Outsourcing Journal

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Home Business 5 Commandments Of Good Outsourcing On The Example Of ERP Systems

The fashion for outsourcing emerged along with the development of the market in specialised services. Because of the high specialisation of individual entities and the need for budget optimisations, businesses tend to transfer niche competencies outside their structures. The tendency to make use of external experts’ competencies is visible, among others, on the market of IT services. What should we bear in mind when deciding to outsource a given area?

Operating on the basis of reliable technological foundations is proof of a company’s high business maturity today. The term “IT technologies” means not only computer equipment, but also the entire IT environment that supports individual business processes in the company. It includes solutions such as integrated ERP systems, industrial automation, computerised production lines or electronic document circulation.

The possibility of simplifying and arranging individual areas of the company’s activity using advanced IT solutions makes it easier to do business and eliminates both paperwork and potential errors. Data collected by companies may become not only a resource needed for reporting purposes, but also a source of new business opportunities based on analytic tools connected with Business Intelligence or Big Data.

The systematic development of company IT competencies does not have to involve high investment outlays for the maintenance of teams of highly qualified specialists or costly equipment and its security. This is the reason for the growing popularity of outsourcing, which helps to transfer the burden of maintenance and management of the IT area outside the company, thus allowing it to focus on its key operations while ensuring proper standards of functioning of IT tools.


1. Outsource what you can

Nowadays, almost every element of the company‘s IT ecosystem can be outsourced – from the purchase and servicing of computer equipment for employees, through the implementation of advanced IT systems, to their development, maintenance and ensuring of the continuity of operation and the purchase of licences. Does this mean that IT departments in companies will disappear?

These days, external service providers co-operate closely with customers, offering frequently tailor-made solutions in place of ready out-of-the-box products. Such methodology assumes primarily a thorough understanding of the company‘s needs, development plans, philosophy and, most importantly, all business processes occurring inside it.

Partner co-operation based on the above principles brings more advantages than a simple subcontractor-customer relationship does. It leads to a better selection of products and flexible co-operation, so the final outcome is much more satisfactory for the customer.

A tremendous role in this process is played by internal IT departments, which act as a substantive link between the service outsourcer and the home organisation. They have the necessary knowledge of the company‘s processes and situation and, at the same time, do not have to focus on work requiring unique competencies thanks to outsourcing. In this way, the company gains an external team of specialists that remains at its disposal to a specific extent, whereas the IT department can focus on remaining issues, which leads directly to the improvement of the quality of functioning of the entire IT infrastructure.

To sum up: if an investment in IT is necessary for strengthening the company‘s competitive edge, but is not the central axis of its activity, it is worth considering an outsourcing decision. We can gain many benefits (including financial) by outsourcing, e.g., the maintenance of the ERP system on external servers or the constant monitoring of the continuity of operation of these solutions and a quick response from the team that remotely administers the system.


2. Cold calculation: it pays off

It would be difficult to indicate clear prerequisites upon which an outsourcing decision is conditional. An insightful calculation of costs related to the given area of operation of the IT infrastructure will allow the company to consider the best options. For example, the company does not have to incur high costs of construction of its own server room on which the central enterprise management system will be maintained.

The company may choose one outsourcing model by leasing the entire necessary space, or part of it, in an external server room where the supplier guarantees certain parameters and conditions of maintenance of the continuity of operation of servers.

It is also worth considering issues relating to the outsourcing of specialists with unique competencies. For example, engaging an in-house team responsible for the maintenance of the SAP system in the company is often unprofitable, to say the least. This involves the need to employ many professionals responsible for particular areas, including financial, logistic and other consultants. These costs are disproportionately higher as compared to costs of outsourcing the same service.

The regular subscription of the administration of ERP systems guarantees that care will be taken of the maintenance of systems at specific times, together with a strictly specified time of response to problems affecting the system.


3. Maintenance: Take care of updates and use know-how.

The term ‚maintenance‘ is quite broad and may include inspection, prevention and also improvement activities. This concept can be applied to IT systems, too. Although they do not exist physically, they also require appropriate maintenance work that ensure the continuity of their operation. With regard to popular ERP systems, maintenance services are based on updating the system on a current basis and on providing access to a series of training courses, workshops and the knowledge base of practical experts creating these solutions.

Maintenance can be outsourced, too. Specialized teams engaged, among others, in the remote administration of IT systems under co-operation agreements take care of system updates and provide training to employees of their service recipients. This means also the possibility of access to a series of advanced system status reports, which makes the proactive monitoring of its functioning possible.


4. Remote administration: Under the vigilant eye of specialists… without limits

The aforementioned possibility of remote care of ERP systems is particularly significant in today‘s world, which is often called the „global village“. IT technologies make it possible to erase formal borders between states and continents and, therefore, allow companies around the world to work and co-operate with one another on a running basis.

Convenient ticket-based error reporting systems guarantee that each outgoing service request will be allocated to the proper specialist. Every user of the system has also a constant preview of the current ticket status and can contact a consultant irrespective of his location.

Modern security methods provide reliable remote connection without any threat to the stability and safety of the system. Thanks to such solutions, users of IT systems do not have to restrict their activity only to co-operation with local companies, and the latter can acquire new market outlets for their services.


5. Help the IT environment develop with your company

Apart from maintenance and updates, an inseparable element of the life cycle of the IT system is its development. New entities in the company‘s structure, production lines and areas of activity mean also new business areas that must be covered with relevant functionalities of the system. In the case of ERP systems, development work is performed by application service teams that respond to users‘ demand on a current basis.

This area can also be outsourced to external companies; in addition, it is often a natural continuation of the co-operation established in connection with the implementation of IT solutions. With an excellent understanding of the configuration of the IT environment, business processes and specific characteristics of the company‘s activity, it is possible to perform a particularly adequate analysis of needs and maintain good partner co-operation.

One of the more current definitions of outsourcing is the transfer of a part of niche competencies outside the company. A well-planned outsourcing process results not only in a more orderly arrangement of the internal structure of the enterprise, but also in cost savings and the possibility of focusing on key aspects of the company‘s activity rather than investments in secondary areas of activity.



Remigiusz Efinowicz, Hicron

The Author: Remigiusz Efinowicz is Head of the application service department, responsible for building relationship with clients and partners on the West European market, including SAP SE. He has a wide knowledge of IT technologies and SAP products portfolio, backed by experience acquired in the projects carried out for the most demanding companies. He is deeply committed to creating the vision of Hicron, as well as setting its goals and lines of action.