Frameworks such as ITIL have developed guidelines for strategizing, designing, implementing and managing IT Infrastructure that provides best value to businesses. While the guidelines were designed for Tier-1 firms, they are also applicable for Small to Mid-Sized Businesses. Ignoring the Fortune 1000, there are 17000+ companies who have between 500 and 10,000 employees. Let us call these companies Tier-2 companies. There are probably 200,000+ companies who have more than 100 employees but less than 500. Let us call these Tier-3 companies. A challenge Tier-3 companies, and to some extent the Tier-2 enterprises, face is the lack of economies of scale. If they do not have a outsourced environment, they require systems administration expertise, network management, helpdesk, maintaining the server farms, and maintaining the user devices (PCs, laptops, PDAs, etc.). One easy way to gain economies of scale is to outsource, particularly off-shoring to leverage the lower costs.
According to Stephanie Overby (CIO Magazine: Outsourcing: The Pros and Cons of Offshore Remote Infrastructure Management dated: March 18, 2008), the services that can be off-shored are:
Service % that can be off-shoredNetwork Services 80% Internal Help Desk 75% Servers 70% Maintenance 60% Administration 35% End-user Devices 15%
While the degree of off-shoring can vary for each enterprise, Stephanie’s insightful article points out the need for a blended model – a combination of on-site expertise backed by Remote Infrastructure Management (RIM) services. Cost savings are a result of three factors: 1) labor arbitrage, 2) shared services including SaaS, cloud computing, and, 3) shared expertise. The best example of labor arbitrage is off-shoring. Large outsourcers such as IBM, Infosys, and Wipro have provided these cost benefits to Tier-1 companies. In the past five years, many Tier-2 and Tier-3 outsourcers have provided niche RIM services. Cloud computing has helped reduce infrastructure costs. SaaS (Software as a Service) has gained momentum helping companies pay for services actually consumed. Shared expertise is another strong benefit as outsourcers provide a multitude of expertise that would be very costly to in-source.
Savings can be significant. Typical savings for e-mail hosting and support can amount to over 100% , over 200% for remote server monitoring, and over 50% for applications monitoring and support.
In addition to cost savings, RIM offers a much higher level of service. For example, outsourcers can provide 24-7 support far more economically than in-sourcing. Another significant benefit of using outsourcers is the ability to provide higher availability of services on demand. RIM is a proven model for managing IT Infrastructure. In the past these benefits were limited to Tier-1 firms managing large data centers. Recently, the growth of highly qualified and credentialed Tier-2 RIM providers makes it easy for Tier-3 enterprises to take advantage of off-shore partners.