Tip

Reaping the benefits of IT outsourcing with a hands-on approach

This tip was originally published in the Data Center and Virtualization Handbook "Keep Outsourcing Decisions In-House."

Outsourcing data center operations can simplify IT's job, save on the cost of power, cooling and space, and provide a company with greater flexibility. However, with all the outsourcing models and providers available, expensive mistakes are easily made.

To maintain the benefits of IT outsourcing, IT managers who are moving tasks off-site need advice on

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negotiating service-level agreements (SLAs), understanding pricing considerations and maintaining useful communication with service providers. Measuring the success of an outsourcing initiative is also important, so that problems can be detected and resolved by switching providers or bringing functions back in-house as needed.

To gain the benefits of outsourcing and avoid common conflicts with providers, IT managers should take a more proactive role in evaluating their company's outsourcing strategy.

For companies not actually in the IT business, outsourcing data center operations may seem like an ideal move. The decision to engage colocation, managed hosting or cloud providers reduces costly equipment and facility investments, converting IT services into recurring operational expenses that are easier to budget and scale as needed. Outsourcing also shifts daily IT burdens to third-party providers and allows in-house staff greater flexibility to focus on long-term IT projects that can lead to measurable business improvements.

To realize the benefits of IT outsourcing, an organization needs to plan carefully and consider potential problems before it signs on with a service provider. But planning ahead doesn't remove the possibility of setbacks once you've started outsourcing. Be prepared to identify and address problems, and have an escape route if things go wrong. The most robust and successful outsourcing arrangements occur when a business takes charge of its relationship with the outsourcing provider, rather than stepping back and allowing the provider to deliver substandard services.

Understand the SLA in advance

Every IT outsourcing provider will establish an SLA before an engagement. In addition to defining the services to be provided, an SLA typically outlines methods for accessing support and escalating problem resolution, along with the prescribed recourse if the SLA's terms are not met, including termination. It's important to realize that the purpose of a provider's SLA is to set expectations and to protect the provider -- not the customer.

Although many SLAs consist of legal boilerplate language, providers add definitions, terms and conditions that reflect their own unique services or operating model. It's vital for business leaders, legal staff and IT managers to read and understand an SLA completely before proceeding.

In reviewing an SLA, availability should be a major area of concern. Suppose a company relies on an outsourcing provider to deliver 50 Mbps of service bandwidth to help the business sell its products. The company may expect 50 Mbps as a minimum guarantee with no downtime -- and full compensation for lost sales due to any service disruption. Most likely, the SLA states that the provider will make a "best effort" to deliver the bandwidth, but does not guarantee it. The service may only be guaranteed for 99.9% uptime, with additional allowances made for maintenance or unforeseen disruptions. And under no circumstances would the customer be compensated for more than the value of its lost service (not lost sales).

Outsourcing providers base their business model on a suite of standardized services, so it is rare for a business to successfully negotiate better SLA terms from the provider. When negotiation does occur, it usually focuses on pricing and optional services. For example, a customer planning to engage a bundle of established services might be able to negotiate more attractive pricing.

A typical provider may offer several different service levels, alternatives (such as better technical support) and options (like ancillary software) that are all covered by the same SLA document, yet pricing may be issued through a separate quote. For example, service monitoring and reporting may not be provided with basic services, but as a supplemental service available for an additional fee.

Evaluate support and escalation options

Every enterprise relies on cost-effective and readily available computing resources, from servers that process workloads to storage that retains business data. When those resources are supplied by an independent third party, the IT outsourcing provider becomes a vital partner. As with any relationship, problems can and will arise, so a successful relationship requires a clear understanding of the way problems will be resolved. Unfortunately, this is an area where outsourcing providers and enterprise clients often fall short.

Understand what support options are available and communicate those options to your in-house IT staff. Support options are usually spelled out in the provider's SLA, but study the various avenues for support, including telephone, email, a helpdesk ticketing system, support and community forums, or even social media.

Take the time to test each support option and evaluate each response for timeliness and usefulness. For example, consider how it would affect your business if you didn't get a response for two hours even though your SLA advertises a 30-minute response time. A rapid response without actionable advice can be equally problematic.

Next, know the support escalation path. If the response from a tier-one technician is unsatisfactory or fails to solve the problem, understand how to elevate the incident to an engineer or higher-level support staff for resolution. It may be impractical to test this prior to establishing a relationship, but it's worth discussing with the provider.

Also look for proactive support communications from the provider, such as reminders about scheduled downtime or prompt explanations of unexpected service disruptions. Open communication is one of the best ways for outsourcing providers to instill confidence in their clients. Plus, it prevents unnecessary service calls.

Monitor the performance of your outsourcing arrangement

After engaging an outsourcing service provider, you should periodically re-evaluate the provider and your outsourcing endeavor as a whole.

Look for performance monitoring and reporting as integral parts of any outsourcing agreement. Make sure the metrics involved are relevant to your business needs. For example, some providers offer simple monthly service summaries, while others might furnish real-time performance metrics accessible through a Web portal.

Also evaluate the level of detail provided in any reporting -- especially exception or problem reporting. It's rare for third-party IT providers to allow complete transparency into their infrastructure, but the reporting should be consistent with your user experience. For example, if an enterprise experiences six hours of service disruption and the provider reports 99.998% service uptime, you might question the integrity of that provider's reporting. Consistent errors or oversights may signal a deeper problem with the provider's services.

Regular evaluations of your relationship with the provider can help to identify problem areas where more discussion, negotiation or clarification must occur. The typical process involves a quantitative evaluation (e.g., meeting the SLA) along with a qualitative evaluation (e.g., service responsiveness) to determine if the outsourcing relationship is worthwhile for the business. The results of such evaluations can be invaluable when it comes time to renegotiate and renew contractual agreements -- or make the decision to select an alternative service provider.

Safeguard data when changing providers

If the outsourcing provider's services don't meet expectations or if the needs of a business grow beyond the provider's capacity, the enterprise needs to have a clear roadmap for terminating the relationship. IT administrators should also have a plan in place to recover or restore the data and workloads in-house or migrate to the services of a new provider. The guidelines for termination in the SLA should include the retention and protection of content, along with guidelines for retrieving it (meaning the provider won't just delete your database).

The trick with migration is to be proactive rather than reactive. Make the decision to migrate, establish a relationship with an alternative provider or provision the resources for in-house restoration, discuss the migration plan with your new provider or in-house staff, and then terminate the current relationship in accordance with the SLA. In many cases, the new provider or in-house IT staff can work with the old provider to handle the migration.

There are times when an organization may not be able to access its content for migration -- for example, if a provider unexpectedly goes out of business. The best insurance for business continuity here is regular data protection (such as backups) accessible to the in-house staff. If the provider cannot assist in the migration process, it should still be possible to restore the backups. It is vital to include restoration and validation testing of these backups so that IT personnel know how to access and restore the backups.

Ultimately, IT outsourcing considerations revolve around the concept of relationship management. Today's IT outsourcing industry is increasingly robust, reliable and transparent, but these are characteristics that each customer must redefine and reevaluate regularly. In-house IT staff should always be positioned to switch providers when an organization needs to expand services or lower costs, or when their service provider disappoints.

Stephen J. Bigelow is senior technology editor in the Data Center and Virtualization Media Group at TechTarget and has more than 20 years of technical writing experience in the PC/technology industry. He holds a bachelor of science in electrical engineering, along with CompTIA A+, Network+, Security+ and Server+ certifications.

This was first published in December 2013

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