBM cloud and other public clouds, whether they realise it or not, have not only outsourced and offshored their IT systems, they have also outsourced and offshored many of their IT administrative tasks as well. A decision that makes a lot of sense.
Selecting your outsource provider
Selecting an outsource provider is like selecting a tradesman; you know there is a wide range to choose from; different skill levels, different experiences, different cultures, different track records, different locations that operate in, and different charge out rates. If you don’t take the time to do the analysis and research your options properly you risk experiencing a shoddy engagement.
Spend some time on Google, ask your network of contacts, seek people with relevant industry experience using LinkedIn and other online resources.
Like any search for a relationship partner don’t try and short circuit the process; yes it’s really easy to find a partner if “any partner will do” but outsourcing a business function is too important to take a short-sighted or short-term view. Just think about someone you know who has exited a failed relationship. Enough said.
How to make outsourcing work for you
The success of an engagement starts by scoping the functions which are appropriate to assign to an outsource partner. Culture and brand alignment are likely to be important and therefore it will be necessary to define expectations and confirm that you have the necessary alignment.
Here is a list of recommendations that I believe will optimise the likelihood of a successful engagement:
Set clear objectives. It is reasonable to expect that benefits will be obtained in all three areas:
1. Cost reduction
2. Quality improvement
3. Ready access to specialist expertise
Prioritise functions that have low strategic importance, but which contribute significantly to operational performance.
- Do thorough research: Ensure that the outsource partner has all of the capabilities that will be needed to deliver on the objectives. Reference check to confirm that success stories are the norm.
- Ensure that there is a clear and well-structured agreement so that both parties have a comprehensive and common understanding of what will be done.
- Do not abdicate control. You are still responsible for the outcomes; the difference is that you now need to manage an outsource provider and not a group of staff. Someone with appropriate skills to take responsibility for managing the outsource provider will be needed.
- As with all initiatives of significance ensure that senior management is involved and supportive.
- Ensure that there is regular, smooth and open communication between the parties.
- Continuously monitor key metrics and trends, including “soft” metrics such as the proactive presentation of value-added ideas.
- Acknowledge that change always meets with resistance. To minimise resistance, follow change management best practices including developing a plan based on a partnering approach with realistic timelines and achievable outcomes.
In summary; I predict that organisations will increasingly need to respond to the presence of onshore and offshore outsource providers. Organisations can view outsourcers as a threat or as an opportunity. Over the last decade or so I have assessed the situation from several perspectives: I have worked for both offshore and onshore outsource providers and been a purchaser of both onshore and offshore provided services.
I see that the world is changing; In New Zealand it’s getting harder to recruit specialist skills and easier to engage specialist outsourcers to provide organisations with the outcomes they seek.
Axicom Australia undertakes IT Infrastructure modernisation
SASIT assisted Axicom to achieve a multifaceted IT system upgrade over a period of eleven months involving upgrading ERP software, refreshing hardware, changing data centres, and moving to a significantly more flexible hybrid architecture. These improvements were achieved on-time, on budget and have strengthened Axicom’s market position to the extent that Axicom now has a modern architecture, modern secure, high-performance infrastructure and the flexibility to deploy and use new technology as required, largely on demand and consumptive based.
Axicom is Australia’s leading provider of independently owned wireless infrastructure. The company owns, operates and manages a portfolio of approximately 2,000 towers in Australia, covering a substantial portion of the Australian population. Axiom’s customers include the major Australian wireless carriers such as Optus, Vodafone, Telstra and various State and Federal government agencies, as well as wireless broadband data service providers.
The relationship with Team Computing and SASIT
SASIT has been providing ICT Managed Services to Axicom since October 2015 with Sydney-based reseller Team Computing. The scope of the engagement included the provision of infrastructure and related services associated with Axicom’s ERP application: JDE EnterpriseOne.
Challenges and Objectives
Axicom was faced with a major JDE upgrade, which required a rebuild, significant testing, and took advantage of an offer by SASIT to refresh the underlying technology at the same time. The move to new infrastructure also facilitated a move to the Equinix Data Centres – and a significant change in the architecture achieved the objective of increased business agility through integrated access to public cloud services.
Of major importance was ensuring that changes would be made without putting business operations at risk.
After a period of consultation including a review of options, SASIT was engaged to deliver on the following four objectives:
1. An upgrade to core technology infrastructure
2. An upgrade to the ERP application
3. A move to new, more advanced data centres in Sydney and Melbourne
4. A transition to a flexible and scalable hybrid architecture
SASIT managed these changes using a multi-disciplinary team committed to professional project practices. The project began in November 2017 with completion achieved in September 2018.
The core technology upgrade involved a transition from an IBM Power 7 to Power 8, introduction of an All Flash Storage Area Network (SAN), and upgrades to systems replication technology, as well as high speed connectivity to Microsoft Azure.
The ERP application upgrade was a multi-phased sub-project resulting in the deployment of JDE 9.2 development, test, and production environments.
SASIT had recently implemented a new hybrid-cloud solution within the Equinix Sydney and Melbourne data centre campus to take advantage of these new facilities, the high-speed connectivity to the Public Cloud providers, and the ISV community residing there.
The transition to a flexible hybrid infrastructure was the major change in that it involved integration of on-premises, private cloud and public cloud environments including orchestration between the different platforms. This hybrid model was important because it would enable Axicom to develop and deploy applications faster, and more efficiently.
