Outsourcing Trends

Recession Obsession

If you’ve been alive 10 years, you’ve been through a recession – the Great Recession actually.  If you’ve been alive 20 years, you’ve been through two recessions.  30 years on the planet will give you…you guessed it, three recessions.  Although recessions do seem to be cyclical, they don’t always happen every 10 years. Over the last 50 years, there have been 7 recessions.

Gas Lines and Baby Food Jars

RecessionThe ramifications of a recession also change over time. Being 53 years old, I recall my grandparents saving every coffee can, baby food jar, and plastic container to repurpose and use for storing things throughout the house.  As products of the Great Depression, they were raised to literally save everything.  I can also distinctly recall having to wait in long lines for gas during the recession in the 1970’s.  My father and I would park the car in line at the gas station and go to the nearby strip mall to kill time for two hours while we waited for the line to move.

Although not a recession, I recall Black Monday in 1987 when the stock market dropped over 22%.  I was working at a financial planning firm at the time and that was not a good day, and not just because it was Monday.

Dot Bomb Bubble Burst

In the early 2000’s, the dot com bubble burst, and turned into the dot “bomb”.  It seemed like anyone with a web-based idea was given millions of dollars in funding without having to show any DownGraphprofits (a scenario which still occurs today).  eToys.com, Webvan.com, Pets.com, and many more all wiped out almost overnight.

Most recently, we can all recall, if not relate, to the Great Recession that occurred in 2007-2009 when the housing bubble burst due to the subprime mortgage crisis.  The term “government bailout” became a major thorn, and the nemesis for many household brands.  Many are still recovering from this economic meltdown. However, the prosperity over the past 10 years has dulled some of the sting.

But, some are now warning us that the great run we have enjoyed may be slowing down, and we’re potentially headed for a recession.  Search Google for “Recession 2019” and you’ll find blue-chip names discussing the very likely possibility that a recession is looming.

Before it's too late!

CrisisI have owned a technology company, Fluid IT Services, for the past 17 years, and we felt the impact of the 2007 recession – but in an interesting way.  We provide IT solutions and support for small to mid-sized businesses, and the cost of our services is typically less than the cost of one full-time employee. Although we lost the clients who unfortunately went out of business, we gained new clients who needed to cut costs and couldn’t afford full-time IT staff.

We certainly had to cut costs ourselves and manage everything more tightly, but we were okay because our risks were spread sufficiently, and we provide a service that is “recession friendly”.  We continued to grow as the economy improved, but always with a keen eye on our market segment and the economy as a whole.

As the economic signs, signals, metrics, statistics, etc. started showing a downturn, we’ve used it as an opportunity to get our business in order.  It’s much easier to evaluate all your people, processes and technology-related costs, and make sure that your business is operating as efficiently as possible, before things go south.

Every company has and uses technology (IT) constantly. Most companies today wouldn’t be able to function without IT.  But, when times are good, costs related to IT (and other business functions) may not be closely monitored because sales and revenue can cure many ills.  However, it’s best to ensure your IT house is in order before the times get tough and budgets get tight.

Start by asking questions

An analysis of your current IT spend at a detailed level, may be as exciting as watching paint dry, but it’s crucial when dollars tighten. IT cost analysis can also be difficult. Even knowing which items to include when analyzing your IT spend can be confusing. I’ve found that it’s easiest to start by asking questions…

  1. What are my costs for internet, phones, software subscriptions, IT support, computers, etc.?
  2. What hardware needs to be replaced soon? How much will it cost to replace?
  3. What costs can be reduced or eliminated?
  4. What costs are a bare minimum to keep the lights on?
  5. When was the last time I evaluated all my contracts related to technology and what are the terms? Being locked into an expensive 5-year contract at the beginning of a downturn is no fun.

Good news...

We can help! At Fluid, we help companies analyze their IT costs almost daily. So, we already know where most of the IT costs are found, where the skeletons are buried, what is reasonable, and what is outrageous.  As a provider of outsourced IT services for small to medium businesses, we have to know these costs because we’re responsible for managing them in order to be a good steward with our clients’ hard-earned money spent on IT.

We also take it one step further by using a more proactive and strategic approach to IT. We will hope for the best, but also help you plan for the worst by discussing current and future business needs, goals and “what if” scenarios. Once we have this information, we can provide guidance on ways to cut IT costs and suggest solutions that will generate revenue, and specifically align with each clients’ business plan.

Don’t be afraid to say you don’t know and bring in experts to help you understand your costs.  It will reap rewards now and help you sleep better when economic conditions do change.  Feel free to call Fluid IT, we love this stuff!  Our main objective is to help people with their businesses and see IT in action!

How 20 Minutes Can Save Your Business: 4 of 4

In my previous post, I promised 4 topics that if considered may make you re-think outsourcing IT.  We started with the specialized knowledge required to keep IT running smoothly for a business today.  No one (or two) person will have it all.  If you missed it, check it out here.  Next we covered the strategic role IT should play in your organization.  Here's #2.  In my third post, I covered reducing risk.  Sometimes we don't consider how much key-person risk we have in our businesses.  This post will help you consider that. Today, I'm going to focus on cost.

