Outsourcing, Managed Services and SaaS, which is right for you?

So the other day I was sick. Not horribly sick, but just sick enough that I could ask people to do things for me and not feel guilty. And as the one person who could put up with me was running about, making me a sandwich or refilling my water glass, tying my shoes and so forth—I couldn’t help but think about outsourcing. I mean a person could certainly get used to having minor but meaningful tasks done for them on a daily basis. I know I could.

Now I understand that the term Outsourcing is used fairly ubiquitously around the water cooler and boardroom; in reference to a whole slew of outsourcing techniques like Software as a Service (SaaS) or Managed Services. But in reality, these things are different. And it’s probably important to understand how they’re different if a company wants to take advantage of the service that’s best for them.

So what makes them different? Well, with SaaS, the customer has to use whatever solution the vendor provides. The solution comes as a standard, out-of-the-box and doesn’t allow a lot of customization. Outsourcing, on the other hand, takes processes and systems that already exist in the customer’s work environment and hands the operation over to a chosen vendor. With the last choice, managed services, a provider offers the customer a system it can customize to an extent, then takes on operational responsibility.

To take the level of complexity down yet another notch, pretend I outsource cars made of LEGO’s. In a SaaS model, I come to you with the LEGO car already built, then allow you to use the car while I take care of its maintenance. With managed services, I bring you the LEGO car, let you paint it—maybe give it some new rims—and then agree to look after it for you. In the outsourcing approach, I simply agree to operate the LEGO car you’ve already built.

Regardless of the definitions the result for media companies is more or less the same—someone else takes care of one of their key business aspects for them. According to the 2009 WAN Outsourcing Survey, Outsourcing helps companies save an estimated 10 to 50 percent of their in-house costs. Not bad, when you also figure in that cost savings the added benefit of peace-of-mind—that a company doesn’t have the operation of these functions hollering in the back of its head.

One example the study uses is of an Italian media company that outsourced its newspaper’s editorial content management system. The publisher wanted to increase the footprint of the main paper by offering local editions in other parts of the country. It was the cost of starting the project that led the media company to consider outsourcing. The publisher realized the initiative would take significant investment that would leave it little capital to make changes in the future. By outsourcing, the initial investment was not nearly as large and the company could save money in case they needed to make changes further into the project. Given these circumstances the company was able to move forward and achieve some significant results. Since starting the project, it has created 13 new local titles that helped increase its revenue by nearly 6 percent in the first year alone.

That’s pretty impressive if you ask me. But I’m not an expert. Luckily, though, Atex is. And if you want more information please check out the Services section of our website. Or if you’d like to read a case study about the Italian customer mentioned above, please click here.