There is always contention for IT funding, especially with the increasing requirements for digital solutions and to incorporate emerging technologies such as block chain, predictive analytics and artificial intelligence into the more traditional IT application portfolio.
As a result, provider organizations are constantly looking for ways to lower IT support costs. In the past that typically was accomplished by methods such as staff reductions or technology platform consolidation.
Today more providers are migrating to alternative delivery models where key services are provided by outside parties.
Examples of these type of service offerings include:
- Software as a Service (SaaS) or remote hosted agreements where the application vendor provides application support and operational services.
- Co-location or cloud based services where the processing and storage required to support the provider’s IT environment are outside the traditional data center.
- Managed services or outsourcing agreements where a provider contracts with a third party to provide specified IT services.
These solutions have been available, in some capacity, for many years but now they are becoming more common and all provider organizations, in my opinion, should consider them as part of their overall IT delivery model. None of these are a “one size fits all” solution but should be evaluated based on a provider’s unique requirements.
The overall delivery model likely will include a combination of these offerings along with retaining some traditional in-house IT support.
In addition to minimizing capital required for IT processing, the solutions also can allow foot print assigned to IT data centers to be more productively utilized (or lease cost associated with that space avoided) resulting in cost savings.
Also, there may be staff cost savings due to elimination of certain operations staffing. Finally, some agreements include the vendor being responsible for application upgrades which further allows providers to redeploy application support staff to more strategic projects.
Again, these solutions aren’t new (I was involved in healthcare IT outsourcing in 1990 for example) but given the financial requirements associated with implementing newer, more strategic solutions these are areas organizations should evaluate to free up precious capital and operating expenses.
In the next blog I’ll go over some additional benefits of alternative IT delivery models and also how to start the evaluation process.