Local Area Network and Desktop Computing Support

Installation and support of LANs and PCs is a function where both staff augmentation and outsourcing can be used successfully, depending on a company's maturity level and objectives. If the IT department has little in- house expertise and wants to develop it, staff augmentation is an effective way to bring in experts who will train existing staff. Similarly, if IT has not developed formal procedures or standardized its methods, it may want to hire a contractor with specialized skills to develop those procedures. Even if the long-term plan is to outsource the function, it is desirable to establish procedures prior to outsourcing. In general, a company whose function is not yet mature should consider staff augmentation rather than outsourcing. Similarly, to increase the odds of successful outsourcing, IT should seek to first stabilize and standardize its function, and then outsource.

For some companies, outsourcing of LAN and PC support has been a less than successful venture. The reasons for the disappointment include:

■ Immature processes or lack of standardization. As noted above, outsourcing contracts are managed by service level agreements (SLAs). If there are no existing SLAs, it is difficult to specify with any precision the work that the outsourcer will be required to perform. This means that measuring success will become subjective, increasing the possibility for dissention between the company and its service provider. In addition, if the processes are not clearly defined, the service provider may have difficulty pricing the engagement.

■ Incomplete due diligence. This is a corollary to immature processes. If the vendor does not completely analyze the company's existing function, it may make inaccurate assumptions about the required staffing level or the current customer satisfaction. This can lead to faulty pricing and another opportunity for disputes. Incomplete due diligence occurs most often when the company seeks to compress the time to develop a contract, and when suppliers overestimate their knowledge of the company's function.

■ Unrealistic expectations. A company may outsource a function, hoping that the service provider will resolve all outstanding problems, improve customer satisfaction, and reduce costs. While all of these are possible, it is unlikely that all of them can be achieved in the short term. A more realistic approach, particularly when processes are immature, would be to hire a vendor to implement formal procedures and stabilize the environment as phase one. Phase two, under a separate contract, could include cost reductions and improved customer satisfaction as its goals. Although the same vendor could be used for both phases, this is not mandatory. Some outsourcing firms that would be well-suited for phase two may not have the expertise needed for phase one.

■ Loss-leader pricing. Occasionally, a service provider will price an engagement at or below cost as a way of getting the business. From the supplier's view, the loss-leader approach is justified by the anticipation of being awarded additional business in the future. Although loss- leaders occur in both staff augmentation and outsourcing engagements, the long-term nature of outsourcing contracts makes them particularly dangerous. Unless the additional work is guaranteed, it is possible that the vendor's expected profit margins will not be met. This typically results in the vendor reducing staffing levels or substituting less experienced staff to generate a profit. Customer satisfaction rarely rises after such actions.

The concerns associated with outsourcing of LAN and PC support include those shown for data center operations. In addition, pricing may not be accurate if the processes are immature. To improve the likelihood of success, full outsourcing of LAN and PC support should be initiated only after formal procedures have been developed and implemented. Staff augmentation can provide an effective method of developing and implementing such procedures.

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