Results & Future plans
Axicom now has flexibility of choice. The new architecture provides a gateway to integrate software as a service (SaaS) solutions and cloud born applications such as Office 365.
Axicom has also gained access to a richer set of managed services; in part provided by the cloud providers but primarily by SASIT widening the scope including the addition of a service delivery management function. The entire initiative took eleven months from inception to go live and was successfully completed on time, and under budget.
Andrew Fox (Axicom Head of Information Technology) commented that:
“SASIT has delivered a significant improvement to the infrastructure solution they provide to Axicom, resulting in a full technology refresh, a change in datacentre and an architectural design shift. Each of these elements has delivered benefits to the Axicom business with improved performance, flexibility, availability and currency of long-term support. The most notable achievement was SASIT’s ability to deliver these complex changes on time, within budget and to specification in parallel with Axicom’s upgrade of its JD Edwards ERP system.”
Phil Martin (SASIT Group CEO) commented that:
“We invested significant funds to develop what we believed would be a seriously flexible, customer centric, hybrid-cloud environment built with IBM Power Systems at the heart of the solution. Building this solution provides our customers with choice and flexibility to put their compute, and storage hosted assets where they are most appropriate, allowing our customers to be far better equipped to deal with the digital challenges of a modern-day business.”
Martin commented further “Few customers can predict what their business might look like in three years or less, and this solution provides a resilient, but flexible platform to cater for an uncertain future, with unprecedented choice baked in.”
For more information about how SASIT may be able to assist your organisation through the implementation of new technology in a hybrid cloud environment please contact Ian Hight: email@example.com
Content Hub IBM i
SASIT is a long-standing IBM business partner with deep expertise in 24/7 operation of mission critical systems particularly IBM i based systems.
We have put together some information assets which we think will be of value for our IBM I customers. The assets are:
- Application & infrastructure modernisation - White Paper
- How to achieve cost effective 24/7/365 support for IBM i based systems
- Efficiently analyse your IBM i applications – step one in your roadmap
- Why a transition environment is important – The SASIT /Equinix solution
- IBM Power: End of Life dates that will affect you
- SASIT story: IT excellence over several decades
You can view these documents in our content hub here:
We believe SASIT is the largest IBM i IaaS provider in Australasia with 130 systems under management across seven data centres (4 in Aus, 3 in NZ)
Cloud first? 10 benefits to consider
Over the last couple of decades much has been written about the advantages of “cloud”, but practically the benefits that cloud could provide your organisation can only be evaluated in the context of the specific needs of your organisation. The generic term “cloud” can’t be evaluated as good or bad all depends upon both the specific cloud features in the context of your organisation.
The current reality is that most organisations have hybrid IT systems. Systems where some IT components (hardware and software) reside external to the organisation (in the case of NZ mostly offshore), these are known as “cloud” and some components residing locally – typically within your own premises.
The scale and variety of cloud provider offerings dwarf the capabilities that are able to be provided by any single organisation; which is the primary reason why cloud use all over the planet has grown steadily for the last two decades and is unlikely to slow down in the foreseeable future. Most commentators predict that cloud adoption rates will accelerate.
Rather than assessing the value of “cloud” on any single measure such as cost, or functionality, or security; a better alternative is to consider the bundle of features that are “cloud” in the context of what you want to achieve.
Here is a list of 10 benefits of “cloud”:
1. On demand computing capacity including storage, on an almost unlimited scale
2. Enormous application and service functionality
3. A vast array of flexible pricing options including pay per use in tiny increments
4. A huge variety of security options
5. Availability from anywhere anytime
6. A single point of entry to a wide range of vendor and partner relationships
7. A fertile playground of some of the world’s most ground-breaking innovations
8. Access to automated operational processes
9. Simplified procurement including standardised agreements
10. Many development frameworks and environments
When thinking about this list; it’s not hard to understand why an increasing number of organisations have adopted the motto: “cloud first”
IBM Think 2019
"THINK" is a slogan first used by Thomas J Watson in December 1911 while managing the sales and advertising departments at NCR. Now of course THINK is an IBM Trademark and also the branding of IBM’s worldwide user conference.
The upcoming Think Conference will be in San Francisco: February 12-15 2019. Last year the conference was attended by almost 40,000 (yes that’s 40,000) delegates and attendees will be of a similar number in February 2019.
If you would like to know more about the event including the 3-day agenda and speakers please visit this site www.ibm.com/events/think/
SASIT will have representatives attending the 3-day event.
Customer portal released
At SASIT we pride ourselves on being easy to do business with and on the quality of our customer service. Our latest initiative is the provision of a customer portal.
Our portal is a private, secure website that enables 24x7 access to customer specific information and currently includes the capability to log jobs, check on status, and escalate actions. The portal has been designed as a compliment to, not a replacement of, our other exiting support channels including service desk, phone, and email.
Our product roadmap will see the customer portal developed into more of a one-stop-shop by adding functionality such as the ability to review important documents and policies, check on systems status, and locate detailed information about products and services. Our key objective is to improve our service quality by empowering customers with greater control and transparency.
The customer portal (beta version) has been rolled out to a number of customers over the last few months. Feedback from these users is assisting in refinement of the product roadmap.
If you would like to become a portal user please contact Ian Hight: firstname.lastname@example.org