Posts Tagged ‘CFO’

Selling Managed Services to the CFO

August 28, 2012

It can sometimes be very difficult for IT Managers, CIOs and other Senior Managers within the business to get the CFO’s buy-in for an IT project. Many find it even more challenging when they are considering proposing a Managed Service model, where a third party manages the IT Service Desk or parts of it, taking over an in-house function.

The CFO wants to know what the benefits are, especially in financial terms: how does it save us money? What are the risks involved? And finally, why would using a provider be better than doing things in-house? Luckily, it is not difficult to show the return on investment of this sourcing solution if all the factors are accounted for.

Often, the perception in the market place is that a managed service trades in-house knowledge and control for greater cost. This is particularly the case when the organisation does not present the correct business case and/or is unaware of the true expense of its IT Service.

With this in mind, the very first step in preparing the business case for the CFO to review is consider all the financial implications of having an in-house solution. Armed with this knowledge, one can now consider the business case profile for the CFO.

The first and most tangible benefit of a managed IT service is cost. Expenditure related to managing the IT Service Desk can be extremely variable: it includes HR costs, sickness and holiday cover and training, as well as the design and implementation of new strategies and best practices to ensure service efficiency and continual improvement.

With a managed service, all of this becomes a fixed monthly cost, smoothing out the expense and providing known, quantifiable out-goings. It also lowers the risk profile of the service to the business with defined Services Metrics and the Managed service providers taking on the absence cover and staff training.

There is often a general apprehension amongst companies in having a third party take care of an internal function, particularly one that is viewed as the face of IT to the rest of the organisation. It is important to note that, with a managed service, the organisation always retains a level of control over the outsourced function, which allows them to focus on strategic business decisions, rather than grappling with the day-to-day management of the service desk.

Unlike full IT outsourcing, in a managed service the organisation normally retains ownership of all hardware and software, as well as locating the service desk within their premises rather than elsewhere. The organisation sets the Service Level Agreements (SLA) and if these are not met, there will be consequences – normally a fine and, in the long term, the non-renewal of the contract. These SLAs are constantly refined and honed as the business grows and changes.

It is easy to see that, in the end, it is the service provider that risks the most. If they fail, the organisation can find another provider or return to in-house provisioning, but they will damage their reputation and this affects their chances of getting new clients in the future.

Additional benefits include the immediate access to skill-sets and expertise which may be in short supply or not present internally. A fresh approach can result in spotting inefficiencies and improvements that internal staff are used to and don’t see any more, or alternatively are trying to cover up to defend their work and decision-making.

All in all, a managed service is a cost-efficient solution that can increase an organisation’s competitive advantage. There are different models which can be adopted: an organisation might only outsource its helpdesk or desktop support staff, the out-of-hours function, or use the provider for its flexibility in providing an amount of temporary staff for seasonal increase or holiday and sickness cover.

With the right model, tailored to the organisation’s specific needs, IT can become a cost-saver and a real value-add. Managed Services can not only support the business but also help it grow, flexing with the needs of the company and allowing the CFO to invest finances in other areas and projects without having to worry about unexpected IT support costs any more.

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Jennifer Grant, Service Delivery Manager

This article has been published on Service Management: http://bit.ly/Om1Y7r

Just how much of a saving is the reduction of heads from an IT support team?

March 20, 2012

ImageIn a bid to meet the demands of an FD who needs to see cost savings across the organisation, often it’s a portion of an IT team that have to go.  On the face of it, it’s an easy choice.  Those within an IT team will often perform the same functions as one another, therefore, if one or more leave the team, it can still perform all its required tasks, albeit a bit slower than before.

But what might not have been considered in such decision making is the organisation’s profile of staff’s expected IT skills and the speed-of-service demands.  If the two are considered together, an optimal ratio of IT staff to company staff can be derived which can be used as a benchmark against any planned reductions in heads.

Definitions:

Staff’s expected IT skills – Some business environments may have a low expectation on its staff in terms of their IT skills.  A law firm is a good example as it’s more beneficial to the organisation if their legal teams are fee earning (by practicing law), instead of being able to clear their own printer jams.  Other organisations, perhaps a software house, will have employees who are more than capable of dealing with common IT issues.  In these examples, the law firm is clearly going to need a greater ratio of IT support people to staff members than the software house.

Speed-of-service demand – An investment bank, or indeed any organisation that is wholly reliant on IT to trade, will tolerate only the most minor of IT interruptions, whereas some business types might be able to suffer IT delays for hours, or even days, without any particular impact on their business.  Those with the need for greater speed of service, or even immediate need for service, will require a greater ratio of IT support people to staff members compared with those that don’t.

If these two aspects of a business’ IT culture are considered together, one can begin to determine the optimal number of IT support people to staff members.

For organisations with a low expectation of staff’s IT skills, but who need rapid IT support, a ratio of 1 support person to every 50 members of staff, might be appropriate.  The other extreme, high staff IT skills coupled with lower speeds of support, may lead to a ratio of 1 support person to every 200 members of staff.

Then, if there is a need to cut heads, a more informed choice may be made, i.e. just how many heads may be lost without: a) requiring the established IT culture to change, or b) having a detrimental impact of the organisation’s ability to trade?

Of course, this thought process and logic need not only apply to difficult times, when reducing costs is a priority.  It can apply to times of business success and be used as a means of determining the best IT support fit for the business.

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Jon Reeve, Principal Consultant