Sometimes the hardest part of outsourcing involves not the why or the who, but the how and the when.
Why do you want to outsource your IT operations? That's a tough question, but it often involves your bottom line, and a cost-savings analysis can help you figure out the answer. Even more difficult to figure out is whom you're going to outsource to. You can pour over RFPs and crunch all the numbers you want, but sometimes it just comes down to whom you feel most comfortable with — whom you trust (and who will be able to satisfy your bottom line too).
But, once you've figured out why you're going to outsource and whom you're going to outsource to, how do you get started? What's the best way to swap out one entire IT system for another? How do you let your IT staff know about your decision? How are you going to keep track of everything while at the same time making sure your business continues to run smoothly? Those, sometimes, are the most difficult questions.
Henry Svendblad knows how hard it is to move from the planning stage to the doing stage. Last year his company decided to outsource its IT operations to vendor CenterBeam Inc. Mr. Svendblad is the vice president of information technology and business systems for ChartOne, a privately held technology company that provides on-demand medical records and services to healthcare providers. ChartOne counts 1,500 healthcare customers, 10 different offices and about 1,600 employees.
In July ChartOne decided it needed to outsource its IT functions. Mr. Svendblad said the company wanted to outsource to save money and focus on its core competencies. However, there was more to the company's reasoning: ChartOne also wanted to relocate its main offices from San Jose, Calif. to locations in Irving, Texas and Burlington, Mass. Although the two actions at first seem unrelated, Mr. Svendblad explained that ChartOne's office relocation would give it the chance to make a clean transition from an in-house IT system to an outsourced IT operation.
"When you're opening up a new office, people don't have any preconceived notions about how support is done at the company," Mr. Svendblad said.
The reason for ChartOne's move was the same as its reason for outsourcing. The high cost of living and the high cost of payroll in San Jose, CA — situated in the heart of Silicon Valley — were hard to maintain. ChartOne decided to move much of its technical functions to Irving, where both are much less expensive. Mr. Svendblad said most of ChartOne's upper management, including Mr. Svendblad himself, would relocate to Burlington, where many of the company's C-level executives already lived and were working from home.
Mr. Svendblad said that, although it was a complicated balancing act coordinating an office move and an outsourcing agreement was ultimately a good decision. He said synching the two events made for a clean, succinct transition.
–> TIP #1: If you're ever in a position to make a major change in your office — be it a move or some other event — consider orchestrating it with an outsourcing transition. But expect a rough few months.
When ChartOne reached the decision in July to both outsource and to move, it had little time to coordinate both events. The company's lease was up in October.
"We were working on a very short time frame," Mr. Svendblad said.
That's when CenterBeam stood up to shine. ChartOne signed an outsourcing deal with CenterBeam at the end of July, and wrote its moving requirements into its contract with the company. Under the terms of the agreement, ChartOne would outsource its help desk services and computer monitoring, management and software distribution functions — everything up to and including its Windows operating system needs.
Under the specifics of the contract, ChartOne required that CenterBeam have the Irving office up and running by Oct. 4, 2004, when the new office was scheduled to open. The company's other offices were to go online within the next few weeks. CenterBeam was tasked to get the Irving office's network up, its computers connected and its workstations configured, as well as provide an onsite help crew to smooth out any glitches during the first few days.
However, one thing that CenterBeam did not cover was the management of ChartOne's telephone service. Mr. Svendblad said that the company had to find a separate vendor for its telephones, one that would take over at the time of the move.
–> TIP #2: Moving while transitioning to outsourced services adds one complicating factor: Does your service provider have experience in setting up a totally new infrastructure? Find out early on if it's capable of handling all aspects of the move or whether there areas where a second provider will need to be called in.
"We did sort of a green-field deployment" at the Irving office, Mr. Svendblad said.
At the end of August, ChartOne crossed the last t and dotted the last i on its contract with CenterBeam. After finalizing the contract, the company knew it was now time to tell its IT staff of its decision.
"We didn't tell them we were going to do it until we did it," Mr. Svendblad said.
On Sept. 13, ChartOne gathered its staff in San Jose to announce the move. The IT staff was led to a separate room where they were told of the company's decision. Mr. Svendblad said the company's IT staff was offered a 60-day retainer, but he said things started to go downhill soon after the IT staff found out they were losing their jobs. He said that since they knew they would soon have to look for work elsewhere, their productivity took a sharp downward spike.
"It was pretty difficult from a management perspective," Mr. Svendblad said.
–> TIP #3: Waiting until the last possible minute obviously has advantages and disadvantages.
On the plus side, the operational turmoil created by a staff in upheaval will be contained. On the minus side, a lack of upfront communication by management will always have negative consequences. (And until that transition is 100% finished, you'll need to rely on the people who are now mad at you. Even hefty severance bonuses — while pacifying to some degree — won't cure that.)
