In-House vs Outsourced

When an organization reaches a certain size or complexity, the question often comes up, "Shouldn’t we just get an internal IT guy?".  Usually, in my experience, it’s because the only thing they’re getting from their IT provider is reactive support, billable hourly.  So, why not get someone who will be available to us all the time for one flat rate!  As a business owner, I like the sounds of that.  It also reminds me of a familiar outsourced approach.

Though I’m partial to the outsourced model for obvious reasons, just like any IT decision, this should be about what the business needs are.  In-house isn’t always a fit, and neither is outsourced.   

In-House Challenges

The Juggler

A common problem in small business IT is the singular hero who is expected to fulfill multiple personalities and skillsets.  This can work in very small or simple environments but for any company growing and thinking about a switch from outsourced to internal, let’s hold up and think about this.

Compare the financial world to IT.  Every company has a bookkeeper, accountant, banker, and depending on size and complexity, numerous other financial disciplines.  IT has many roles just like this.  You don’t ask your bookkeeper for financial planning advice, and you don’t ask your banker to do your books.

The one man show exists in the outsourced IT world too, where poorly organized service providers just pimp out one guy and leave him at a client to rot.  They present a holistic service but all you end up getting is that person sitting in the corner office, billing you hourly for who knows what.  

The biggest concern in my opinion is that for this one man hero, it is totally natural for the tyranny of the most urgent issues to rule their day to day.  As a result, this support role takes precedence and IT quickly deteriorates into a fire fighting exercise.  Even the most talented, multi-skilled person will have a difficult time carving out time for proactive work or any sort of strategic approach. 

Hit by a bus

This is a classic concern in many roles, but especially in IT.  A lone wolf is rarely driven to properly document their work, configurations, passwords etc..  because there’s no pressing need to share this information (no co-workers in their department). When there’s a lot on your plate, it’s much easier to just get things done than worry about the administrative headache of documentation.  In the event that this person leaves on bad terms, or worse, meets a tragic demise, a company could be left in a very critical state with costly consequences.  

Management

A mature outsourced IT firm will have a proven set of systems, processes, and people that make them efficient and reliable.  Essentially, this is the bones of a well planned IT department. It can take years to find the right combination, with a considerable amount of time invested in testing, implementing, maintaining, reviewing and upgrading these systems and processes.  Without the right systems in place, an IT operation can be prone to the same pitfalls of any business unit not leveraging the right technologies:  Inefficient and error-riddled manual work, dropping the ball on critical back-end responsibilities (as mentioned, due to putting out fires), no time for strategic thinking, and a resulting lack of measurability, transparency and perspective for leadership.

Solution

Obviously, the solution to these challenges is an IT department: A structured operation with multiple people in specific roles. But, until you’re at a certain scale though, it’s just not cost effective to do this in-house.

So… outsourcing is the only way?  Not necessarily, but I do think it’s the best place to start:

• Assess first:  Work with a strategy minded IT consultant to determine where you’re at, and where you need/want to be.  With this perspective you can get a better understanding of what you actually need, and how you can best meet those needs.  There’s often a lot more to it than you think, and with the right help, you should feel empowered to make the best decision when you evaluate different outsourced providers or interview in-house candidates.
• If you’re leaning towards in-house, start with an IT firm that can help you build this into your long term strategy. As you grow, they can fill in the gaps, manage your internal IT staff, and establish a reliable and structured department from the start, one that can be smoothly transitioned to an in-house team when the time is right.