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Slide 1: Why Outsource Application Management? By Chuck Vermillion CEO & Founder
Slide 2: Application Management Companies typically find the demands of application management overly complex. As a result, more and more companies are turning to outsourcing application management functions. The fundamental value proposition offers service improvement and cost reduction from sharing the outsourcing provider’s technical resources. Even in challenging times, organizations need to maintain application management at peak performance levels. Finding ways to cut costs and still provide high service levels remain a top priority of senior executives. One area where they can reduce costs, while continuing to serve the company, is through outsourcing application management.
Slide 3: Application Management For companies of all types and sizes, the demands of application management frequently divert resources away from core business functions. Company-wide applications, like Enterprise Resource Planning (ERP) systems, are so ingrained within companies that little productivity can take place without them. These applications are complex, expensive and require specialized resources to properly manage them. As a result, more and more companies are turning to outsourcing application management functions. The fundamental value proposition offers service improvement and cost reduction from sharing the outsourcing provider’s technical resources.
Slide 4: Simultaneous Service Improvement and Cost Reduction Reduced system downtime is a major contributor to service improvement in an outsourcing scenario. An outsourcing provider’s specialized application expertise, proven internal processes and diverse experience help ensure high levels of systems availability. Another important way outsourcing improves service and reduces costs involves application implementations. When companies take on enterprise application projects, they risk cost and time overruns. These overruns deplete the resources available for core business functions and delay the benefits of the project. Outsourcing application management eliminates these risks and provides predictable, regular costs.
Slide 5: Sharing the Cost of Technical Resources Sharing the cost of technical resources among multiple businesses almost always reduces costs for outsourcing customers. A recent IDC study of 54 outsourcing customers found an average return on investment of over 400% and a payback time of less than six months for almost half the participating companies. Using an outsourcer’s technical specialists, especially those not required on a regular basis, highlights the fundamental economy of scale associated with application management outsourcing. An outsourcing provider can justify numerous specialists and distribute the cost over many customers. Most individual businesses can’t begin to justify the cost of the expertise they need. Because organizations often can’t afford to employ all the specialized resources required, they hire generalists to fill in the gaps. This approach not only diminishes the return on investment for the ERP system, but also produces lackluster results, creates stability issues and unnecessarily taxes the IT staff.
Slide 6: Leveraging Outsourcing for Real Business Benefits Outsourcing convincingly improves systems availability and eliminates the need for costly in-house specialists. But, customers also benefit from: Current Technologies and Expertise. Application management outsourcers must keep up-to-date with advances in technology to best serve their customers. Enhanced Security and Disaster Recovery. Maintaining a secure environment protected from all types of threats is critical for both the outsourcing provider and its customers. Reduced Risk with Regulatory Compliance. An outsourcer’s SAS 70 Type II compliant environment can assist the customer with Sarbanes-Oxley audits
Slide 7: Leveraging Outsourcing for Real Business Benefits Increased Agility. An important factor in a company’s ability to recover from the economic recession, agility allows quick scalability of a customer’s services up or down. The benefits of application management outsourcing are compelling and well supported by customer satisfaction surveys. With careful planning and vendor selection, companies can leverage an outsourcing provider’s capabilities, skills and market maturity to further their own business activities. Contact your local application management outsourcer for more information on how your business can benefit.
Slide 8: About the Author Chuck Vermillion is CEO and founder of OneNeck IT Services, a leading provider of mid-market enterprise hosting and managed services since 1997. For more information about our Application Management solutions, visit http://www.oneneck.com/Solutions/HostedApplicationManagement/Applicati onManagement.aspx today.