Economy and IT Outsourcing
9/10/02

As the U.S. economy struggles through recession, most companies find themselves operating in "survival mode," focusing on cost reduction while attempting to retain customers. More so than at any other time, this mind-set places pressure on employees at all levels to extract greater value from existing IT investments, especially those in business intelligence (BI) tools and analytic applications.

Whereas once BI was heralded as a means for competitive differentiation, it now can make the difference between survival and business failure. Based on the information-rich transactions generated by enterprise resource planning (ERP), customer relationship management (CRM), e-commerce systems, and document management systems. BI solutions empower managers to closely monitor costs and minimize customer churn while reducing production costs.

However, just 20 percent of the useful information generated by the average enterprise stems from these types of transactions - what of the other 80 percent?

According to Gartner Inc., the vast majority of information generated is of the unstructured variety and stored within documents, e-mail messages, presentations, spreadsheets, and other formats. Content created by employees - not the artifacts of operational systems - comprise the majority of a company's information assets. Yet, despite this significant investment, managers have no way of knowing whether it supports a healthy bottom line or impedes corporate performance.

The creation and maintenance of unstructured information is typically viewed as a cost center, due to the simple fact that it is difficult to tie content to revenue-producing activities. Therefore, many companies employ content management systems to automate content workflow, catalog and index content and offer portal-based content access - all of which help rein in the costs of managing and providing access to escalating volumes of unstructured information.

As a means to reduce costs and improve employee productivity, content management systems combined with document management models are necessary. Yet, most corporate information assets are not considered within the context of traditional business industry tools and applications. Thus, management has little choice but to view content investments as a cost of doing business - albeit one that presumably contributes to revenue attainment.

ASP outsourcing is a new breed of BI solution designed to help companies quantify the value of information assets within the context of business processes. Blending concepts from existing BI solutions and academia, document/content score carding can transform content investments from a cost center into a profit-generating member of the corporate value chain.

Enter the outsourcing ASP model:

Currently companies are strategically outsourcing their non-core functionality issues without costing jobs, by utilizing an ASP model in an outsourcing provider.

In a recent study by Phillips Group (January 2002) the findings were significant to support the cause, concluding that both large enterprises and small to midsize businesses say 65% percent of large enterprises (500-100,000 employees) will use ASP services for internal applications by 2004, and 72% will use ASP model's for e-commerce. Among small to midsize companies (those with 40-499 employees), 44% are projected to use ASP's for internal applications and 53% for e-commerce by the same year.

What does this mean to your company? Cost savings, by reducing your production costs by as little as 25% will increase your bottom line, reduce staff overload and clearly offer new methods of doing business.

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