Matter & Substance
  September 20, 2015

Mitigating the Risks of IT Outsourcing

Many businesses outsource one or more of their IT functions with the goal of saving money. Yet if you don't mitigate the risks involved, you could end up both losing out financially and failing to get the most from the arrangement.

At Mowery & Schoenfeld, we have traditionally used a third party IT consultant, BSSI2, to provide IT support for the Firm. As we have grown to more than 50 employees ("users" in IT lingo), we found it necessary to hire an internal IT specialist. The rule of thumb is that when you have 50-60 users, there is enough work and responsibility to justify a full time person for internal IT. In 2014, we hired Chris Madden for this role. It has been very successful as we operate in a business where time is of the essence and having someone available to resolve issues immediately has been very helpful. The days of the green eyeshade and paper and pencil are long gone and we as CPA's need to use technology to the greatest extend possible to be successful. We have continued to use BSSI2 for additional support and special projects and feel that we have achieved really great results from this arrangement.

If you're considering outsourcing, here are some best practices to consider

Consult your users. Ask for candid feedback about whether your company's technology is meeting your employees' needs. What help from an outside provider do you really need? Also contact other businesses that have outsourced. How did outsourcing help or hurt them?

Weigh opportunities against risk. Identify opportunities beyond cost savings. For example, outsourcing noncore IT functions - such as management of HR systems and supply-chain technology - could free up internal resources for projects you've put on the back burner but that have strategic potential. Then again, outsourcing too many noncore processes could leave you with too little control of these functions and expose you to inefficiency and compliance risks.

Refine your relationship expertise. Many business owners believe that, once they sign the deal, the contract will take care of itself. As a result, they don't adequately manage the relationship and often find themselves in conflict with the vendor or stuck with unsatisfactory results. You'll need new skills, processes, and metrics to ensure the services deliver what you want. As noted above, we have had to redefine our relationship with our outsourced IT since we brought some aspects in house. Through the use of clear communication and feedback, we have been able to achieve the best of both worlds; we have immediate resolution of issues supplemented by additional expertise and recourses when necessary.

In a global economy, IT outsourcing has become, in many industries, a competitive necessity. Whether your company is large or small, it is important to take the time to assess, negotiate, and maximize the bottom line benefits of an arrangement.