The Six Major Pitfalls of In-Sourcing IT Remedial Services
Many CIO’s assume that In-Sourcing IT Infrastructure remedial maintenance is the most logical, least expensive process for their company. However; there are many major pitfalls that CIO’s could fall into that will actually distract time and effort and in the eventually cause cost over runs and end-user dissatisfaction. The first question that all CIO’s should ask is; “Does remedial maintenance of the IT infrastructure fall into the core competency or long term strategy of the IT organization?” Additionally, there are many cost and operational challenges that can jeopardize a CIO’s focus and potentially his/her career: 1) Does the company have a CRM service package to manage the IT remedial maintenance business? Many major corporations attempt to manage the remedial maintenance business on a helpdesk package or worst case no system at all. This action can cause many problems for the company. It is imperative to manage service through key operating metrics to reduce costs, maximize client satisfaction and organizational efficiency. Not utilizing the proper Service Management CRM System can handcuff the CIO from a control and cost management perspective. Additionally, a solid CRM service management system can cost millions of dollars with an average implementation time of 1.5 years and an ROI of two years or greater. 2) Over paying/management of the technical staff. The average company that insources IT services pays 30-40% above market value for technical employees. Again it is a question of core competency. If a CIO is not connected to industry salary trends overpayment of the technical staff will un-questionably occur. Additionally, many internal IT service organizations are grossly overstaffed. Without proper systems and measurements, it is impossible to maximize the efficiency or properly gauge the necessary amount of staff to manage the business. 3) Spare parts inventory. If the end-user population has an expectation tied to aggressive SLA’s, spares inventory will be required to satisfy the users’ demands. Again a question of core competency and costs. To successfully manage inventory, a CRM Planning System is required, to avoid the purchasing and writing off of unnecessary spare inventory. A few key questions relative to spares management: How much inventory is required to support the end users environment? Where should the inventory be stored for maximum efficiency? How will the inventory be tracked i.e. who has what part and how long have they had the parts. What is the inventory depreciation schedule? How often will Physical Inventory counts be conducted and using what methodology? Where will spare parts be purchased from? How will one ensure that the suppliers are not over charging for spares?
4) Warranty Management. Most OEM’s of IT equipment will not allow nonresellers to support product warranty. Some OEM’s allow self service, assuming the engineers are certified on the product. Many OEM’s charge a significant cost for engineer certification and require annual certification retesting. OEM’s are extremely strict relative to warranty parts management. For example most OEM’s require the return of defective spares inventory within 15-30 calendar days. If the parts are not returned on time, the cost of the part at full market value is charged to the servicing organization. Additionally, to receive warranty certification, engineers must be A+ CompTIA certified. This is a baseline requirement for the majority of OEM’s and carry’s a cost with independent testing. 5) Customer Satisfaction Measurement. Getting the pulse or the voice of the end user is paramount for success. How, when, who measures customer satisfaction are questions that need to be addressed by the CIO. 6) Asset Management. Many corporations do not have a clear picture as to where their IT assets are or what condition they are in. There are many excellent CRM packages on the market designed for IT asset management. Once again this is a question of cost, core competency and time. As you can see, remedial maintenance is rather complex with many moving parts and cost traps if not carefully managed. There are many top notch organizations that can assist with service management consulting, if in-sourcing is the selected strategy. Again, the key question that all CIO’s should ask is, “should I invest time, money and energy into managing remedial maintenance or should it be outsourced to a company that specializes in the business and has the necessary infrastructure to manage the end user environment?”
Peter Manni Vice President, North American Client Support Services Siemens Information Solutions and Services
Manni has over twenty years in the outsourcing business servicing large Fortune 500 Clients. He is a frequent guest speaker at American Federation of Service Managers, Field Service Management, Interlog and many other industry events. Manni holds a Masters Degree in Technical Business Management from Johnson and Wales University and serves on the Board of Directors for CompTIA.