Outsource or not?

The decision to outsource some or all of IT requires a close look at the skills needed for performing hardware maintenance, software upgrades and configuration management. While some companies prefer to control everything in-house, trends show that companies are increasingly outsourcing tasks such as Web hosting, application maintenance and infrastructure management. However, trust is an issue with outsourcing, particularly for technologies that directly touch users, such as access management, help desk and customer relations. Network executives explain when to outsource IT functions and why.

Outsource

Cede control over content delivery.

Outsourcing content delivery to Speedera Networks' global distribution network is cost-effective for streaming video provider IFILM. "We're not in the business of building a video distribution network," says Blair Harrison, CTO for the company. The portal's staff produces content, offering Web viewers more than 80,000 movie listings and 15,000 short films, along with news, reviews and movie clips.

Based in Hollywood, Calif., IFILM serves 6 million visitors per month. Outsourcing obviates the need to buy the switches, routers and OC-3 bandwidth required to push hundreds of megabits per second when traffic peaks at 3 million views in six hours, Harrison says. Instead, IFILM routes viewers' requests to Speedera's network of caching servers, which deliver the video streams from points of presence on more than 1,000 backbone networks worldwide.

IFILM also avoids hiring four network engineers to manage streaming software loaded on multiple platforms, including QuickTime Streaming Server for Linux, RealNetworks, RealSystem IQ server for Linux, and Windows Media Server for Windows 2000.

Outsource VPN services.

Aventail's VPN services have a good prognosis at Oakwood Health Care of Dearborn, Mich. The VPN services cost considerably less than the $200,000 annual call charges incurred by users, especially when factoring in the staff required to support the previous home-grown remote-access service (RAS), says Dan Paton, IT adviser for the hospital system.

The VPN service relieves IT of fielding complaints from users spread across four acute facilities and 35 ambulatory sites, who suffered with the old RAS system's low modem speeds and shabby carrier lines.

Paton says outsourcing offers an advantage over building the VPN infrastructure in-house: "Not having to do upgrades twice a year or keep current with technology changes is an added benefit."

Hand off management duties.

When Cendian launched in late 2000, the chemical shipping company outsourced the monitoring of its hardware, applications and data center systems to SevenSpace/Nuclio.

Cendian leases four Unix servers from SevenSpace/Nuclio, and relies on the managed service provider to monitor its Sun servers running Solaris, Compaq servers running Windows 2000, various Cisco switches, firewalls, and Oracle and WebMethods applications. In-house implementation would require eight administrative staffers, plus a slew of management tools, says Jeff Seargeant, technical systems manager for Cendian in Atlanta.

"We'd have to build our own data center and invest in generators, uninterruptible power supply devices, air conditioners and huge Internet connections," he says.

In-house

Keep control of critical functions.

Investment banking firm Putnam Lovell Securities outsources some portions of its network, but considers some applications, e-mail, security, network management and desktop support too critical for adopting an outsourcing model, says CTO Rodric O'Connor in San Francisco.

His IT department has the skills to perform hardware maintenance, software upgrades and configuration management on its WAN with aggregated data, voice and videoconferencing traffic. O'Connor says e-mail is critical for investment banking because of large volumes and attachments.

Concentrate on your core competencies.

IFILM is hanging on to the development of its application, encoded and editorialized video previews, clips and trailers, and exclusive independent films. The company's developers write the code for the applications to run on various browsers and servers. "It's the intellectual and creative substance of IFILM, just like Microsoft wouldn't outsource the development of its Windows application," Harrison says.

Tax Technologies, a financial and tax reporting software vendor, keeps development, security and customer service in-house "Our core competency is to understand our client's issues," says Jeff Wenger, CTO for the company in Bradenton, Fla.

IT updates servers with application revisions, and keeps its staging servers in-house to manage performance tuning.

Stand guard over security.

For Mt. Sinai NYU Health, keeping things in-house is done more because of security concerns. For the New York hospital, security is a top focus because of the confidential nature regarding patient data, mandating management of the back-end infrastructure, including the mainframe, portal and Citrix desktops, says Fred Eisenberg, senior director of IT and information security. The network of five hospitals manages access to patient data in compliance with Health Insurance Portability and Accountability Act of 1996, and other medical standards.

Outsourcing is risky when it comes to managing the hospital's data security requirements, Eisenberg says. "You open the door to a third-party and are one of many clients, meshed with everyone else on one system in a shared firewall environment. There's opportunity for mistakes that open up your environment to others and for information to be passed in the clear," he says.

Contact Feature Writer Suzanne Gaspar

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