Savings, Security, and Risk Mitigation

Why Outsource?

Outsourcing IT services can provide companies with a variety of benefits. Managed IT allows businesses to keep their IT systems running and updated without hiring, training, and retaining full-time IT staff, according to Christopher. It also allows the company to focus on its business goals, rather than worrying about day-to-day IT functions. Take a small doctor’s office, for example. Rather than hiring a full-time IT employee, paying salary and benefits, providing professional development and training, and having a plan for what to do when that person is sick or on vacation, managed IT providers can address those problems. “For a flat monthly fee, Alaska Communications’ managed IT services can help businesses ensure smooth operations, reduce risk, and eliminate budget uncertainty,” she says.

Clark says the key advantages of outsourcing IT boil down to depth in expertise and coverage. With outsourcing, a business can instantly have a team managing and following best practices because a managed service provider is an expert in managing IT staff members and in knowing best practices. This level of expertise is often too extensive or impossible to have with a single, full-time employee. Also, having managed services gives the company round-the-clock access to a staff of IT experts. “With fully managed services, you have a team, so you’re not worried about coverage during after hours, vacations, and other times,” Clark says.

DenaliTEK has fifteen employees available to assist businesses with a broad range of needs. Sometimes that means stepping in to manage a system after an employee has been let go. Other times, it entails supplementing the efforts of internal IT staff. DenaliTEK also offers a complimentary onsite consultation for businesses that are contemplating managed IT services. During the consultation, Clark starts by asking probing questions, and sometimes that’s enough to determine the feasibility of using a managed IT provider. If it’s not, he can also schedule a free network assessment. “Even if they don’t go with our services, it’s an eye-opener in all the things they should be paying attention to,” he says.

For Bradison, cost, security, and risk mitigation are the main motivators for outsourcing. She has an extensive amount of employee and client data to maintain and protect and cannot afford for her computer system to be down—not even for a few hours. “Outsourcing is a necessity for me,” Bradison says.

Bradison outsources IT administration for Alaska Executive Search, which has eight employees, and her consulting firm, Bradison Management Group, which has four employees. The external administrator not only maintains their network but also monitors it twenty-four hours a day and issues alerts if there is any unusual traffic. Bradison says, “It’s something we couldn’t afford to hire someone for on a full-time basis being a company our size… To have an onsite IT administrator, it would cost $65,000 to $105,000 annually, plus 40 percent of that base in benefits.”

Also, there are IT network administration duties that are simply beyond Bradison’s level of technical expertise. Most of her software applications are web-based—plus there are certain regulatory requirements for businesses that accept credit cards and store private health information that make outsourcing IT a necessity for Bradison.

Cost and risk are also primary reasons for outsourcing IT at Business Insurance Associates. Specifically, Pobieglo uses outsourcing to reduce and control the company’s IT costs. “It brings down the cost compared to if we tried to do it ourselves. It also gives us a defined cost, so we can budget and account for that. It keeps the company focused on the revenue-generating activities,” he says.

The company pays about $50 to $100 per hour to use the expertise of James Park Consulting, and it’s money well-spent, Pobieglo says. “To be able to have him on call when we do is worth the expense,” he explains. “He knows our system… We’re comfortable with him.”

Using an IT provider also helps the company reduce its risk. It gives Business Insurance Associates the ability to maintain accurate information, which is critical for its industry. Not keeping accurate information can result in errors and omissions claims, which are made against professionals for inadequate work or negligent actions. “Errors and omissions are a big concern for insurance brokers,” Pobieglo says. “To be able to keep the accurate data really reduces our E&O risks.”

Outsourcing with TAM Online also provides a major benefit for Business Insurance Associates. It costs the company about $5,000 a month to use the software, which is a significant—but justifiable—expense, according to Pobieglo. With the agent software system, the company has access to broader resources. “They have products and services to offer that we could never do in our office with our size and in Alaska,” he says.

Granted, there are more cost-effective solutions available, but they don’t offer the same capabilities, level of service, and other benefits as TAM Online, according to Pobieglo. “It was important for us to have a system our employees could understand and use,” he says. “Plus, Applied Systems provides extensive support… They can take over our system remotely and address technical problems.”

Pobieglo says he is comfortable with outsourcing the agent software system through Applied Systems, which is located outside Alaska. But it’s a different story when it comes to his intraoffice IT and hardware needs. “I would be pretty reluctant to outsource outside Alaska,” he says. “There are some things that just have to be done in person when it comes to maintaining the hardware.”

Bradison agrees. She outsources IT services to two companies in Alaska: HiTech Alaska and Applied Microsystems. Alaska is a unique and relationship-based state, and using a local provider makes a difference, she says. She adds: “It’s awfully nice to know that somebody is in our time zone. We do have unique concerns, such as earthquakes, and computer accessibility can make the world small.”

Bradison and Pobieglo share the views of many business owners in Alaska. Most Alaska-based companies work with in-state providers, according to Christopher. “While most managed IT can be performed remotely, businesses like the feeling of having their provider close by,” she says.

Not for Everyone

Despite the advantages of outsourcing IT for some, not all businesses choose to go this route. For certain companies, it’s simply not feasible. For instance, companies that are highly regulated or have complex lines of business application requirements typically have their own IT departments. Corporations or large businesses usually have the scale that allows for internal IT departments. However, Christopher says, “Managed IT is not all or nothing. Some businesses have internal IT departments and contract out for one service, like help desk support.”

On the other hand, Clark says, some companies opt not to outsource IT services because of their perception of the cost. They make a skewed apples-to-oranges comparison of outsourcing with maintaining a full-time IT employee. But a managed service provider can deliver a tremendous amount of expertise and benefits, including implementation of best practices, data backup, cloud storage, licensing, anti-virus software, support, and 24/7 remote monitoring and management.

Over the years, managed IT services have evolved from a flat-rate scenario to clients investing in comprehensive services that result in fewer service calls. This translates into value and convenience for clients. “With managed services, it appears that we’re doing less work, but we’re increasing the productivity and reducing the frustration for our client,” Clark says.

The importance of outsourcing IT for some companies is indisputable, Pobieglo says. “It’s become such a big piece for business owners to be able to effectively run their business,” he says. “Outsourcing is here, and it’s not going away.”