Insource Confidential

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IT Outsourcing Does it Make Sense for Your
Company? June 15, 2006
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AGENDA
IT Outsourcing Does it Make Sense for Your
Company?

• What is outsourcing or managed services?
• What are the trends?
• Why should you consider outsourcing IT?
• Critical factors in determining whether
  outsourcing is right for you?
• What should you look for?

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WHAT IS OUTSOURCING?
IT Outsourcing Does it Make Sense for Your
Company?

• Partial or complete ownership or delivery of an
  IT service by a third party
• Either on-site, near-site, on-shore, near shore,
  or off-shore
• Typically broken down into three broad
  categories
• Infrastructure
• Applications
• Desktop service

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OUTSOURCING TRENDS
IT Outsourcing Does it Make Sense for Your
Company?

• Started in enterprise organizations clout and
  size
• Focus was to lower costs
• Difficult to continue that on-shore
• Off-shore companies emerged

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OUTSOURCING TRENDS
IT Outsourcing Does it Make Sense for Your
Company?

• Fewer larger deals - enterprise or
  multi-nationals
• Deal focus has changed cost is not the only
  driver
• Consider
• Time zone differences
• Cultural and language factors
• Customer satisfaction
• Image
• Hidden costs
• Enterprise providers need to expand their revenue
  opportunities mid-market is the new battleground

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SERVICES SPENDING TO INCREASE MODESTLY
IT Outsourcing Does it Make Sense for Your
Company?
April 2006, Data Overview 2006 IT Spending In
The SMB Sector
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OUTSOURCING TRENDS
IT Outsourcing Does it Make Sense for Your
Company?

• New companies are emerging and targeting
  mid-market
• Technical know-how
• Flexibility and shorter agreements
• Nimbleness
• Additional factors being considered
• Ability to offer end to end service and quality
  of service delivery
• Domain knowledge of the project (area of service)
• Industry and/or business knowledge
• Ability to take over personnel and sometimes
  assets
• References and cultural fit

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A data point Cost-effectiveness of outsourcing
is top of mind for clients
IT Outsourcing Does it Make Sense for Your
Company?
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OUTSOURCING TRENDS
IT Outsourcing Does it Make Sense for Your
Company?

• More mid-size businesses viewing technology
  strategically
• IT is a competitive advantage
• Shortage of skills to run IT efficiently and
  effectively
• Need for legal compliance
• Cannot afford the same expenditures as the large
  companies
• But see the need for the same types of solutions
  that large companies have

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WHY CONSIDER OUTSOURCING?
IT Outsourcing Does it Make Sense for Your
Company?
"Technology is always breaking"
"Technology is too complex"
"Need to retool"
"No one knows how to fix it"
"Projects take too long"
"Hard to find the right people"
"Takes time away from running our core business"
"Costs are unpredictable"
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WHY CONSIDER OUTSOURCING?
IT Outsourcing Does it Make Sense for Your
Company?

• Hidden Cost of Total Cost of Ownership (TCO) of
  IT
• Outages, slowdowns, disruptions
• Employee frustration
• Lost productivity
• Duplication of effort
• Non-direct personnel related costs (training,
  recruiting)
• Lack of standards, costly mistakes and no
  recourse

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CRITICAL FACTORS IN DECIDING?
IT Outsourcing Does it Make Sense for Your
Company?

• Is executive management ready to make and support
  the change?
• Is the company ready to conduct governance?
• Is the company ready to embrace a partnership
  role with the service provider with a mutual
  sharing of information?

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A data point The majority of firms have formal
vendor management functions
IT Outsourcing Does it Make Sense for Your
Company?
November 2005, Data Overview The State Of Vendor
Management And Sourcing
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A data point Formal sourcing and outsourcing
satisfaction are not correlated
IT Outsourcing Does it Make Sense for Your
Company?
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WHAT SHOULD YOU LOOK FOR?
IT Outsourcing Does it Make Sense for Your
Company?

• Last several years have seen large increase in
  growth of providers servicing the SMB market as
  well as growth in the number of companies seeking
  the services
• Direct result of the providers looking for new
  opportunities
• Fast becoming a self-regulated market for Managed
  Service Providers

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WHAT SHOULD YOU LOOK FOR?
IT Outsourcing Does it Make Sense for Your
Company?

• Managed Services
• Proactive
• Recurring Billing
• Predictability
• Better Performance /Alignment of Interest
• MSP Makes When Things Work

• Break/Fix
• Reactive
• Sporadic Billing
• Cannot Predict Accurately
• Interests Not Aligned
• Provider Makes When Things Are Broken

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DO YOU NEED A MSP?
IT Outsourcing Does it Make Sense for Your
Company?

• Do you have an IT department?
• Are they full time?
• Do they have depth and breadth of expertise?
• Do they have access to tools?
• Do they have enough time?
• Do you have to comply with regulations?
• Have you ever suffered from a security breach?
• Is IT important to your business?

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WHAT SHOULD YOU LOOK FOR?
IT Outsourcing Does it Make Sense for Your
Company?

• Service Verticals
• Servers
• Desktops
• Wide area network
• Security
• Storage
• Backup
• Email/messaging
• Applications

• Market Verticals
• Oil and Gas
• Financial Services
• Healthcare
• Manufacturing
• Construction
• Etc..

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WHAT SHOULD YOU LOOK FOR?
IT Outsourcing Does it Make Sense for Your
Company?

• Is the MSP credible?
• Are they offering proactive or reactive services?
• Are services offered 24x7?
• Are references available?
• Are you looking for a generalist or a company
  that can provide specialist services where and
  when needed?
• Are you ready to apply governance?
• Outsourcing or using a MSP is an executive, not
  an IT decision

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SUMMARY
IT Outsourcing Does it Make Sense for Your
Company?

• Managed Services can bring
• Improved security
• Improved IT performance and service
• Predictable costs through planning and budgeting
• Access to broader and deeper technical skills
• Make sure you pick a qualified MSP
• Be prepared for governance
• Take your IT investments seriously and they will
  serve you well

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CONTACT INFORMATION
IT Outsourcing Does it Make Sense for Your
Company?

• David Duchen
• Vice President
• Managed IT Services
• david.duchen_at_insource.com
• 281-774-4008 Direct
• 281-774-4020 Sales
• www.insource.com

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IT Outsourcing Does it Make Sense for Your
Company? June 15, 2006
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A data point Apps and infrastructure outsourcing
demand is increasing among midmarket firms
26
A data point Cost-effectiveness of outsourcing
is top of mind for clients
27
A data point The majority of firms have formal
vendor management functions
November 2005, Data Overview The State Of Vendor
Management And Sourcing
28
A data point Formal sourcing and outsourcing
satisfaction are not correlated
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Services Spending To Increase Modestly
April 2006, Data Overview 2006 IT Spending In
The SMB Sector
30
A data point Apps and infrastructure outsourcing
demand is increasing among midmarket firms
IT Outsourcing Does it Make Sense for Your
Company?