Updated 3/1/2021 at 2:00 pm ET
As an organization makes advancements and grows, its technological needs and team advance and grow along with it. The information technology (IT) needs of middle market organizations are vastly different than the IT needs of a small business. Experiencing organizational growth can uncover pain points and gaps in technology that weren’t felt before. When these gaps appear, organizations often wrestle with the fact the business requires someone to fill the role of a Chief Information Officer, but the resources just aren’t there to acquire an internal CIO. As a result, many organizations have turned to the solution of outsourcing their CIO along with many of their IT needs.
Any organization can benefit from the services provided by an outsourced CIO. Organizations entering new markets, experiencing greater rates of growth, or facing increased competitive pressure often realize the greatest benefit from outsourcing this function. Utilizing an outsourced CIO brings additional insight, perspective, and experience from senior executives dedicated to aligning technology strategy with organizational objectives.
The outsourced CIO acts as an executive level consultant to educate the C-suite of the organization on the complexities of technology at work in their business, and help set the strategic IT goals to align with the operational goals.
Outsourcing the CIO function can provide numerous logistical benefits to an organization:
- Strategic technology plans – addressing short and long term needs
- Optimize technology costs and savings – freeing up crucial resources
- Focus IT efforts on the right priorities – creating greater process efficiency
- Implement enterprise level solutions – aligning IT and business goals
- Short- and long-term boosts in productivity – improving user engagement
- Improved security and security management – mitigating risks and threats
- Modernize technology and services – using the right tech for the right process
Many organizations that outsource the CIO function choose to outsource portions of their IT department as well. It is typically recommended for organizations to spend anywhere between one and seven percent of their revenue on information and technology services. A chief benefit of outsourcing aspects of IT is that it can help bring that spend under control if it’s too much. Conversely, if an organization feels unable to meet the recommended spend on IT, or if it hopes to achieve more with less, outsourcing sections of IT can make that dollar go further in the short term.
It is becoming more and more common for businesses of all sizes to outsource aspects of their IT needs. Over the course of the past several years, organizations have begun to shift their technology model. Where businesses once owned and operated the majority of their technology, they are now opting for a more cost efficient and process efficient model of acquiring technology by leasing it from an equipment provider. In response, businesses have begun to outsource the talent as well as the equipment.
If a business has outsourced IT from a tactical perspective, it makes having the strategic perspective of an outsourced CIO even more important. The outsourced CIO has a strong ability to engage numerous vendors to provide the best possible solutions for the business.
An outsourced CIO also helps to keep the internal burden of managing technologies as limited as possible, enabling the C-suite and senior management to focus on more pressing operational issues. Not only does this free up valuable time and resources for the organization, it guarantees a knowledgeable and experienced individual is in the position to help push the business forward. However, a costly mistake organizations often make when outsourcing the CIO position and various IT functions is assuming the responsibility of oversight is no longer on their shoulders. The capacity may have been outsourced, but that simply means outsourced tactical and strategic partners are being deployed at the benefit of the organization to aid its operational efficiency. The C-suite must still be engaged in the process and must still understand the potential risks.
The extent to which an organization’s IT can be outsourced is dependent on the industry, the organization’s needs, and the relative size of the organization. Typically startups operate with nearly 100% of their IT needs outsourced because it doesn’t make sense yet for them to bring those functions in-house. Most organizations benefit from a hybrid approach to outsourced IT. Generally, the 80/20 Rule is a good baseline to follow for outsourcing IT. In many organizations, about 80% of the IT functions can easily be outsourced, while the remaining 20% stay in-house. The IT that remains under internal control are typically the most vital or are aspects of the business completely unique to its operations.
Technology’s overall impact on a business is significant, and it becomes more vital every year. An outsourced CIO and IT specialists are meant to be an extension of an organization’s team – much more than a typical consultant. At SC&H, we recognize that remarkable service, deliberate communication, and continuity are instrumental to a successful partnership. The outsourced CIO and IT models engaged by our skilled executives are backed by the proven results of a passionate team committed to achieving the goals and needs of every organization we work with.
Ready to Elevate Your Technology Strategy?
If you’re experiencing rapid growth, looking to fill a CIO role, or need guidance on how to adopt technology that will help your organization realize its short- and long-term goals, we’re here to help! Reach out to our Technology Advisory team with a message about your pressing needs and we’ll steer you towards the right innovative technology to meet your demands.
SC&H Group’s Technology Advisory Services professionals help middle-market businesses and nonprofit organizations adapt to new technologies and implement strategic plans that enhance progress, generate value, and accelerate growth. Learn More