Furthermore, pushing out IT functions to an external provider can allow SMEs to focus on their core business and not be slaves to system malfunctions. Outsourcing providers monitor and fix problems as they occur. These services can often be provided remotely, depending on the problem, allowing firms to plough ahead doing what they do best, with peace of mind.
Recognising needs
Recognition of the benefits outsourcing can bring often occurs out of necessity. Firms realise that they need to develop their IT infrastructure but don't have the skills or the manpower to do so in-house.
"We could see what we were getting into," says Derek Keating, manager of health foods chain Nourish. The firm has five stores across Dublin, employing over 40 staff. The business recently started a manufacturing operation of chocolate-based products, and Keating says he recognised the firm was not in a position to develop its IT in-house to meet the extra demand. "We weren't happy with the [existing] system. We wanted an email server to handle client accounts and we needed to be sure that the information was secure. We knew we couldn't do that ourselves."
The firm appointed Datapac to address its IT problems. Datapac introduced a Microsoft Windows Server 2003 domain with an Exchange Server 2003 email system into the firm, providing Nourish with the assurance it needed that data transmitted would be secure.
Finding the right fit
Finding the right partner to act as an outsourcing provider is vital in order to be sure that the service is reliable and secure. Computer games retailer GameStop Ireland investigated several offers from providers before finding the right fit.
"We put a tender out to a couple of companies," says Sankar Nayar, IT manager of GameStop Ireland. The firm has 45 stores across the island but has a relatively small IT department. "We required a lot of expertise in different areas. We don't have a network engineer and it was taking a few days to resolve problems."
After receiving submissions from several firms, GameStop found a partner it believed it was happy with, Strencom. This was not the end of the validation process, however, as the firm wanted to see how clients of Strencom felt about its outsourcing services. "Once we had a partner in mind, we were able to get recommendations from other businesses," says Nayar.
GameStop then proceeded with a pilot run of Strencom services for some of its stores over a two-month period, before adopting the outsourcing provider as its partner across the business. This approach allowed GameStop to mitigate the risk involved in selecting an outsourcing provider, but SMEs should be aware that there is no way to remove all risk from the process.
Risk factors
The biggest risk firms face when they opt to outsource is that they lose control of how their IT is managed. So starting off small, with just a couple of applications managed by the outsourcing provider, will allow you to see how capable the provider is of meeting your needs.
Firms should also be aware that power outages suffered by IT providers could potentially lead to a loss of access to systems. Businesses should also ensure their chosen provider is well established and not likely to suffer financial troubles. If your provider goes out of business, you could suddenly find yourself in IT limbo.
A service level agreement (SLA) can safeguard both the SME and the outsourcing provider. Such an agreement will ensure that both parties know exactly what will be provided, and it can be used to set targets for accurately measuring the performance of the outsourcing provider.
Labour and reward
The work required in finding an outsourcing partner may seem arduous for an SME, but the rewards can be significant.
"It was hard work. The project took an intense nine months from the decision to outsource our IT to the appointment of a provider," says John Hackett, director of insurance brokerage Arachas. The firm has 110 staff and wanted an IT infrastructure that would allow it to compete with major international firms. "The vast majority of our clients are in corporate and commercial sectors and they expect a high level of service. We wouldn't have regarded IT as a core competence of ours."
After a process Hackett describes as taking "a lot of effort", Arachas appointed Data Electronics as its outsourcing provider. The firm took the task of managing Arachas' servers, PCs, firewall and security systems, and Hackett says appointing a partner has made a significant difference to the firm. "The selection process took place three years ago and the intervening time has seen them provide a tremendous service."
For firms like Arachas, outsourcing IT has enabled them to keep up with major international firms in their industry. Outsourcing can allow Irish SMEs to focus squarely on their core business, while challenging larger businesses on an equal footing.