Outsourcing is easy for giant businesses, but it's much harder to get right if you are a smaller company.
Mid-market organisations face a conundrum when it comes to sourcing IT services. They realise, and mostly accept, that their organisations are not a priority for large system integrators.
However, generally speaking they are more likely to find a better outsourcing experience if they do manage to engage with a large integrator: so the challenge is to find smaller IT service providers, with a mid-market focus, that can deliver best-in-class service levels.
A recent Quocirca research report, called the “Mid-market conundrum”, covered businesses with between 500 and 5,000 employees across a range of business sectors and shows the degree to which the UK mid-market relies on outsourcing.
Most organisations are more likely to outsource a given application than they were two years ago, especially utility services such as email, voice and conferencing; it is also seen as the best way for many to achieve business continuity goals.
Through doing so, mid-market organisations largely expect to procure the same service levels as their enterprise counterparts; this being true even for the smallest of organisations. In other words, second best is no longer good enough, the mid-market believes it should, and can, achieve access to best-in-class IT applications by seeking the right IT service providers.
The drivers behind this are made clear by the new research:
- Over 70 percent of mid-market employees are hands-on IT users, this rises to almost 90 percent in financial services
- The need for reliable external interaction is paramount; the average mid-market organisation now transacts with 40 times as many external users as it does internal ones, the ratio ranges from 30 in manufacturing to 50 in financial services
- All this has to be achieved with limited internal resources. Smaller organisations have on average one IT headcount for every 45 employees, with the figure rising to one IT person per 112 employees at the upper end of the mid-market
Most say that the resources they have available are not enough to support the demands placed on them; and that too much time is spent fire-fighting, for example, dealing with unexpected IT problems and compliance issues. Such distractions mean the most neglected areas are discussing IT requirements with the business, and planning innovation.
The area where mid-market organisations are most likely to say the time spent is "about right" is working with IT service providers. In other words, the ideal is to off-load more of the mundane stuff to those with the skills to do it and in doing so, try to free more time to build value through IT for the business.
To achieve this, most say they must find the time and resources to focus on four key areas of innovation within IT:
- The use of public cloud services – which is a logical extension of outsourcing
- The use of social media, especially to help drive all that external interaction
- The big data opportunity, a big part of which is making good use of the detailed data generated through transacting online
- Consumerisation, through the use of personal devices and web resources by both employees and external users
Those mid-market organisations likely to achieve the most success will be those that find the right partners to ensure they maximise the benefits in all areas of IT deployment and deliver reliable applications for both external users and employees. Few expect to find one IT service provider that will deliver all their application needs; the average number of partners worked with in 2013 has increased compared to two years ago.
Long term success will be found with IT service providers that have the necessary focus and experience. Mid-market buyers should look for proven ability to deliver guaranteed service levels for a given application; be it utility or bespoke. They should seek providers that focus on the partnership more than the contract and see the relationship as a long term investment. Find this Holy Grail and you may achieve something which only a select few report: a better than expected experience.
Not many IT service providers stand out in a frothy market. Most mid-market buyers complain that it is hard to tell the difference between one provider and another during the procurement process. Once engaged, those mid-market organisations who say their providers focus on partnership are more likely to report a better than expected experience, but only marginally so.
Still, it is clear from the new research, which was sponsored by Attenda, where the mid-market expects the focus on service providers to be. Primarily, it must be on ensuring the efficient use of IT resources whilst keeping costs under control; after this come delivering business outcomes and the ability to provide supplementary on-demand resources.
Where the partnership between a mid-market organisation and IT service provider is a success, the net result is that both raise their game. The mid-market organisation will have better, more reliable applications and therefore provide better service levels to all its users; and through demonstrating success, the IT service provider will find it easier to win new contracts and grow its business: a win-win scenario for the select few that can find it.