"Save money" is not a strategy

Many companies that Quocirca talks with have been hit hard by the recession and general trading conditions. This has forced many of them to work against a reduced overall capital and operational budget with IT hearing the standard call from on high to “save money”.

For many, this has driven them to look at outsourcing in one way or another. The thought process tends to be that an outside company must be able to carry out more cheaply the functions that are already done by the internal company, mainly because the internal way of doing things has been sub-optimal for so long.

So far, so good – in many cases this will be the true. But the next part is where it often goes wrong. What is seen as the next logical step is to find a supplier who can carry out the functions or supply a facility, platform or service for less. This may be a tactical means of surviving for longer, but as a strategy, it is more often than not doomed to fail.

If the only approach is “save money”, the supplier already has constraints applied to them.  They know the maximum amount that the customer will be happy with, and they have to cut their cloth appropriately. If there is insufficient margin for them, they will have to look at where they can make savings, which may be around support, providing critical advice such as when it is right to upgrade or change platforms and so on. Even worse, if the customer has been doing its cost-based homework to start with, many of the suppliers who should be on the list due to their capabilities will have already been dropped, leaving ones with less capability to match the customer’s needs.

What if the customer takes the opposite approach of trying to find the supplier that best fits with the business's needs? The initial, knee-jerk response will be that this will lead to suppliers who are just too expensive – but it need not be so.

Consider a case of moving from an in-house datacentre to a co-locational one. There are plenty of co-location providers out there who are “cheap” – they use re-purposed buildings retrofitted with adequate cooling, along with UPS, failover generators and redundant networks. Sounds fine, doesn’t it?

The decision has been made to move to one of these cheap co-los. Equipment is moved into a cage provided by the co-lo company, everything is set up and off you go. The switches are thrown – and a relay flips. Unfortunately, the co-lo had not adequately provided for such a high density of power per square metre, and could not supply your needs. You spread things out a bit and all is well – until one of the network providers to the building goes bust and the other has issues. Now you don’t have connectivity. Or there’s a power interruption and neither the UPS nor the backup generator is sized correctly to maintain the overall facility. Or a hot spot goes unnoticed, and eventually systems have to be shut down after gas suppression has been set off. There are far too many weak links in the chain here.

How about going for one which is fit for purpose? One where the facility is continuously reviewed as to how well it can meet the needs of the total facility and at a granular level of cage, aisle, rack and even machine. One where multiple redundant external network connections are maintained and managed to ensure that connectivity is guaranteed. Where security comes first, at both the physical and technical levels and your environment can change and still be supported by the facility – not one where a required change may lead to the need to swap facility.

The second approach may cost a little more upfront, but over a lifetime of use it will be considerably cheaper due to its less adverse impact on the business, in enabling greater flexibility and in working with a facility owner who knows that it is in their best interest to work with you, providing advice on best practices in building a platform within a shared facility, who can advise on what other functions are available within the facility and how you may be able to use them through super-fast interconnects and so on.

Quocirca believes that if you go for any form of outsourcing for price reasons alone, it will cost you dearly. However, if you go for outsourcing based around business needs and a fit-for-purpose provider and capability, the savings will happen naturally.