Business Technology

Outsourcing your IT to the cloud: The business case for it

5 min read

20 November 2015

Outsourcing IT to the cloud cheers the finance team up, reduces stress for the CEO and presents new opportunities for the business.

CFOs quickly see the benefit of moving to the cloud. Not only does spend on IT begin to drop but so does the headcount. CEOs, will see the benefit too, not only because of the reduction in cost but because of the opportunities that this creates for the business.

In-house computing can cause headaches through accumulated hardware and software and the need for staff to support it. The effectiveness of the IT is reduced and cost piles upon cost, some of it predictable, some not, impacting on gross profit. Security of data must be heightened, further increasing overheads.

Add on losses incurred by downtime and the cost of user licenses and the picture becomes less rosy still.

How can an SME turn situations liked these around? The IT could be retained in-house but rationalised as best as possible. Buying new servers and desktops could be prohibitively expensive and not meet the requirements of the business by having too much or too little spend. The CEO is unlikely to be happy at the prospect of more financial outflows with uncertain results. 

Viable and practical option

Outsourcing to a cloud services provider is a financially viable and practical option for many SMEs. 

With a reduced headcount in IT, a more cost effective computing set up (now at the cloud services provider end, in a secure data centre) and a flat monthly fee, the attraction is clear. Add in the enterprise-grade data security and online security provided as standard by high end providers and the argument for moving to the cloud becomes persuasive.

Where outsourcing happens, the remaining IT staff manage the provider and software vendors and provide support internally if the size of the company justifies that. 

But with IT’s unpredictable and sometimes high spend now out of the way, life will be less stressful for the CEO and the finance team.

Every business manager knows that keeping the headcount in check represents a long term saving, not only of the direct costs of employment but also in the management time required to scale up and down – recruitments costs, interview times and so on. 

In some businesses, metrics are even measured on a staff basis; that is, revenue per employee, gross profit per employee and so on are taken into account. Clearly, reduced staff numbers help present the efficiencies created by outsourcing.

In addition, the business will have the opportunity to take a hard look at how staff work, see if office space can be saved or any need for new offices put on hold or dropped, and reappraise how it communicates with its customer base and the market as a whole.

More mature

Because cloud computing allows greater operational flexibility a business can become instantly more mature in its approach to hours of work. 

Staff can work from anywhere with any device, when they want or when the business wants, or if unforeseen circumstances – a fire in or near the office, tube strikes, or bad weather affecting travel to work – require it. Employees who need to stay at home to look after a sick child also benefit, because they can work as seamlessly as if they were in the office.

The CEO can justifiably ask: With a more mobile and flexible workforce, does the business need all its office space? 

To quickly summarise, cloud computing allows traditional approaches to IT to be dropped in favour of advances and opportunities made possible by the cloud approach – and a healthier balance sheet. 

Outsourcing the IT means the finance team is happier because it finally has a head lock on costs, while the CEO finds that unrealised potential and capacity in the business, including in its staff, can help it in a number of key ways.

Joseph Blass is CEO of WorkPlaceLive.