Why Are You Spending Money on Your IT Infrastructure?

Mike Scheuerman
April 28, 2008 | COMMENTS

If you are a credit union with less than 100 employees you're probably struggling with your IT infrastructure. It doesn't do what you want it to do, but you can't justify hiring more people to make it work the way you want. Why are you wrestling with this problem? It's not your credit union's core area of expertise or interest, but you know that you couldn't survive without it. So OUTSOURCE it! Let somebody who likes the challenge and is good at it take those headaches away.

I just had a conversation with a CEO of a small credit union that has an in-house managed technology infrastructure. He was complaining that he can't get his IT manager to do the little things that need to be taken care of like giving a new PC to a new employee. There's a double whammy—a new employee that's not productive and an IT employee that you're paying to help get employees productive. I asked him what he was paying for IT in his credit union and he didn't know but he knew that he was paying his IT manager about $60K plus benefits. I looked at him and said, “Why are you spending your money that way?” He has less than 50 people that use PCs and can outsource the entire infrastructure support including PCs and servers for less than $100/month/user. That comes out to less than what he's paying for one IT employee who's not doing the job and he gets a whole company that is dedicated, trained, and has an incentive to provide him with the level of support he wants and needs.

The challenge that most small credit unions have is that they built their infrastructure over several years and have never looked at where they're at today versus where they've come from. The rest of the credit union is typically focused on building product and value where IT is many times considered a cost center even though much of IT is necessary for the business to be successful. The organic growth of organizations leaves them little time to sit back and reflect on the foundations of the growth. One day when the server crashes and it takes a week to get back online, they realize that they have a problem, but the IT staff are is working their tails off to get things back to “normal,” when normal is not where they want to be. They need a solid, stable, secure foundation on which to grow the credit union to the next level. Most credit unions don't understand how much they rely on the technology to get through each day. It's become ubiquitous and they don't take notice of it until it's not performing.

Take a Closer Look

Step back and look at what you're doing. By now you've outsourced your payroll so people get paid the right amount on time. You've maybe outsourced your sales process management to somebody like SalesForce.com or Microsoft Office Live. Why aren't you outsourcing the other pieces of business process, like IT support, to somebody who knows what they're doing? They have the experienced staff to solve problems quickly. They can help you put together a disaster recovery plan. They can help you protect your valuable information assets from theft and hackers. Your single IT geek can't do that no matter how smart or hard working he/she is. Get them some help.

If the IT person has the right stuff, they'll welcome the help and work on getting the right kind of partner in place. They can off-load all those daily crisis projects on somebody else and focus on getting the truly business-value enhancing projects done. If they fear this kind of change, perhaps it's because they fear loss of control. Tell them it's not about loss of control, but gaining more control over more resources and a lot more influence in the credit union's future.

Service Level Agreements

Now that you're convinced to look at outsourcing, there are some essential elements of an outsourcing contract that you should look for before signing anything. These are typically addressed in the Service Level Agreement (SLA) portion of the contract, but can be contained anywhere, as long as they are there and provide some enforcement mechanism.

An SLA has two major components, Service Levels and Problem Resolution Procedures. In service levels there are two service level metrics that you want to address in order to protect yourself from some of the risk; they are uptime and response time. Uptime refers to the amount of time a system is available for use. It's calculated as a percentage of the total available time. Response time refers to the amount of time that it takes to get a problem resolved. Both of these are measurable items and any good outsourcing company will be able to give you their averages across their client base. If they can't, move on to the next potential partner. Also realize that higher uptime percentages and lower response time numbers cost more, so be realistic about what you really need, want and can afford.

The second part of an SLA addresses how problems are resolved when things go wrong. It may be a critical problem where the system is totally down or just a minor inconvenience. In either case you'll want to know what's being done to fix the problem. You should have your partner provide you with a set of priority definitions as they apply to problems, i.e. what does critical mean, what is severe, etc. Along with those definitions you should also get a resolution timeframe, who to contact to report a problem, how often you will be updated on progress toward a solution to the problem and who you can call if you need to escalate the problem.

One last caveat, don't outsource and forget. You need to manage an outsourcing firm just like you would an employee. It's an important part of your credit union and you don't want to just let somebody else make all the decisions when they don't sit in your seat.

Sure it's a hassle to find the right company that will give you the service levels that you want and need to continue growing, but it's worth the hassle and time to get the right partner to share the load with. And just maybe, you will be able to sleep better at night.

Mike Scheuerman, MCP, is a partner and senior consultant with Catalyst Consulting Group. Contact him at michaels@ccg-catalyst.com or 800-439-8710 x207.