How to Successfully Outsource IT

(1)

How to Successfully

Outsource IT

A Case Study: Reducing Risk, Managing Costs and Improving Efficiencies

From the Perspective of Mike Emmons, Senior VP & CFO - YMCA of Greater Houston

(2)

Introduction

In January 1886, Houston had a population of about 25,000 when a group of businessmen met with a vision. These individuals put a plan together to bring a YMCA to Houston. Over 125 years later, the YMCA of Greater Houston continues to promote our mission and core values of respect, responsibility, caring, honesty and faith. Our focus is directed on Youth Development, Healthy Living and Social Responsibility. We are an association of men, women and children joined together by a shared commitment to nurture the potential of children, promote healthy living and provide opportunities to serve our communities.

The YMCA of Greater Houston is a dynamic organization which has experienced tremendous growth and is one of the largest YMCA’s in the United States. Our Association maintains revenues in excess of $100 million with 500 full time employees and 3,600 part-time employees. We serve over 389,000 members in our 35 facilities. YMCA after school programs are offered in partnership with 29 area school districts and various other organizations providing after school care in more than 200 locations. We offer core

programs for youth in sports, day and resident camp, aquatics and parent child activities.

Last year, we provided summer day camp at 51 sites serving 63,750 children and teens.

We seek to make YMCA programs and membership available to all and provided over $9.0 million in scholarships and community support last year. Additionally, the YMCA of Greater Houston operates 30 Caring Community Centers and settled 635 refugees from 26

countries through our International Services Y.

An organization of this magnitude and complexity requires deliberate focus and vision. As Chief Financial Officer (CFO) of the YMCA of Greater Houston, my role involves being intricately involved with daily operations from a financial perspective and guiding the organization’s strategies. As we all have experienced over the last several years, our organization has undergone a host of complex challenges requiring strategic guidance and leadership. Ultimately, the CFO must drive the metrics and measurements of the

organization, rather than merely reporting the results. A key responsibility of the CFO is to be the organizations financial visionary - maximizing our resources while mitigating risk.

Organizational credibility and accountability is paramount in the not-for-profit arena. The YMCA proudly bears the responsibility of sustaining its pristine reputation built over 125 years of serving the Greater Houston area. This responsibility entails being good stewards of our resources provided by members, donors, volunteers and other community partners to further the YMCA mission.

(4)

Background and Analysis

In today’s environment, Information Technology is an integral part of almost every aspect of our business and social lives. As CFO, how technology is acquired, deployed, applied and managed has become increasingly challenging. The consequences of not seeking

improvements to the IT functions are detrimental to the mission and the overall organization. The balancing act is maximizing our IT infrastructure and service while

ensuring we are good stewards of our resources. We must give our staff the tools needed to serve our members and communities.

Beginning in 2007, we embarked on a project to assess our IT strategy and vision. We focused our evaluation on the following systems and processes:

 Time & Attendance

 Fundraising Software

 Member Relationship System

 Financial Reporting

 HR Software

 Online Registrations

 Payroll Processes

 Data Mining & Statistical Tracking

 Budgeting & Forecasting

 Cash Management Systems

 Server Management

With increased focus on all these systems, as CFO, I found it necessary to evaluate the staffing and structure of our existing IT department. Our IT department consisted only of internal resources. As the demand for IT increased, the trend was to outsource services to various vendors and providers while maintaining current staffing levels. At one point, we had as many as 40 different vendors and our IT staff effectively became vendor managers.

Further analysis revealed the following negative results:

 Most expensive form of support

 Ineffective server management

 Vendor dependency leading to lack of control and ownership

 Single point dependency

 Difficulty in budgeting IT costs

 Limited overall organizational IT strategy

 Antiquated hardware and equipment

(5)

Although the existing YMCA IT staff was performing at optimal levels, our analysis proved that we needed additional resources and expertise in order to meet the demands of a rapidly changing IT environment. With the intention of lowering risk and maximizing resources, we began to evaluate whether to further invest in our internal IT structure or retain skilled and experienced external IT professionals.

Assessment

The YMCA enlisted CHR Solutions to perform an assessment of our IT environment. As a leading provider of technology managed services, business process outsourcing,

engineering services, and software solutions, we felt CHR had the expertise needed for such a broad assessment.

