Finding the Balance: In-House and Outsourced IT for CRE Organizations
The evolution of technology has significantly changed the way commercial real estate organizations conduct their business. With more complex technological needs, many companies are looking to outsource pieces of their IT function, and in some cases, they wish to completely outsource their IT department. But it takes a deeper look into each organization’s business strategy and future plans to determine what mix is going to provide the best cost savings, scalability, and support the organization as needed.
5Q’s Managing Partner, Wade Hughes, says, “Determining what IT functions to perform “in-house” versus outsourcing is highly dependent on your business strategy and the required flexibility. It is NOT an either/or decision. Both can co-exist very efficiently and effectively.” It’s important to take a look at what IT functions are creating bottlenecks or slowing business operations down. An MSP can support CIO's and CTO's in keeping above the noise so that they can focus on value-add activities instead of being in the weeds.
The main technology components to consider in aligning your IT strategy with your business strategy are:
Core IT – computers, networks, servers, datacenter/files, etc.
Cyber Security Program – detection, prevention, protection, response, and recovery
Business Applications – Yardi, RealPage, MRI, Argus, Juniper Square, etc.
Property Technology (if you are fully integrated) – computers, networks, access controls, security cameras, fitness equipment, package lockers, gates, etc.
In general, in-house IT is a fixed cost and out-sourcing is a variable cost. That means with in-house IT there are cost “plateaus” due to salaries plus taxes/benefits versus an incremental curve based on added properties or devices. By outsourcing, companies can avoid the expense of hiring and maintaining a full-time IT staff. MSPs like 5Q typically offer customizable service packages that allow businesses to pay only for the services they need. This can be especially beneficial for small and medium-sized businesses that may not have the budget to support a full-time IT staff. Additionally, MSPs often have access to the latest technology and can offer their services at a lower cost than what a company would pay to maintain an in-house team. When taking a look at the cost benefits of outsourcing an IT department, it is vital to find a balance between in-house IT personnel and outsourced functions.
When considering in-house IT is important to understand one or two people will not have all the required expertise for day-to-day execution in all four components above. If you have a self-managed portfolio of any size or a geographically dispersed user group, you also must consider “coverage” of support functions geographically and across time zones. Again, one or two people are most often not enough to get full support of your operational coverage especially given the ever-expanding expertise required in each technology component.
MSPs employ a team of experts who have a wealth of experience in IT. MSP’s focused on the CRE industry add an additional level of expertise in prop tech and business applications. This means that CIO’s and business leaders can tap into a pool of specialized knowledge without the expense of hiring and training additional staff. MSPs have a team of professionals with expertise in areas such as general IT, cloud computing, cyber security, data analytics, and more. This expertise can help companies stay ahead of the curve when it comes to new technology and trends.
Many MSPs also typically offer 24/7 support, which means that businesses can get help whenever they need it. This can be especially beneficial for companies with operations in multiple time zones or those that operate outside of regular business hours. Additionally, this helps bridge the gap for companies who need a blend of in-house IT staff and outsourced IT staff, ensuring your team has someone to go to at all hours of the day or night in the event of an incident. MSPs can provide support for everything from basic IT issues to complex network problems allowing personnel to take care of the business and the MSP to take care of the day-to-day operations.
To get the right balance it is critical to develop an IT Strategy that aligns with your business strategy. There are MANY questions to answer but some of the primary ones are:
What is the business trajectory?
How do you align the 4 components to the business trajectory not only to keep up but to stay out front?
What provides the most flexibility and risk mitigation?
Where do I want to invest in expertise on the team versus “hire” expertise?
How do properties adequately cover their portion of the expense?
Outsourcing to an MSP allows commercial real estate companies to scale their services up or down as needed. For example, if a company experiences rapid growth, it can quickly and easily add additional services from its MSP. Similarly, if a company experiences a slowdown, it can reduce its services without the expense of laying off staff. Outsourcing also allows businesses and IT leaders to focus on their core competencies. By taking some components off their plate, businesses and IT leaders can concentrate on their primary goals and objectives, being more proactive versus reactive, leading to added value to the business.
5Q’s full suite of managed services, cyber security, and other products can offer commercial real estate organizations incredible cost savings, expertise and experience, scalability, improved security, 24/7 support, and frees up their staff to focus on the core business. Because 5Q exclusively serves the commercial real estate industry, you can tap into our pool of highly-specialized and knowledge team members without the expense of hiring and training staff.
5Q can also help companies stay ahead of the curve when it comes to new technology and trends. To learn more about 5Q’s comprehensive IT and cyber security offerings specifically for CRE companies, visit 5qcloud.com or start a conversation by telling us about your business using the form here.