There's been quite a lot of feedback to my blog post the other day regarding how small/medium buisnesses should really be thinking about outsourcing all of their IT (or as much of it as possible). Most of the feedback seems to concur that it really makes no sense for SMBs to insource given the state of the state in terms of what's available as a service today and how reliable it is.
It didn't take long for Nick "IT Doesn't Matter" Carr to piggyback my post with one of his own that said:
Ironically, even as many smaller companies are embracing hardware hosting, software-as-a-service, and other forms of utility computing, many others are currently building up their IT assets, drawn by low component costs. I think those companies are going to end up regretting a lot of the investments they're making. They'll soon find that the highest IT costs aren't component costs but labor costs, maintenance costs, electricity costs, and other secondary expenses - and that owning your own gear ends up reducing your flexibility rather than increasing it.
On the e-mail backchannel, Nick said "there are 10-person firms that have Exchange servers running in closets. It's crazy." Agreed. It's completely nuts. If you must have Microsoft's Exchange Server, there are probably hundreds of companies like Centerbeam that you can outsource Exchange Server hosting to (and they'll even hook you up with Blackberries and stuff like that if you need them) and then, once you outsource, all you have to do is modify the MX record on your company's DNS entry. Here, in the comments area of ZDNet, Donnieboy was on the same wavelength as Carr when he wrote:
All of the issues arround acquiring a data center including selecting the hardware, selecting the software, hiring the employees to run it and do the programming, keep the systems patched and secure, making you have 24x7 coverage, is just one huge distraction and headache.
Nick thinks small businesses buy gear more out of habit than because of the myth that they need to. In writing a post entitled Allow me to pile on the bandwagon, Chris Wilson at Washington state-based consultancy Indigo Moon Systems expanded on what I think those in a position to sell infrastructure to SMBs should be saying to those SMBs before making the sale:
[David Berlind has] a great quote, and it's one that you should be thinking about the next time you have a conversation with whoever you're getting your IT advice from these days "But a real IT partner should say Well, we'd be happy to sell you that storage, but perhaps there's a different way you should be thinking about your IT"..If you're not hearing that, or something like it, think about who you are relying on for purchasing advice these days. If they aren't at least pointing out that you have service-oriented alternatives, get a second opinion.
I second that (not the great quote part... but rather, the what you should do part if your IT supplier never mentions the outsourcing option).
Also on the backchannel, regariding SMBs outsourcing their IT, John Gates asks why stop there? Outsource your telephony while your at it. Gates has a vested interest in the discussion. He represents Whaleback Systems -- an outfit to which SMBs can outsource PBX-style telephony for $50 per seat per month. It involves on-premises gear and IP-based telephony but is billed to the SMB as a managed service (read: it hits the accounting books differently too). Wrote Gates:
All infrastructure requirements are managed by Whaleback and call quality is assured by Whaleback’s unique end-to-end 24x7 network monitoring and management of every phone and every call....a premises-based IP PBX managed service is a system that acts and looks like a traditional PBX service featuring a server on the site of a business which handles the switching of calls and media services (ie: voice mail etc), but is managed, controlled and monitored by the third-party service provider....The managed service model is all inclusive....Whaleback customers pay a fraction of the cost for installation, configuration and leasing of equipment and a low monthly service fee of $49.95 per person for unlimited local and domestic calling and 24X7 monitoring and support. The fee also covers the charge for DSL or cable connectivity. For my business, I use the managed service. I paid about $1.5K for the installation of 7 phones and the IP PBX system and pay $350.00 per month for the service which includes the cost of the DSL connection and calling charges.
Fifty dollars per month for unlimited domestic calling and full PBX functionality without the need to hire your own Centrex person? Sure, if you're an SMB, you can roll you're own VoIP or try to use Skype or something like that. But, to get telephony backed by a service level (quality) agreement and 24x7 support for $50 per month per seat? Whaleback probably has competitors so I don't want to come across as endorsing just this one company. But, once again, outsourcing yet another part of your SMB sure seems like a no-brainer to me.
But not everyone agrees on outsourcing. Wrote one commenter on ZDNet:
However, small businesses are not typical consumers of SANs, in my experience as a consultant. In many markets (accounting, for one) the case can be made easily for a single server with a reliable backup solution. This does not require full time in-house staff, and although it does not promise the uptime of externally hosted solutions, it allows the business to keep closer tabs on privacy and information protection, and over the course a one to three years, the cost of duplicate backup hardware (the whole server) is likely to be recouped.
Speaking of small businesses running their own servers and backups, the food had barely digested in my stomach (from the dinner with the folks from EMC where this was the topic of conversation) when an e-mail turned up in my inbox pitching an insourced storage solution. Here, slightly modified to protect the innocent since I don't have permission to reprint the letter verbatim, is what the e-mail said:
a [doctor] has implemented the solution for data protection to ensure that his SQL database and patient photos are backed up first to [our product] and then onto tape. It's the portability of [our product] that sold him because in the event of a hurricane he can simply power down [our product] and throw it into one car and take the tapes in another and have all their critical information on two different devices. Small business can solve problems in ways that big business can't imagine!
I think the statement that "small business can solve problems in ways that big business can't imagine" is correct. Through outsourcing. Or, our doctor friend can just keep the data on a server in some data center that's accessible from anywhere in the world and let the hoster worry about fault tolerance and reliability. Why on earth would a doctor want to be driving around with data in his or her car and (and tapes in another -- something I totally didn't get) and worry about how to re-establish the operation of a mission critical application at some separate location? Doctors -- particularly ones running away from a deadly hurricane -- should have the freedom to focus on their patients. Not their IT.