When should you outsource ITAM to a third party? When does it make more sense to keep resources in house? This article is in response to an ITAM Review reader question as follows (edited for brevity):
“I’ve recently become the ITAM Leader at <Company>. Where I’m needing help is around a few key topics my new management is asking. <Company> is in <financial services sector> and ITAM is not considered a core competency. So, I’m really trying to figure out if I should build the skills/processes internally or not.
“Are there any benchmark studies where I could see metrics around things like (For a company like ours, similar industries and size, what their spend is to run the Business Operations Service side of IT Asset Management)? Example: So, if we spend $1M to run our program … is that in line with others in our size.”
I’m not aware of any studies that show how much an organization should be spending on ITAM. I suspect someone like Gartner might have these, Big G also quotes things like “Orgs should spend 5% on Software License Management” etc. Our salary survey back in 2014 showed team size versus number of assets which might provide an indication. We will revisit this salary survey for 2017.
Whilst comparison to other organizations is useful I prefer a more pragmatic approach, which says:
- How much risk do you have?
- How much risk can you tolerate?
- How much do you want to spend to reduce that risk?
When communicated in purely financial terms in this way: ITAM departments get funded. We cover this approach in more detail in the AUTHORITY, PLAN and TEAM modules of the 12 Box training course (available on demand free at the time of writing). Also check out the case study with chocolate company Hershey who run ITAM as a zero cost operation.
Should you run things internally or not? By the time you’ve got Authority in place and written a business plan, you build a team to deliver against the business plan. At this stage it you’ll have a shopping list of expertise, you can then make a judgement on whether to source internally or not. I cover what I consider are some of the strengths and weaknesses below (Note that some outsource ITAM because they can’t find or retain the right staff; it isn’t necessarily out of choice).
People mainly outsource to gain access to expertise, not because it’s a cheaper option:
We cover how to select a SAM managed service provider in a webinar in January (Video available on demand with registration here: http://itam-review.teachable.com/).
“Are there any whitepaper studies around “insourcing” verses “outsourcing” (the HAM and SAM functions/services)? Including pros/cons”
We’ve conducted studies in 2013 and 2015 into SAM Managed Service providers:
- 2015 SAM Managed Service Providers Group Test: https://www.itassetmanagement.net/2015/10/15/sam-msp-group-test-2015-results/
- 2013 SAM Managed Service Provider Group Test: https://www.itassetmanagement.net/2014/01/27/sam-msp-group-test-results/
These tests looked at what people are outsourcing, why they are outsourcing it and key market drivers, although it is heavily weighted towards SAM over broader ITAM.
“Also, any industry numbers referencing percentages that do “outsource their IT Asset Management services? I saw this data below but was unsure if it was only focused on “software”? I need to consider both hardware and software IT Assets.
‘Early results suggests 60% of survey respondents have a SAM tool in place, 67% make use of a SAM Managed Service provider (bear in mind this is the ITAM Review audience, active ITAM practitioners, not the IT industry as a whole). Average satisfaction with the SAM MSP is 7.70.”
That quote came from our survey in December 2016 (Again, we presented the full results in our webinar in January 2017 available on demand here: http://itam-review.teachable.com/). As it suggests in the quote, this is from ITAM Review readers, my guestimate is that adoption of SAM Managed Service Providers is within single digit percentages for the IT industry as a whole but I would love to see concrete research / figures into this. I suspect it is a lot higher if you include traditional outsourcers supporting everyday ITAM processes regarding desktops and devices.
Pros and Cons of Outsourcing ITAM
- Frees up time to do more strategic ITAM
- Less dependency on recruiting highly specialist resource
- Lower risk execution (because you are buying an outcome not a bunch of component parts and doing it yourself)
- Experience factors (since the outsourcer would have done the same thing for many other customers)
- Higher cost option in the longer run
- Intelligence gained in execution is not always integrated or leveraged in-house
- Responsiveness might not be as good as in house teams
- Motivation of the outsourcer might be primarily focussed on maintaining the recurring revenue of the outsource contract rather than your business goals
Finally, you can’t outsource risk or responsibility but many of the Cons above can be addressed with a well balanced deal with the outsourcer.
We plan to revisit our SAM Managed Services provider group test in 2017. Please contact me if you wish to participate, nominate your partner or provide feedback.
Are there any pros and cons I have missed or research you can point to? Please let me know in the comments. Thanks, Martin