MSP Insourcing: Is Internally Managed the Best Move for Your Enterprise?
Nimble Global
Rethinking Managed Service Provisioning:
The Insourcing Revolution
In a business landscape where the status quo is continually questioned, many organizations are reconsidering traditional service provision models. One of the most transformative shifts has been insourcing the Managed Service Provider (MSP) instead of outsourcing.
The Financial Equation
Firstly, let's examine the economics. How much did your MSP charge vendors last year? The financial implications of these charges often loom large on an organization's balance sheet. The longstanding argument that a third-party MSP can outperform an insourced model has increasingly been scrutinized.
Nimble Global - Best Practice: Conduct a complete cost-benefit analysis, considering not just supplier and vendor fees but also the intangible benefits such as agility, control, and compliance that an insourced model may offer.
Technological Innovation
The fusion of Vendor Management Systems (VMS), cloud-based technologies, and advancements in recruitment practices has revamped how businesses function.
Organizations can now onboard experienced MSP talent and actively utilize technology with top-tier analytics. All this often comes at a substantially reduced cost compared to conventional MSP models.
Nimble Global - Best Practice: Regularly update your technology ecosystem and recruitment practices to stay abreast of industry innovations and best practices. Consistently evaluate these systems' return on investment (ROI) to ensure they deliver value.
The Power of Allocation
When you insource your contingent workforce MSP, the fees vendors used to pay to the MSP are now funneled back into your organization. This opens up new avenues for resource allocation, whether for HR initiatives, cost-saving measures, or other strategic operations.
Nimble Global - Best Practice: Create a comprehensive financial model that explicitly demonstrates how insourcing could redirect funds to various departments. Establish KPIs to evaluate the impact of these financial allocations within the enterprise over time.
Strategic Workforce Planning
Insourcing doesn't merely represent a financial shift; it signifies a move toward strategic workforce planning. In an insourced model, the MSP is not an external entity but an integral part of your organization. This intimate association naturally fosters greater accountability and personalization.
Nimble Global - Best Practice: Involve stakeholders from across the organization in the strategic planning. For a well-rounded insourcing strategy, ownership and accountability should be distributed among diverse departments, including HR, finance, and operations.
Dispelling the Insourcing Myth
Over time, a certain 'hoopla' has permeated the MSP industry, casting doubt on the feasibility and efficacy of insourcing. Today, however, industry partners like Nimble Global can significantly minimize these risks.
Nimble Global - Best Practice: Consider involving a strategic insourcing advisor to provide industry-specific insights and identify potential pitfalls. Collaborative problem-solving and knowledge-sharing are vital to neutralizing insourcing myths.
A Tailored Approach
At Nimble, we appreciate the uniqueness of each business. Our approach is inherently flexible and consultative. We embed our team of industry professionals within your organization's internal discussions, promoting creative thinking, lending thought leadership, and steering the business case towards approval.
Nimble Global - Best Practice: An initial pilot phase can be an excellent way to prove the business case for insourcing. Use the pilot to refine your approach before rolling it out on a larger scale.
Are there any risks to insourcing?
Certainly, insourcing an MSP isn't without its challenges and risks. Understanding these can help craft a more nuanced strategy for insourcing your MSP.
Lack of Expertise
Shifting from an outsourced to an insourced model may reveal gaps in internal expertise. You might find that your team lacks the skill sets that the third-party MSP provided.
Nimble Global - Best Practice: Conduct a skills gap analysis well before the transition. This allows you time to upskill your team or make strategic hires.
Service Disruption
Transitioning from an outsourced to an insourced MSP could result in service interruptions or a decline in service quality.
Nimble Global - Best Practice: Develop a comprehensive transition plan with contingency strategies to ensure uninterrupted service.
Financial Overheads
While insourcing can be cost-effective in the long term, the initial investment in technology, recruitment, and training can be substantial.
Nimble Global - Best Practice: Budget carefully for the transition phase, considering one-time and recurring costs. Make sure to include this in your ROI calculations.
Resource Management
With an insourced model, resource management becomes a more complex internal responsibility, including potential overstaffing and understaffing issues.
Nimble Global - Best Practice: Utilize advanced workforce planning tools to optimize your staffing levels, ensuring you neither overhire nor experience skill shortages.
Supplier | Vendor Relationships
Your external MSP might have established relationships with vendors that you'll have to build and maintain yourself.
Nimble Global - Best Practice: Proactively engage with vendors before, during, and after the transition. Clear communication and relationship-building are critical during this phase.
Compliance and Liability
With the internalization of the MSP function, compliance responsibility also shifts in-house, increasing your liability.
Nimble Global - Best Practice: Conduct a thorough compliance audit for your insourcing transition plan. Ensure you have legal advice on navigating the various compliance landscapes in which your organization operates.
Cultural Integration
The insourcing process can bring about significant cultural changes that may meet resistance internally.
Nimble Global - Best Practice: Create a change management plan and involve employees at all levels to understand and buy into the cultural shifts that will occur with insourcing.
Understanding these risks is not about building a case against insourcing; instead, it's about preparing your organization to address these challenges effectively. Through careful planning and strategic implementation, many of these risks can be mitigated, ensuring that your insourced MSP is a true asset to your organization.
Conclusion
In a world of ever-evolving business practices, continually reassessing your strategic models is critical. Insourcing your MSP may offer cost savings, operational efficiencies, and strategic alignment that can prove invaluable in the long run.