Binod Taterway, founding partner at outsourcing firm Blue Canopy, identifies four levels of complexity inherent in any IT organization. Here he explains them and tells why outsourcing becomes a less practical option as complexity increases.

1) Network infrastructure. Lowest on the complexity food chain, networks are the most easily measured and managed, and thus, the most easily outsourced, Taterway says. "Not only is network infrastructure well established, it can also be well instrumented so that you can track it easily and provide good insight into it. It's a good place to start."

2) Physical infrastructure. This includes hardware, operating systems, storage devices and so on. These too can be somewhat instrumented, he says, but the complexity lies in their lack of plug and play. "If one storage array goes down, can you switch to another, and do you have the infrastructure to do the switching and track it?" he says. "And do you have different SLA parameters because you're providing storage on a contingency basis, and how do you bill for those?"

3) Data . Outsourcing the database environment is even more complex because sometimes business processes are stored within the data. "If you're outsourcing that, what does it do to your core competency?" he says. "Can you change your business processes on demand when they're tied so closely to your data, which is managed elsewhere?"

4) Applications . The most complex, at least in the IT world, are the applications that are core to running the business. "If you outsource applications, you have less utility and a more tightly coupled relationship between the provider and client," he says. "It's far less flexible and far more difficult to do successfully."

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