Reason #4 - Cost is King: Why Managed Services are MORE Affordable

For small businesses, costs are a critical measurement. The cost to maintain an internal employee’s technical acumen can be monumental. Salary, workers compensation, benefits, and payroll taxes are not cheap. Small companies do not have access to healthcare discounts that large enterprises can harness. Adding regular and expensive training for an IT staffer is a significant increase to those costs. Every course sponsored by your company makes an employee more valuable on the open market. Every course neglected creates risk for your business.

If you are making investments in hardware to maintain an on-premise environment, what happens in the event of an economic downturn? There is no better example than that of the ever-changing Oil and Gas industry. I have seen large infrastructure investments made during a growth period, followed immediately by a downturn. Many found themselves paying for hardware they can no longer utilize effectively.

All things considered, outsourcing IT is less expensive than the cost to maintain a full-time employee. If your industry is facing a downturn, a managed services agreement allows you to scale down. When you experience growth you can easily scale up. You gain access to a team of experts instead of relying on the expertise of one person or a small team. A recent Gartner study cited that 80% of small business would “realize significant savings from outsourcing e-mail management alone.” Imagine the savings in outsourcing other technology components.

Bottom line: If you own or operate a small business you should be evaluating IT outsourcing. A 20 minute conversation might just change your life.

 

How 20 Minutes Can Save Your Business: 3 of 4

In my previous post, I promised 4 topics that if considered may make you re-think outsourcing IT.  We started with the specialized knowledge required to keep IT running smoothly for a business today.  No one (or two) person will have it all.  If you missed it, check it out here.  Next we covered the strategic role IT should play in your organization.  Here's #2. Today, I'm going to focus on reducing risk.

Reason #3 - Taking the Stress out of Taking Vacation (Reducing risk)

What would happen if the only employee familiar with your IT environment resigns? Or just goes on vacation? What is the procedure when a server goes down in the middle of the night? Would anyone notice before business was disrupted the next day?

When a small company chooses to use a managed service provider, these questions are no longer relevant. You are not impacted by the loss of an employee or having to scramble when they go on vacation. If a business-critical system goes down, you will be notified and it will be handled quickly. If the power goes down on site your systems are not impacted (depending on your level/type of service). If your company is subject to compliance requirements, you don’t have to worry if you are meeting them. For many businesses, managed services provide peace of mind and value that more than compensate for the cost.

Have you taken a hard look at the cost of a full-time IT employee? Read the last of this series, Cost.

 

How 20 Minutes Can Save Your Business: 2 of 4

In my previous post, I promised 4 topics that if considered may make you re-think outsourcing IT.  We started with the specialized knowledge required to keep IT running smoothly for a business today.  No one (or two) person will have it all.  If you missed it, check it out here. Today, I'm going to focus on the strategic support you get from the right IT partner.  IT should be a business enabler, not a cost center.  The right partner will provide that support.

Reason #2 - From Password Resets to Profit (Setting an IT Strategy)

If you currently have a full-time IT employee or team, how often do they approach executives to get input on how to better support the business using technology? Based upon experience, my guess would be not very often. Smaller IT shops typically do not have the time to keep all of their systems up to date (not to mention password resets, break/fix, email issues), much less consider how to make the technology profitable. The most valuable function an IT organization can provide is not just keeping the lights on, it is enabling the business to grow.

Outsourcing your IT to a managed service provider gives you access to consultants that will work to align technology with your business strategy. Some even provide virtual CIO services, such as planning a technology roadmap, developing an IT budget, and analyzing and reworking business processes.

How are you mitigating the risks associated with maintaining an IT environment? See our next installment on Reducing Risk.

 

How 20 Minutes Can Save Your Business (And Your Sanity)

You are busy, I get it. There is not enough time in the day for you to finish the tasks on your plate, much less extra time to evaluate new technology options. Whether you are part of a small internal IT team or your company has added IT maintenance to your ever-growing list of responsibilities, Fluid has you covered.  There are 4 key reasons to consider outsourcing IT that you may not have thought of in the past.  I'll cover these reasons in a 4-part series.  So if you have 20 minutes, read on and we might be able to change your IT life!

Reason #1 - Specialized Knowledge

I recently participated in a meeting with a potential managed services client whose IT staff consisted of two full time IT employees who both left the company unexpectedly. The reasons they exited are common in small business, though are not often considered in decisions regarding outsourcing. For one employee, the responsibilities were just too overwhelming and they could not handle the workload; the other believed that they did not have a vertical career path. Unfortunately, most small companies cannot afford IT employees with the depth and breadth of knowledge required to adequately run an entire IT environment. Many of the good ones don’t stick around because they are offered more money for their skills by larger companies. The damages left in the wake of their departure were systems and hardware that had not been updated in years, creating significant risk for this business and few options to resolve the issues quickly.

With the decision to outsource, you leverage the collective knowledge of a much larger IT organization. You receive the benefit of much broader coverage, access to expertise and skills you would not have otherwise, and reassurance knowing that critical systems will be maintained consistently.

Are you getting the strategic guidance that you need to grow your business? Check out the next installment on General Business Consulting.