It was important for us to establish a starting point from which we could properly launch our evaluation. The final deliverable of the project was to be a written report that would include the following:

 Recommended best practices to be implemented

 Options for reducing IT costs

 A high-level project plan

 A budget estimate for implementation of the recommendations

 Recommended priority of implementation

CHR visited 9 YMCA facilities, gathered documentation and conducted interviews of YMCA staff members as well as off-site visits to hosting vendors. A total of twelve CHR staff participated in this project spending more than 750 hours. CHR’s observations were based on best practices and took into consideration the issues of security and compliance,

performance, functionality and cost-effectiveness. The assessment revealed the following key findings and observations:

 Over-spending in key areas while under-spending in others

 Identified opportunities for cost reductions while improving reliability, security and minimizing risks

 Identified the need for IT Governance

 Current staffing was undersized to support the complexity of IT systems deployed and the number of end users

 Revealed opportunities to reduce the number of vendors

 Identified aging network devices and desktops

 Servers were missing critical updates and/or anti-virus protection

 Efficiencies could be achieved through server consolidation

(6)

Based on the assessment and our organizational goals, the YMCA decided to explore the concept of engaging a managed IT service provider.

Engagement

The YMCA began by soliciting proposals from several managed IT service providers. The result of this process was the selection of CHR Solutions and a contract was executed March 2010.

As part of the transition to CHR, opportunities were created for our internal IT staff to join the CHR team. Integrating our teams created a sense of familiarity and confidence among our staff when the need for assistance arose and expedited trouble shooting by having the involvement of someone with firsthand knowledge of our systems and organization. Mike Hodge is one of the former YMCA staff members who made the transition to CHR. His continuous commitment is recognized by both the YMCA and CHR.

“It was a challenge to provide the broad skill sets necessary to best serve the Y, given such a small number of IT staff. We simply couldn’t be everything to everyone with only two of us. Joining CHR is a “win-win”. Now, we leverage a large and talented IT team with a broad range of technical aptitude and knowledge. CHR provides training in emerging technologies to stay current on my skills and the opportunity to work with multiple clients on a variety of projects. I am able to take what I have learned and apply it to projects for the Y and other clients—where before, we would have had to resort to a multitude of outside vendors.” – Mike Hodge, Senior Systems Engineer – CHR Solutions (former Director of Project Management – YMCA of Greater Houston) Also, during the transition period, CHR formally documented our environment, processes and procedures to support the Y and cross trained a number of their staff.

(7)

Benefits

After nearly two years of collaborating with CHR, the YMCA has experienced significant benefits that would have been cost prohibitive had we decided to attempt this level of service internally. Benefits include:

 Servers are monitored 24/7 from CHR Network Operations Center

 Provides remote access for observation and troubleshooting

 Unlimited on-site dispatch to operating units

 Development of monitoring tools for critical applications

 Online and telephone help desk support

 Secure server hosting and consolidation

 Minimized risk

 Formalized change management

 Data mining support

 Software updates are kept current

 Accurate inventory of hardware

 Reliable back-up and recovery processes

 Single point of contact eliminating multiple vendors

 Access to online trainings

 Professional IT expertise and strategic planning

 Reduced service incidents

As you can imagine, outsourcing a portion of your business is difficult. It takes commitment from both collaborating parties to make it work. CHR has a continuous improvement culture which stands to provide benefits to both organizations going forward.

(8)

Looking Ahead

The risks within our control have been mitigated. Business processes are in place to ensure proper expense and back office management and we are aligned with a leading IT

management organization.

Under the “advice and guidance” provision of our managed services agreement with CHR, we are creating a roadmap to further improve our back office operations. With their strategic direction, we continue to seek opportunities to improve efficiencies and reduce expense. We continue to focus on standardization of equipment and software which will further serve to improve the support we receive through increased reliability and

maintainability of our overall infrastructure.

We have a number of other strategic projects in various stages of planning and budgeting with the assistance of CHR. As we change or are forced by external factors to change or respond, we are confident we have a partner who will be there to provide what we need to be successful.

For years we operated under the assumption that we could not afford to maximize our IT environment in a technology world that is always changing; however, IT managed services through CHR Solutions has made this possible. We have been able to meet our IT goals of reduced risk, enhanced efficiencies and expense management.

With CHR’s support, the YMCA of Greater Houston is free to do what we do best – serving families and communities of Houston.

CHR Solutions would like to thank Mike Emmons for his invaluable contributions to the this case study.

How to Successfully Outsource IT