Tiddlers dine well with outsourcers

Are full-time IT managers too expensive for many smaller organisations? Some, particularly the consultancies and outsourcers touting for their businesses, think so.

Are full-time IT managers too expensive for many smaller organisations? Some, particularly the consultancies and outsourcers touting for their businesses, think so.

The theory is that as IT systems become ever more reliable, the subcorporate-size company can get by with a part-timer or that it might actually be cheaper to just farm out occasional installations and maintenance.

In its latest newsletter Auckland IS consultancy Cogita likens modern IT systems to the classic song Ol' Man River: "And ol' man river, he just keeps rollin' along."

Says Cogita executive director Margaret Brown: "You cannot employ 20% of a $60K person; you have to spread them around, which is where we come in."

IT consultant Ian Howard of IE3 says there is now less hands-on work for an IT manager to do within a small or medium-sized business. The drivers behind this include IT becoming "more robust, reliable, packaged and simple".

This view is borne out by many small organisations who outsource their IT.

Auckland-based chartered accountants Harts used to employ an IT manager and systems administrator Karen Vickers. When the IT manager left, systems for the 25 accountants were crashing daily, occupying an hour of Vickers' time every day. Eighteen months ago Maclean Computing were brought in, along with new equipment. In her role as secretarial manager Vickers now spends only an hour a week on IT matters.

Macleans visits every month to carry out preventative maintenance.

"Our server used to crash daily," she says. "It hasn't crashed for a year. We don't get the problems like we used to so there is not much [IT] work to do."

Macleans recommended a Citrix rollout for transport equipment group Caspex. The firm used to have a Windows Terminal Server infrastructure over a WAN, asking it to perform "something it was not designed to do". The group's systems administrator, Pauline Luinstra, says the new technology is "fantastic, it's working brilliantly".

An outsourcer also offers her firm access to "a wide variety of experts in their field" with specialist skills such as Cisco routers, Citrix, terminal servers and Linux. "It has been a huge benefit for us."

Bay of Plenty bee products company Comvita uses Cogita to support its servers and Computerland Tauranga for weekly maintenance. Financial controller Grant Young says the 35-PC firm used to have a part-timer dealing with IT issues. Young says Cogita also distributes his firm's MSG Pro ERP system, so its staff are ideal for supporting it. The systems have not failed in six months, he says.

The Wellington Regional Development Agency uses Infinity to service the IT needs of its 17 staff, though finance and IT manager Anton Ferrari does "basic things" like logging on new users.

Anything trickier is dealt with by Infinity, who can "remote ghost" systems from Auckland and fix problems through the virtual private network link.

Ferrari agrees systems have become more reliable and easier to handle remotely, saying IT matters now take up only 10% of his time. "There are very few hassles. I reckon using an outsourcer is about a third of the price of an IT manager."

Allan Maclean of Maclean Computing concurs, estimating that a typical contract takes ten hours a month, at $120 an hour, so an outsourcer may cost $14,000 to $20,000 instead of the $80,000 to $100,000 of an IT manager.

Maclean says there is probably another $30,000 to add to the typical $60,000 salary of an IT manager in course fees and testing equipment.

IE3's Howard says that keeping IT skills is increasingly expensive and less in need of a separate input and planning process from a dedicated IT professional.

Fellow IE3 director Robert Barnes warns, however, that firms can become too dependent on -- "hostage to" -- their services company, particularly if institutional knowledge is lost.

HP and IBM say that even large businesses are switching to outsourcing, for reasons such as accessing a wider range of skills, though companies tend to keep a CIO or IT manager while contracted staff do the day-to-day work.

IDC expects the $2 billion services market to grow annually by 6.4% by 2005, with Gartner predicting an even more impressive 8.9% annual growth until 2003.

Greenwood is Computerworld's human resources reporter. Send letters for publication to Computerworld Letters.

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