Choosing to outsource your data center is a big decision for any enterprise. In order to effectively reach an enlightened decision as an IT leader, you ultimately need the data to support it. To help you reach your decision regarding sourcing your datacenter, these areas are important to consider:
When assessing the opportunity to source your data center and/or infrastructure operations as an option, you need to take a hard look at your financials. Apart from many potential benefits of sourcing, it’s always about the ROI and developing a compelling business case for executive management. Does it make financial sense to source this IT function? Are you spending more money than your peers? Do you know what the select services will cost in the marketplace? Is it a fair financial comparison? This includes retained, stranded, transition, transformation expenses, capital depreciation, cost avoidance, the list goes on. Are you utilizing highly skilled resources that will be better off deployed elsewhere in the organization? Digging into the financials to understand your IT spend & where the opportunity may be, can be very difficult painstaking work, but obviously required. When was the last time you performed an infrastructure assessment? IT Benchmark? As with an internal audit, it is always best to be done by an outside (expert) consultant. One who has extensive expertise analyzing this data and that knows exactly what questions to ask to uncover the answers is required for all enterprises considering sourcing as an option.
An enterprise should also consider the problems that they may be facing. For example, is there a shortage of skilled labor on a platform(s)? Are they too expensive? Are you operating old hardware? Are there data center inefficiencies? Are you running legacy operations? Spending unnecessary capital expense on mechanical, engineering & plant? Is the data center located in a poor geographic area (flood zone, hurricane, etc.) If this is the case, or if the business is growing, selling divisions, or looking to move into other areas, the economics may favor sourcing. In many cases, companies look at outsourcing data center operations to access resources that they don’t have internally and to help fund a transformative effort.
If the industry an enterprise operates in is under significant change, or the firm itself is undergoing significant transition, it may be time to consider data center outsourcing. The healthcare industry has had a tremendous upheaval in recent years. They needed to reduce expense & develop a more flexible operating environment that can be in strict compliance with regulatory and security requirements. These factors make data center outsourcing attractive for firms in the healthcare industry. This can apply to other firms or industries undergoing similar changes. Not only are industries and enterprises changing, but so is the data center outsourcing marketplace, with many new service offerings. With the advent of “Cloud Computing” everything is different. In fact, the more workload an enterprise pushes to the cloud the higher the “per unit” cost of the platform(s) running an internal data center become. This alone leads many industry leaders to the conclusion it’s not if, but when, an enterprise organization will outsource internal infrastructure operations. With the simplicity, ease of use, time to market, and overall transformation that data center outsourcing offers, enterprises are starting to turn to sourcing as a solution to their growing and changing needs.
Cost savings is no longer the primary driver for outsourcing, but it’s still a major component to consider. By utilizing data center outsourcing, enterprises can turn their capital expense into operating expense and pay for use only. Enterprises can avoid the high fixed costs associated with maintaining and operating their own data centers.
Corporations with enlightened CIOs are those who understand ways to provide value to their organization that is not only strategic, but revenue producing. Running a datacenter operation may not be financially or strategically the right thing for your business today. By understanding and considering the associated financials, problems, industry changes, and costs, IT leaders can make a business case as to why data center outsourcing may be a viable option to save money and improve overall service for their enterprise.