In times of economic prosperity most companies’ information technology departments are perceived as a critical component that can drive top line revenue. Conversely, during times of extended recession, IT can become one of the first and most aggressively targeted departments for cutbacks. Regardless of how efficient the department may have been running before budget reductions, IT often is expected to do more with less.
So how can a downsized IT department remain a productive part of an organization? Many companies expand the use of staff augmentation or professional services consulting. However, before working with an outside provider, there are some critical factors to consider.
First, you must understand the differences between each option. In a staff augmentation scenario, the company adds external resources to supplement their existing staff. Consultants work at the direction of the company. The company is responsible for tasks and deliverables; planning and managing the project; and, ultimately, delivering results.
Ideally, professional services consulting is more like buying a solution. In this scenario, the company outsources its project delivery to a third party. The third party is responsible for tasks and deliverables; planning and execution; and is partially accountable for the results.
Both alternatives can be effective and both have their place. To help you make the right choice, consider the following three key decision criteria:
1. Internal delivery capability
Many companies have a project management office and project delivery tools and standards. How comprehensive and effective these are vary. A company must evaluate the size and complexity of a given project and honestly assess their ability to undertake it. While project management and delivery capabilities exist within most companies, it is often not their core competency. If this is the case and a project is large and complex, professional services consulting firms provide a viable alternative. Be sure that the consulting firm has a core competency in delivering specific types of projects to increase the probability of success.
If you are comfortable with your internal standards and processes, but are lacking specific skill sets, staff augmentation could be the most viable option. Using this solution will allow you to develop and maintain knowledge of your core applications that will be useful in ongoing support.
2. Support and knowledge transfer
A great advantage in delivering a project with primarily internal resources is the knowledge gained during the project that can be applied to the ongoing support of the application. However, managers should keep in mind how quickly the size of IT can grow when you try to support all of your specialized applications internally.
Outsourcing project delivery to a professional services firm may provide for a better chance of successful implementation, but can come with a lot of apprehension around how to support the application after the experts are gone. Therefore, it is critical to ensure that knowledge transfer is built into the project plan and specifically addressed in terms of tasks and deliverables in the project statement of work. This plan should include documentation; user and technical training; a maintenance plan; and possibly ongoing support from the firm that provides you access to specific expertise when you need it. Outsourcing all of the ongoing support of the application to the professional services consulting provider is another viable option to consider.
3. Cost, duration and quality.
Most often, project requests come with a target date and budget allocation. Staff augmentation hourly billing rates will be lower than professional services consulting rates. If you have the expertise and delivery capability, augmenting your internal staff will be a more cost-effective solution. However, should the project take significantly longer to complete in the staff augmentation model, you may defeat any cost savings.
You also need to consider the quality of the deliverable. Even with higher rates, professional services consulting can represent a lower cost and more predictable outcome when you are lacking in delivery capability or expertise.
Careful consideration of these three key criteria before making a decision on staff augmentation versus professional services consulting will help you optimize external support resources. Whether in times of prosperity or recession, a thorough understanding of your options before choosing a direction is smart business that will ensure desired results and save significant dollars.
James E. Thompson is president and CEO of The Insource Group, an information technology resource provider. He can be reached at firstname.lastname@example.org.