When looking into getting an outsourced IT company to do your technology management, there are several key questions you should be asking as a business owner or CFO. When researching IT outsourcing services in the Bay Area, there are certain key questions about cost CFOs should be asking these prospective outsourced IT companies in San Francisco CA (both directly and indirectly related to cost).
10 Questions for CFOs to Ask Before Outsourcing IT Services
Outsourcing has become a competitive necessity for many firms. A 2016 Deloitte report shows that more than 70% of companies were utilizing outsourcing for some aspect of IT services. The demand continues to grow.
With IT outsourcing services becoming such an important factor in business processes, organizations are now asking “What IT management aspects should I outsource, and to whom?” Outsourcing experts advise that instead of only looking for a low-cost IT outsourcing service provider (although questions about cost and other financial aspects that should concern a CFO are important), companies must carefully assess the offerings, requisite skills, experience and capabilities of potential providers.
Here are 10 crucial questions to ask before you outsource (all either directly or indirectly related to the question of cost). Use these questions to evaluate prospective outsourced managed service providers before signing an IT outsourcing contract:
The best way to evaluate a prospective IT service provider is to examine their service track record from multiple perspectives. Find out about their customer service and get to know if their service has followed an upward trajectory. Ask the IT outsourcing services firm’s existing customers if they were happy with the service provided. Be sure to ask the vendor if they offer help desk support after the completion of the project. It’s good also to find out if the IT outsourcing provider’s SLA (Service Level Agreement) is backed by financial guarantees and follows customer service standards and operational metrics.
Finding out how your business IT systems will be managed is a critical aspect of any IT outsourcing project. Ask the IT service provider if they follow a clearly defined vendor management process, and if a dedicated individual will be handling your day–to–day IT functions; also, how frequently you would need to interact with that person. Ask the vendor if you can meet your future outsourced IT manager and other staff before the onset of the IT outsourcing services contract commences.
Request the service provider to provide you with their customer list of former and existing customers. Speak to at least five of these customers who have a similar industry profile/business needs as yours. Ask them for detailed and honest feedback about the provider’s strengths and weaknesses. Find out if they faced any problems and how they were resolved. Finally, ask them how satisfied they were with the provider’s service levels and systems management expertise.
Find out how reliable and scalable a provider is by asking information about their infrastructure, technology partners, internet providers, data centers, network environment and key metrics followed. Making an on-site visit to the outsourced IT management firm can give you confidence in the provider’s management expertise and physical infrastructure. Also, ask details about the provider’s quality assurance methodologies, procedures, and processes.
Security is something that you must find out about as you will be sharing confidential business information with the IT outsourcing provider. Ask the outsourced IT services provider for a detailed description of how they have protected their facility from outside intrusion. Find out about the firewall and other security measures taken by the provider. Ask the vendor if they have a recovery plan in case of a security breach. Finally, ensure if the provider’s data center is staffed with qualified, experienced and committed resources.
Find out if the IT outsourcing services provider has a tested plan to ensure a seamless migration of operations and data from your company to their business center. Get to know in-depth details of how the vendor will be governing the migration and the methodology that would be employed. Ask the vendor if their migration plan can be modified to meet your needs/concerns. Also, check if the outsourced IT provider will work with your in-house staff or overlap operations to ensure a smooth transition.
Before starting on the outsourcing project, make sure you know what you are paying for. Query the prospective IT support provider to find out about hidden costs. Ask if you will be priced separately for help desk services. Question the vendor about how their pricing will change as your needs scale up or down over time. Ask if you can expect pricing breaks or waived fees in case the vendor misses a specified service level commitment. Weigh the final pricing structure against your total cost of ownership (TCO) to get the total pricing picture.
Evaluate the outsourced IT company’s breadth and depth of experience in offering the services that you require. Get to know details about the provider’s past by asking if they have always been providing a particular service or if they evolved into providing a service. Ask them for intricate details about their competencies, strengths, experience, and skills.
Asses if the vendor is simply trying to sell you their services by overpromising, or if they are genuinely committed to tailoring their services to meet your unique needs. You can know for sure by asking the IT outsourcing service provider’s existing customers if their needs were accommodated. Check if the service provider demonstrates a willingness to clarify your needs and map these onto their service offerings. However, you should not expect the vendor to reinvent their business model for you.
Do not overlook the financial health of a prospective vendor, as this is very critical. If the prospective provider is a brand-new startup or less than two years old, you must ask to review their cash flow position, burn rate and other financial information to mitigate the risk of losing a business partner due to sudden financial death. It is always safer to outsource to an established IT outsourcing services firm with a track record of profitability. (BACS will hit high marks on ALL these queries.)
[Source credit: Outsource2India.com]
Further Key Questions to Ask When Researching IT Outsourcing Services
Is the outsourcer transactional or custom service oriented?
In other words, does the IT outsourcing services firm operate under a one size fits all way approach, or is the outsourcer sensitive to your unique and particular ways of doing things?
A great indicator is to have the outsourcer elaborate on their best practices. To what extent is the IT outsourcing services provider engaging in best practices? A good example would be reporting. Does the outsourcer provide you with their financial reports, or are they willing and interested in providing you with customized reports that fit your particular needs?
What is your pricing model?
Consider it a red flag if the outsourced IT service provider is pricing the cost based on a flat percentage rate of revenue. As revenue increases, costs should be lower as efficiencies in operations will result.
Does the IT outsourcing company have established relationships with other industry vendors?
This question is really an extension of the previous question. If the outsourcer has IT management experience, then the company should have connections with other technology services companies, software and hardware outfits, and the like. As a result, these established relationships should result in your company having more reliable solutions and the attendant cost savings.
What does the IT outsourcing team look like?
Ideally, the IT outsourcing team will assign someone to report to your Chief Financial Officer. What are the qualifications and experience of their own Controller and CFO? Do their own CFOs adequately articulate how the IT outsourcing team works together to protect your financial interests?
What are the terms of the Engagement Letter?
The engagement letter is essentially a letter of understanding, including stipulated expectations between your company and the outsourcer. Look carefully at the duration term of the engagement letter. Does the life of the agreement extend beyond one year? Do you have a one-month notice of termination clause? You should.
Does the IT outsourcing services team have professional liability insurance?
Although unlikely, unintentional mistakes can happen, so your IT outsourcing company of choice needs to be bonded. (BACS is.)
What are your references?
This usually goes without saying, nevertheless, make sure you get several good references and be sure to ask them the question: What is working and what is not working for them?
What San Francisco Bay Area Communities Do You Serve?
It’s all about location. In the case of Bay Area Computer Solutions, we proudly serve companies in Palo Alto, Menlo Park, Atherton, Woodside, Portola Valley, Los Altos, Mountain View, Redwood City, San Mateo, San Jose, Sunnyvale CA and the surrounding SF Bay Area with IT outsourcing services and solutions.
Get the IT Outsourcing Services in the Bay Area Who Can Answer All Your Questions Satisfactorily!
If you’re ready for serious, industry-leading, IT outsourcing services in the San Francisco Bay Area, get your free consultation by calling us at (650) 887-4601, or contact us online today to get the process started!
Published on 6th February 2018 by James Berger.