Mr. Svendblad said ChartOne kept its San Jose office open for several months after the opening of the Irving office in order to complete several necessary projects. However, the workers who remained in San Jose were not transitioned to CenterBeam's IT system. Mr. Svendblad said CenterBeam charges an upfront startup fee for each new worker who transitions to its system, so ChartOne decided to avoid "double dipping" since the San Jose office would eventually shut down anyway.
Oct. 4 rolled around all too quickly, Mr. Svendblad said, but the Irving office opened as scheduled with an initial crew of about a dozen. However, it took several weeks for ChartOne to fully transition all its IT functions to CenterBeam. Mr. Svendblad said ChartOne's e-mail system remained in San Jose for several weeks until CenterBeam could take it over. Further, help calls in Irving and Burlington were redirected to CenterBeam immediately upon the move, but help calls in San Jose and other offices were redirected to CenterBeam several weeks later.
"It would have made sense to have all the backend systems ready" at the same time, Mr. Svendblad said. "A lot of our services were still out of the San Jose offices" immediately after the Oct. 4 move.
Mr. Svendblad said that for the few weeks following the move, things were in a controlled state of chaos. Since some systems moved over to CenterBeam immediately but others weren't transitioned until later, it was unclear for a few weeks exactly who was responsible for what. And in an indication of the turmoil, Mr. Svendblad said ChartOne's total number of IT help calls rose from an average of 200 to 300 per week to 500 per week during the move.
Download the ChartOne IT Support Case Analysis Report for a sample of the kinds of stats CenterBeam makes available to its clients. You'll find the link to that in the Useful Links list.
In hindsight, Mr. Svendblad said it would probably have been better to get all of ChartOne's IT systems transitioned to CenterBeam at the same time. However, ChartOne didn't have the time to synchronize everything exactly and instead had to drag out the process over the course of a few weeks. Nonetheless, Mr. Svendblad said that despite the chaos he still believed matching the move with the outsourcing transition was the right decision.
–> TIP #4: Don't expect that overnight your company will be able to move from one set of staff, processes and systems to another set of staff, processes and systems.
Users just don't make transitions that quickly.
Interestingly, a few things did get lost in the shuffle. Mr. Svendblad said that ChartOne's in-house IT department had handled the purchase of computer accessories like keyboards and mouse pads. After the transition to CenterBeam, those requests went unanswered for weeks since CenterBeam hadn't been tasked with that function. Once ChartOne discovered the situation, the company moved such requests to its purchasing department.
Outsourcing can be a complicated, convoluted process, and it can be hard to keep track of every little thing. Mr. Svendblad said it's important to cover all your bases during the planning stages, but you have to also be prepared for unexpected problems. (One can only hope your problems are as innocuous as some unordered keyboards and mouse pads.)
In order to keep track of potential problems, Mr. Svendblad had CenterBeam keep a list of problems and concerns fielded by their help desk. Anything the company couldn't fix it wrote down on the list. Mr. Svendblad then set about setting up a troubleshooting guide for CenterBeam with answers to the list of problems and concerns. Mr. Svendblad said CenterBeam had initially asked for the process to work in the reverse — it wanted a troubleshooting guide when it first came on board. However, Mr. Svendblad decided it would work better if CenterBeam kept a list of problems and concerns, and then ChartOne would know exactly what issues it needed to deal with.
–> TIP #5: Even if the service provider wants you to set up a troubleshooting guide with answers to problems and concerns to refer to during the transition phase, turn the equation around.
Set up the troubleshooting guide — and continue updating it — as you figure out what the real problems are. Get documentation on those problems from the provider itself.
Mr. Svendblad admitted that October was a tumultuous time for ChartOne. The company relocated its headquarters and outsourced its IT functions all at the same time — without much time for planning. But he said it ultimately worked out for the best.
If you're thinking about outsourcing your IT functions, consider timing it with some other major corporate event like a move or relocation. Sometimes your best course of action is to acknowledge the misery to come and just get your hands dirty.
An 8-page sample of a ChartOne IT Support Case Analysis report, generated through CenterBeam’s dashboard functionality (a 970 kilobyte Adobe Acrobat PDF file).
ChartOne IT Support Case Analysis Reports.pdf
IT Cost Assessment. This spreadsheet, supplied by ChartOne and modified by Sourcingmag.com, allows you to evaluate the expense of moving your IT operations to a new geographic location and (possibly) to a service provider by evaluating salary differentials, hardware and software expenses, upcoming projects and miscellaneous expenses related to the move.
IT Cost Template (ChartOne-CenterBeam).xls