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AUGUST 4, 2000

DIGITAL MANAGER

Outsourcing: Is It Worth It?
How to determine if farming out your IT services is a good deal financially


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Sure, it sounds great. New information-technology service providers such as CenterBeam and Everdream promise that for a monthly fee, they'll take care of every technology problem your small business could possibly encounter -- hardware, Office 2000 software, networking, and support. Now, let's talk about the key question: Can you afford all this?

That depends on exactly what you need, and how close you are to upgrading your existing system. You also need to estimate what your old system is costing you, both in consulting fees and in headaches.

The cheapest all-in-one offering comes from Fremont (Calif.)-based Everdream, which charges $99 per user per month. But the company imposes two conditions: You have to sign on for at least 10 PCs to get the $99 rate, and you have to take the service for three years. A 30-month program will cost $150 per user per month, assuming you rent at least 10 PCs.

Santa Clara (Calif.)-based CenterBeam charges at least $165 per user per month for 10 PCs or more. But you can cancel your CenterBeam contract at any time (buying the PCs outright for their depreciated value, if you like) and you'll get hardware from Dell Computer and wireless networking from Lucent Technologies. Rates rise depending on your needs: Swapping a laptop for a desktop, for instance, will probably raise your monthly rate by $50 to $100 a month. You'll get a one-time $500 credit per PC if you hire CenterBeam and let it donate your old PCs to charity.

INTERNAL EXPENSES. That's how Centerbeam and Everdream compare to each other. So how do they compare to the cost of upgrading and maintaining your current system inhouse? Adam Couture, an analyst with Gartner Group's Dataquest, suggests a simple calculation: Add your upfront costs for hardware, software, and networking. Then throw in about $100 a month to support each desktop, along with the monthly charges for high-speed Internet access. That will give you a very conservative estimate that you can compare with CenterBeam or Everdream.

If you add the cost of your own time dealing with computing hassles, you may find that your beleaguered network is more expensive than it looks. "The perception is that you go to Staples, spend a couple thousand dollars, and you're set for a couple years," says Couture. "If you take the position that for small business, focus is everything, then focusing on fixing the printer is probably not a good thing."

Priscilla Carter outsourced her company's IT needs to CenterBeam after figuring that new setups for Carter & Associates' seven employees, plus Web hosting, would cost at least $20,000 up front. An IT consultant to manage the system would be an additional $75 to $100 an hour. Now the DeSoto (Tex.) staffing firm pays CenterBeam about $1,500 a month. "It's been a godsend for a small company where cash flow is tight," Carter says. If that's an issue at your company, too, an IT service provider might be a welcome addition.


By Kimberly Weisul

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