No doubt you've read periodically
about the huge information technology outsourcing deals entered into by giant
corporations with other giant corporations. These deals are usually in the
hundreds of millions to billions of dollars range. You may have wished you
could outsource your information technology, human resources, or supply chain
functions, but know that no one would be interested in entering into such a deal
with a small business. For the most part, you are right. Small
businesses usually do not provide enough economy of scale to justify an
outsourcing arrangement. But that is changing rapidly. Let's look at
some of the options that are available for small businesses.
Application Service Providers (ASPs)
- You've heard of them. You're wary of them. And you should
be. ASPs are cropping up all over the place. Several large companies
like Microsoft and Oracle are now providing ASP services to businesses of all
sizes. There are several questions you need to ask yourself before signing
up with an ASP:
Are they going to be around
tomorrow? ASP services are difficult to price. The business
plans of many of the providers have proven to be suspect as more of them
fail every day. If you turn over critical business functions to an ASP
and they fail, severe damage could be done to your business.
Is your information
private? If you are transferring critical business data to your ASP,
that data is now out of your control. The ASP is now responsible for
security and data backups. Are you comfortable transferring that much
control over critical data?
How do you access your
data? What technology is used to access your data over the
Internet? Will your connection be fast enough to keep your employees
efficient? What happens if your Internet connection goes down?
Can you live without access to your data until your connection is restored?
What kind of service level
does the ASP guarantee? You need to know your data is available when
you need it. You'll need to negotiate a strong service level agreement
and provide monetary penalties if service levels are not met.
Will you save money by using
an ASP? You're giving up a lot of control over your data and critical
business functions. Unless you can save money and work more
efficiently by entering into the ASP agreement, you should not be
Payroll Processing Services -
These are among the oldest forms of outsourcing, and the most successful.
If you have more than 5 employees and less than 30, you should probably be using
a payroll processing service like ADP. If you have more than 30 and less
than 100, you should still strongly consider it. More than that, and you
might be better off beefing up your internal human resource capabilities.
Using a payroll service is more about peace of mind that all your human resource
functions are being properly administered than it is about saving cost, although
you should save money as well.
Outsourcing off Premises -
You can find companies that will perform business functions for you on a
contract basis, such as accounting firms that will pick up your source data and
compile financial statements for you and companies that will handle purchasing
functions for you if you join their cooperative. These services do provide
you with cost savings but they are still a far cry from having someone maintain
these functions on your premises. You need to be able to integrate your
accounting functions with operational functions which enables you to gain
efficiency throughout your business. By farming out your business
functions on a piecemeal basis you lose the ability to capture information from
various sources and analyze it from an enterprise standpoint.
Outsourcing on Your Premises
- If you can find a company to provide your small business with outsourcing
services on your premises, you are ahead of the game. See if your local
systems and networking provider can spare a staff member several days per week
to maintain your IT infrastructure at your site. It will save you the cost
of hiring full time IT people. Do the same with your accounting
firm. If they supply you with a staff accountant a day a week or so, you
can cut back on internal staff required to manage your accounting system.
In this manner you keep your critical business functions in house. If you
can find a firm that will take responsibility for these functions completely,
even better. But such is hard to find!
I should mention that we are one
of the only firms to offer full outsourcing services to small business
clients. We will purchase servers, workstations, software and everything
else you need to complete your IT infrastructure, provide you with technical
support personnel, people to run your supply chain, your order entry functions,
your payroll functions and any other function you would like to outsource.
This service is not available in all areas of the nation at this time, but will
be soon. If you are interested, check with us to find out if this service
is available in your area. You can also use the Outsourcing for Small
Businesses information request form to request
a preliminary quote and additional information.
If you believe outsourcing could
provide a benefit to your business, check out the options available to you using
the list above. If you need assistance locating companies that provide the
services you need in your area, get in contact with us and we'll be happy to
help you. You can email us at firstname.lastname@example.org
or fill out the form on the Other Consultation page
on this site.