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What should you insource?

A lot of government departments I talk to are now looking to insourcing as part of their future infrastructure and end-user computing strategies. Arguably, there has never been a better time to do this, led by the greater control and reduced support overhead of SaaS and PaaS services.

However, the transition has always been the hardest part of any outsourcing project. To do this with a fledgling internal team can be very challenging. Success is reliant on deciding which elements IT provision you can realistically bring inhouse (whilst keeping all the other plates spinning), and which are better left with your suppliers.

We have a simple model and mantra to answer this question.

If you consider your infrastructure support functions in terms of value to your business and expertise, versus the scale of the resource requirement, then you end up with a picture like this:

The elements of your team that have the most business knowledge and expertise are also smaller functions requiring people. As you move down the diagram from expert functions to process functions such as support desks and field engineering, you need more people.

These process functions tend to be less specialised to your business so there is a clear economic benefit in using large suppliers that can leverage these larger teams across multiple customers. However, moving back up the diagram, the higher functions command significant knowledge of your business and control of the services that underpin it, as such these are the prime areas for insourcing.

We summarise this as simply "Insource the Intelligence, Outsource the Factory Process". Where you bring the control into your organisation whilst still enjoying economic benefit of large leveraged service desk, support and field engineering/deployment functions.

This can be shown by where you draw your service boundary on the model. Draw that boundary too high and you hand you lose organisational control and capability, leaving your business beholden to your outsource provider. Draw it too low and you miss out on the economies of scale these providers bring, while also having to stand up a large organisation internally, face higher operating costs and undertake a complex transition.

This can be seen in some government departments where current service issues reflect the fact that the last generation of contracts outsourced too much and the tension that created is leading to a "snap-back" toward total (or vast majority) insourcing.

To borrow a term from astronomy, we believe the Goldilocks Zone lies where organisations take control of their own digital & technology governance, strategy and have some degree of administrative rights and access to configuration. This prevents loss of control and knowledge from your organisation and for all but the largest and smallest organisations, strikes the right balance between maintaining control and getting value from money from supplier economies of scale.

How do you insource?

The simple answer is “from the top down”. Start by taking control of your IT/Digital governance, strategy and roadmap and ensuring the technology decisions are steered according to your organisational objectives. Then as your capability grows, take on functions such as solution assurance, strategy and architecture and then technology service administration/ownership.

This brings control back into your organisation and grows your internal capability in a gradual fashion with the biggest benefit delivered early.

So why am I sharing this?

The simple answer is we offer services to help make this happen.

Not only can we help you draw the line in the right place for your organisation. We can also help develop your insourcing roadmap, prioritise services and support the exit of large and complex contracts.

We do this with an Insourcing Transition Service, which not only helps planning, but can also build your internal capability and support you through the tricky transition period.

This service is the opposite of “Land and Expand”. We provide the capability to help you plan and execute your own insource, but contract at the same time for our service to ramp down as we build your internal capability. We leave you with an insourced capability and seek to remain a partner that can help with any future bursts in capability and capacity that your strategy may require.

If you are serious about taking back control of your services, data and destiny, but need to mitigate the risks and ensure you take on a realistic challenge. Please talk to us about insourcing transition or take a look at the public sector version of this service on Digital Marketplace.


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