Outsource IT Infrastructure to Improve System Availability, Reliability, and Recovery There are very few IT infrastructure components you should be housing internally – outsource everything else. Info-Tech's products and services combine actionable insight and relevant advice with ready-to-use tools and templates that cover the full spectrum of IT concerns.© 1997 - 2014 Info-Tech Research Group

Introduction

IT infrastructure outsourcing has become commonplace; success requires careful planning and diligent execution Infrastructure managers/VPs, IT Directors, and CIOs that are considering outsourcing parts of the organization’s IT infrastructure (co- location, IaaS, cloud). Infrastructure managers/VPs, IT Directors, and CIOs of all organizations that have a disaster recovery mandate. Understand the benefits of outsourcing the organization’s IT infrastructure. Determine what to outsource and how. Develop an outsourcing RFP and scoring method to evaluate RFP responses. Manage the transition to outsourcing. Manage the vendor relationship. Executive management of organizations that are considering outsourcing parts of their infrastructure. Executive management of all organizations that have a disaster recovery mandate. Understand the benefits that outsourcing can bring to the organization. Understand a best-practice approach to developing an outsourcing strategy. Understand the importance of maintaining a strong vendor relationship.

Executive Summary Outsourcing infrastructure through co-location, managed services, and IaaS has become extremely popular in the past few years: The growing expectations for constant availability from customers call for a higher level of capabilities than the internal IT infrastructure can cost-effectively provide. There are more IT infrastructure outsourcing options available now than there ever have been before – there is a suitable option for every organization. Almost every organization is outsourcing a part of their IT infrastructure. Outsourcing parts of your IT infrastructure is inevitable. The question is no longer about whether to outsource, but when to outsource. Many organizations do not achieve the success they expect from outsourcing. Follow Info-Tech’s methodology to boost your outsourcing success. Outsourcing success is elusive. 42% of Info-Tech’s clients do not receive the benefits they expect to in the first year of IT infrastructure outsourcing. The low success rates result from the lack of due diligence and planning when developing an outsourcing strategy. Success results from making the right outsourcing choices and building a strong partnership with your service providers. Use this blueprint to help you plan and execute your outsourcing journey and avoid common mistakes and pitfalls.

The infrastructure outsourcing market has settled on three primary options differentiated based on level of control Self-Owned Co-Location Managed Services IaaS Application Application Application Application Virtual Machine Virtual Machine Virtual Machine Virtual Machine Server Server Server Server Storage Storage Storage Storage Facilities Facilities Facilities Facilities Organization has control Organization and vendor share control Vendor has control

Outsource to improve your availability and reliability cost-effectively Primary Benefits Availability and Reliability: Outsourcing service providers offer higher standards for data availability and reliability than most organizations can provide in- house. Recovery: Outsourcing service providers can also provide better disaster recovery capabilities. Elasticity: Certain forms of outsourcing can provide more elasticity and allow your organization to scale up and down its usage quickly and easily to meet seasonal demands. CAPEX to OPEX: Capital expenses associated with building infrastructure are translated to operating expenses that are smoothed out over a number of years. Secondary Benefits Outsourcing can minimize the risk of operating costs, make them more predictable, and thereby simplify budgeting. In some cases, outsourcing can shorten the time it takes to set up new infrastructure. Many organizations see an improvement in security capabilities. Although every organization is capable of improving their data availability, reliability, and recovery capabilities internally, outsourcing allows you to do so in the most cost-effective way.

Successfully achieving these benefits is difficult without diligent planning and execution Common Reasons: Overall lack of due diligence in the outsourcing process. Inappropriate choice of deployment model. Unsuitable service provider selected. Lack of outsourcing integration. Poor service provider management. Of Info-Tech’s clients, 42% don’t get the value they expect to from outsourcing in their first year. Key Components of a Successful Plan Consequence of Poor Planning 1. Conduct due diligence when deciding what to outsource. You forget to include parts of your infrastructure and need to spend more money to add them, or you include infrastructure parts that are completely inappropriate for outsourcing. 2. Evaluate and select the most appropriate deployment method. You spend more than you need to. Don’t wrongfully assume that cloud is always the cheapest option. 3. Identify infrastructure requirements before developing an RFP. You enter into contracts that can’t meet your requirements or offers of services you don’t need, and these drive unnecessary costs. 4. Assess and select the most appropriate provider for the organization’s needs. This is an expensive mistake: Based on Info-Tech’s experience, the average direct exit cost in the first year of a $923,996 contract is $671,922. (Info-Tech, n=35) 5. Manage the transition and vendor relationship. Poor transition planning results in delayed benefits and a poor relationship with your outsourcing service provider. A poor relationship with your service provider results in poor communication and knowledge transfer.

