In the earliest days of the digital revolution, IT providers were essentially specialists. Each offered a small range of services, meaning that in order to get what they needed, businesses had to interact day to day with a handful of different vendors — often with mixed results.
It was like the left hand didn’t know what the right one was doing. Vendors, used to viewing each other as competition, didn’t want to play nice with one another. Or they’d keep their focus too narrow. Sure, they’d get you X and Y, but when you tried to make it work with Z? Chaos. And then when a problem did come up, the blame would usually get passed between different providers, none of them willing to take responsibility.
It’s not that these vendors didn’t care about their clients. They just didn’t have the incentive to do anything better. Their economic prerogative was to negotiate the highest fee with the lowest labor commitment. And with no other solutions available, all managers could do was shrug their shoulders and sign the contract. As you might imagine, that resulted in some pretty low-grade work — and lots of headaches on both sides of the coin.
Of course, in today’s digital ecosystem, where there’s a problem, a new solution inevitably pops up. Naturally, the problems with multisourcing — the term for outsourcing work to multiple vendors — led to the formation of managed IT providers. Managed IT offers a broad range of services and almost every kind of equipment you could think of — all from one provider. Because the provider has a larger stake in your business, they’re naturally motivated to do the best job they can. It’s a win-win for productivity and business-to-vendor harmony.
Even so, some small business owners and CIOs prefer multisourcing, citing this strategy’s flexibility and cost as deciding factors. When a new need arises, multisourcing companies have the option of adopting another vendor, rather than being limited by the scope of their managed IT provider’s offerings. Of course, businesses that adopt this technology strategy typically have to invest more time in vendor governance — or hand this work off to their IT provider, in the case of an all-in-one IT department. Below, we’ll look at some of the pros and cons of the two different strategies to help you decide which one is right for your company.
Right off the bat, there’s a prominent difference in contract negotiations with an all-in-one managed IT partner versus multiple vendors. CIOs who favor multisourcing quickly learn to include terms spelling out vendor-to-vendor collaboration and cross-provider governance. Because operations are split into different technology towers, these CIOs must take pains to clearly define each provider’s obligations — or pay for it later. Often, this takes the form of baked-in “pain sharing” end-to-end service level agreements (SLAs), in which vendors share punitive measures for a breach of contract. However, there’s a risk here that the contracts will contain conflicting delivery terms as well, eventually resulting in disconnected agreements. By contrast, maintaining a single managed IT contract is much more straightforward, making it popular with businesses hoping to streamline the contract management process.
One of the big downsides of multisourcing is that you may lose visibility into ongoing projects. Yes, IT vendors typically offer reporting and insights, but they’ll only be covering their small slice of the pie. You may have to struggle to get a broader picture of how day-to-day operations are proceeding across providers. And that difficulty alone means teams typically need to dedicate more of their internal resources to vendor management. Essentially, you have to hire a passel of in-house employees just to make sure everything is going smoothly. Managed IT vendors, on the other hand, provide regular reports so you can easily understand how all your tech is doing. For instance, at Taylored, every one of our managed IT clients is connected with a Virtual CIO who meets frequently with client contacts to make sure all key players stay informed. In that sense, it’s a win for team productivity.
Before deciding on your company’s IT strategy, you’ll need to predict your needs for the future — not such an easy task these days. Futures shift rapidly in today’s digital economy, and new tech empires can rise or fall in a matter of months. If you want to stay the course for the long haul, you must bend to change rather than resist it. And that means doing everything you can to keep operations scalable. One of the big benefits our all-in-one IT departments offer to clients is the ability to scale up as they grow, then back down when it makes it more fiscal sense — without compromising network stability or experiencing service gaps in the process. Sure, you could accomplish the same thing by cutting a long-time vendor loose, but you might have to give up a whole technology tower, rather than just reducing your IT services. Managed IT makes it easy to be flexible.
So why would a business owner choose multisourcing over managed IT? The answer usually lies in vendor expertise. Multisourcing allows companies to capitalize on vendor specialties, taking advantage of the talent that niche vendors offer. Managed vendors provide a broad selection of IT services, but they may not be as competitive when it comes to certain areas of technical prowess. At Taylored, we don’t pretend to offer every kind of service your company will need as your business needs fluctuate. Instead, our Virtual CIOs will work directly with additional vendors as necessary to deliver the same level of oversight to every project. We’re happy to take on a vendor manager role so that you can leverage the best talent — without contractual obligations getting in the way. We think of ourselves as your remote IT department — as a partner, not a vendor — so collaboration is baked right into our business model. And that means you can spend less time hiring and negotiating with vendors, and more time on your core competencies.