Why Outsource Application Management?

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Why Outsource Application Management?

• By Chuck Vermillion
• CEO Founder

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Application Management
Companies typically find the demands of
application management overly complex. As a
result, more and more companies are turning to
outsourcing application management functions.
The fundamental value proposition offers service
improvement and cost reduction from sharing the
outsourcing providers technical
resources.   Even in challenging times,
organizations need to maintain application
management at peak performance levels. Finding
ways to cut costs and still provide high service
levels remain a top priority of senior
executives. One area where they can reduce costs,
while continuing to serve the company, is through
outsourcing application management.
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Application Management
For companies of all types and sizes, the
demands of application management frequently
divert resources away from core business
functions. Company-wide applications, like
Enterprise Resource Planning (ERP) systems, are
so ingrained within companies that little
productivity can take place without them. These
applications are complex, expensive and require
specialized resources to properly manage them.
  As a result, more and more companies are
turning to outsourcing application management
functions. The fundamental value proposition
offers service improvement and cost reduction
from sharing the outsourcing providers technical
resources.
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Simultaneous Service Improvement and Cost
Reduction

• Reduced system downtime is a major contributor to
  service improvement in an outsourcing scenario.
  An outsourcing providers specialized application
  expertise, proven internal processes and diverse
  experience help ensure high levels of systems
  availability.
•  
• Another important way outsourcing improves
  service and reduces costs involves application
  implementations. When companies take on
  enterprise application projects, they risk cost
  and time overruns. These overruns deplete the
  resources available for core business functions
  and delay the benefits of the project.
  Outsourcing application management eliminates
  these risks and provides predictable, regular
  costs.

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Sharing the Cost of Technical Resources
Sharing the cost of technical resources among
multiple businesses almost always reduces costs
for outsourcing customers. A recent IDC study of
54 outsourcing customers found an average return
on investment of over 400 and a payback time of
less than six months for almost half the
participating companies.   Using an outsourcers
technical specialists, especially those not
required on a regular basis, highlights the
fundamental economy of scale associated with
application management outsourcing. An
outsourcing provider can justify numerous
specialists and distribute the cost over many
customers. Most individual businesses cant begin
to justify the cost of the expertise they need.
 Because organizations often cant afford to
employ all the specialized resources required,
they hire generalists to fill in the gaps. This
approach not only diminishes the return on
investment for the ERP system, but also produces
lackluster results, creates stability issues and
unnecessarily taxes the IT staff.
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Leveraging Outsourcing for Real Business Benefits
Outsourcing convincingly improves systems
availability and eliminates the need for costly
in-house specialists. But, customers also
benefit from   Current Technologies and
Expertise. Application management outsourcers
must keep up-to-date with advances in technology
to best serve their customers. Enhanced Security
and Disaster Recovery. Maintaining a secure
environment protected from all types of threats
is critical for both the outsourcing provider and
its customers. Reduced Risk with Regulatory
Compliance. An outsourcers SAS 70 Type II
compliant environment can assist the customer
with Sarbanes-Oxley audits
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Leveraging Outsourcing for Real Business Benefits
Increased Agility. An important factor in a
companys ability to recover from the economic
recession, agility allows quick scalability of a
customers services up or down.   The benefits of
application management outsourcing are compelling
and well supported by customer satisfaction
surveys. With careful planning and vendor
selection, companies can leverage an outsourcing
providers capabilities, skills and market
maturity to further their own business
activities.   Contact your local application
management outsourcer for more information on how
your business can benefit.
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About the Author
Chuck Vermillion is CEO and founder of OneNeck
IT Services, a leading provider of mid-market
enterprise hosting and managed services since
1997. For more information about our Application
Management solutions, visit http//www.oneneck.com
/Solutions/HostedApplicationManagement/Application
Management.aspx today.