IT departments all over the world are face growing pressure to improve the business value of ICT by accelerating the delivery of new applications and technologies and improving service to users.
In addition, studies now find that basic maintenance and support of the existing application portfolio consumes between 50% and 80% of a typical IT department’s resources.
According to Marthinus Wissing, Business Connexion group executive for professional services, this poses a serious bottleneck to new developments and improved services that could enhance an organisation’s competitive position.
Furthermore, he adds, many organisations depend on software that they may not be equipped to optimally use, with the result that they may:
* Misallocate resources;
* Waste time;
* Lose capital;
* Produce inferior products and services; and
* Ultimately experience business stagnation or decline.
“Outsourcing the management of established business applications is widely recognised as an effective strategy for meeting this challenge,” says Wissing. “It enables the business to better manage the human and financial resources required to support current applications while positioning it to realise competitive advantage through the implementation of new technologies, enterprise applications and Web-enabled business applications.
“Most organisations are either considering some form of outsourcing or contracting with outside vendors to supply ICT infrastructure management services traditionally provided by in-house staff. In fact, the acceptance of outsourcing as a business strategy now extends well beyond ICT, with outsourcing of business functions like customer service, human resources, and finance and administration projected to grow up to 30% in some countries in coming years.
“As a business strategy, outsourcing is consistent with the drive to introduce new technologies. No longer viewed exclusively as a tactic to reduce ICT costs, it is increasingly adopted as a means to effect rapid, significant change and improve business results. Given its strategic value, it is good management to understand and consider the options, benefits, and potential risks associated with outsourcing.
“Although outsourcing ICT infrastructure management services provides a means to gain competitive edge, businesses can even go a step further by implementing application outsourcing,” says Wissing.
According to top IT industry watcher, Gartner Group, there are a number of trends driving the outsourcing of application management. The costs of application development and management have been a major driver in the past. However, organisations are increasingly seeing the need to concentrate on their core businesses as the environment becomes more competitive.
Wissing adds: “Application development and management is a highly complex task. Application outsource specialists are better equipped to perform this task based on experience, and can offer economies of scale.
“The pressure is also on IT departments to identify how ICT can optimise their businesses. The focus is moving towards the business value of ICT-based solutions, rather than the technology itself. The implementation of such strategies at a technical level will increasingly be outsourced to specialists.”
Gartner forecasts a future significant decline in the use of technical ICT specialists by corporates and a corresponding increase in the use of generalists with the ability and vision to identify and define IT-driven business opportunities, but not to do the actual implementation, which would be outsourced.
“Corporates, who have already outsourced their IT infrastructure management, will also generally increasingly be attracted to application outsourcing as well,” concludes Wissing.