When does it make sense to outsource application support?

For medium-sized software companies like Manhattan Associates, the issue of outsourcing needs to be examined closely because they may not have the leverage of large companies to garner vendors’ undivided attention.

Further, if you aren't having problems supporting applications, you may "not want to shake the boat," CIO Ken Rabun says. Other things to look at include examining the morale of staff. An unhappy staff is a prime indicator that some functions may need to be outsourced, he says. Another indicator to look at, Rabun says, is the percent of staff working on individual applications.

Rabun gives the following advice on outsourcing:

1. Match up with size. If you're a small company, go with a small vendor. "Be a big fish."
2. Keep contracts lose. This gives everyone wiggle room.
3. Meet face to face with senior leadership of the vendor. "It's all about the relationship."
4. Conduct quarterly reviews to learn how the vendor is doing and to let the vendor how he or she is doing.
5. Conduct an ROI assessment at least annually.
6. Pay attention to "miscellaneous" fees and other "gotchas."



Your take:

When does outsourcing not make sense? How should companies conduct ROI assessments of their vendors? Have you ever been caught by a gotchya in a contract?

Excellent points Ken. One consideration I'd give to other CIO's looking to outsource a helpdesk is to look at having those reviews monthly rather than quarterly. I've done this with many of my vendors and found it to be a good, formal way of "tuning" the outsourced helpdesk. It is also a good forum to inform the vendor of any upcoming technology changes which may impact the helpdesk.

I also use these monthly meetings to have the vendor present their actual service levels verses the contracted SLA's. This is typically done via trend reports that I design and ensure is included as a deliverable in the initial contract.