Case Study: A lack of diligent planning and execution can result in expensive mistakes Industry: Not-for-profit Location: Ontario, Canada Context Situation Impact An outsourcing provider approached the organization and convinced them that their in-house IT capabilities were inadequate. The provider convinced the organization’s executives that they would improve IT capabilities and save money by outsourcing their IT infrastructure. The executives agreed and signed a 60 month agreement to outsource all their IT infrastructure to the cloud. The executives did not assess whether this was a good opportunity to outsource. They did not seek competitive bids. Seven months after signing the contract, the transition was not going smoothly and was still incomplete. After further research and help from Info-Tech, the organization realized they were paying at least twice as much as the current market price. They also learned that paying for the “managed service,” facilities, and hosting costs separately was not a common industry practice. The executives began wondering what it would cost to exit the contract. For 30 TB of storage usage per month, the organization would have paid approximately $50,000 more per month than it needed to. The Organization’s Costs: $12,379 MRC (monthly recurring charge) + $3 per GB Storage. Market Estimate: $4,286 to $5,357 MRC + $1.60 per GB Storage. The early termination charges were calculated as all remaining unpaid charges to the end of the term plus 50% of the remaining MRC. If the organization were to terminate the contract at the 30 month point, it would cost $557,057 at a minimum.

Info-Tech’s approach addresses common challenges and will boost your chances of success 1. Assess the infrastructure outsourcing profile 2. Structure project 3. Develop RFP 4. Evaluate RFP responses 5. Manage the transition and vendor relationship Assess the organizational readiness Document your outsourcing goals Identify current requirements Examine the vendor marketplace Manage the transition Determine what to outsource Assign project responsibilities Identify future requirements Score your RFP responses Build a collaborative partnership Select a deployment model Develop a business case Define your RFP process Review and finalize the contract Develop an ongoing monitoring plan Achieve management buy-in Create an RFP Develop an exit strategy Establish project success metrics Measure the project value

Info-Tech is ready to assist. Book a free guided implementation today! Book a Guided Implementation Today: Info-Tech is just a phone call away and can assist you with your project. Our expert Analysts can guide you to successful project completion. For most members, this service is available at no additional cost.* Here are the suggested Guided Implementation points in the IT Infrastructure Outsourcing project: Section 1: Assess your outsourcing profile 1a) Receive current market pricing for each deployment model and compare the costs to your current IT infrastructure costs. Discuss the strategic fit of each outsourcing deployment model for your organization. 1b) Review the components that you’re outsourcing and your organizational readiness to outsource with an Info-Tech Analyst. Section 2: Structure your project Review your business case and project success metrics. Receive tips for achieving buy-in for the project. Section 3: Develop the RFP Review your infrastructure requirements and completed RFP to ensure it is comprehensive and accurately conveys your requirements. Section 4: Evaluate your RFP responses and review the contract 4a) Create a shortlist of candidates. 4b) Review your contract in detail and receive tips on contract negotiation. Section 5: Manage the vendor relationship and measure value Discuss ways to overcome your vendor management issues and ways to maintain a collaborative partnership with the provider. Formulate an exit strategy if necessary. *Guided Implementations are included in most advisory membership seats.

Assess the infrastructure outsourcing profile Section 1: Assess the organization’s outsourcing profile Section 2: Structure the project Section 3: Develop an RFP Section 4: Evaluate RFP responses Section 5: Manage the transition and vendor relationship Assess the organizational readiness to outsource. Determine what to outsource. Select an outsourcing deployment model.

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