Opinion article of José Leal e Silva, Executive Director – Bee Engineering
Every business has its challenges and one of the most transversal is how to handle all the underlying Information Technology (IT) needs for the business to run and prosper. There are demands for new products, new developments, maintenance or just plain corrections that must be made every day, and the solutions are as many as we can imagine.
It is possible to hire full or partial time employees or outsource this service, and it is precisely when the outsourcing occurs that many questions arise. Should I subcontract Time and Materials and control de outcome? Should I do a Full Outsource? Should I use Managed Services or Turn-Key? Should I subscribe a Prepaid Hours Pack, or even a mix of all of these?
The biggest issue is how to find the best possible solution according to the company’s present needs, at the best possible price with the best possible delivery. Just for this process, many companies would need to hire a specialized person to decide.
First, it is crucial to understand what is behind the different types of services, not just the name, but what do they really mean when in place, because in this area, sometimes, the same name is used with different meanings. Let us try, in a few sentences, to clarify this.
It all comes down to the balance between responsibility versus risk, so if a company wants to outsource all the risk, it also outsources all the responsibility in managing the service. This might lead to a delivered service which is not the intended scope and therefore, the key issue is to be prepared to go down to every detail in describing what is needed. With this scenario, the company also loses flexibility, because a change along the way means new assessments, new proposals, change requests and more investment/costs. This would be the Turn-Key model.
On the other end of the spectrum lies Outsourcing Time and Materials, where the company agrees to pay an amount amount (by hour/day/month) for the service of a specialized consultant with certain skills, but all the management risk remain on the company’s side. It is the most flexible model because the company can change their mind/scope about the project/service at any given time, but if control is not in place, it will end up consuming the whole budget, without having accomplished what was needed.
A good way to choose is to find the balance between the internal team skills and the external team skills.
If the company does not have knowledge at all in IT, then Turn-Key, Full Outsource / Managed Service is a good option, because the company can focus itself on the core business and leave the IT to those whose core business is IT. But it is crucial to know exactly what the company wants to achieve with the project / service to be outsourced.
On the other hand, if the company has a good skilled IT team, which already developed, and maintains current systems, Time & Materials could be a good option because it is an easy way to bring knowledge or work force into the company for a specific amount of time, at a low risk.
All the other situations need to be analyzed one by one. There is not a magic recipe to that works every time, but mixed models such as Hour Packs, or Turn-Key for new features and Time & Materials for support or ongoing developments, could be an option.
What about your company. Have you looked at IT Costs vs Impact on your business? Are you using the best possible solution? The pandemic has closed many doors, but has also opened many windows. For example, some companies, which were forced by contract agreements to travel to different countries in Europe to deliver the service, are now forced no to do so, but still have to deliver value. The key issue is in finding the right IT company with the right people and build with them the needed trust to make everything work.
In fact, IT Business is not so different from every other business. It all comes down to trusting the people we work with.
