IT Services - Would you prefer in-house or outsourced?

Good morning, all. I'm currently researching options and would like to see what others feel is the best course of action when dealing with a small business' IT solutions.

I was recently hired as IT Director for a small e-commerce business, and I'm slowly but surely evaluating our current infrastructure in order to determine what could be done to improve it. This is my first manager-level position, and at the time I do not have any staff.

Since this is a very small organization, the majority of core IT services are either hosted by an external company, or outsourced as needed. As I understand it, the position I was hired for has been vacant for about a year; the company had a database programmer whom they let go before I came on board.

Anyways, the current infrastructure is a mishmash of technology and outsourced solutions, and I'm currently evaluating the cost benefit of bringing the solutions in-house versus leaving them as they are.

So far I've discovered the following:

• Email is provided by a third-party company. We don't use Exchange; the service is simple mail services and so is dirt cheap. We also have very little ability to administer anything with the email - there is a console to do basic tasks. At this point I'm not sure if Exchange is the best solution since I'm not sure if we would need/use the majority of its benefits.
  
• We're an e-commerce business, and our web server is hosted in a data center. The staff there are very knowledgeable but all they do for us is apply updates/patches and backups. The main issue here is that I can only administer the server remotely without having to drive 30 miles to the data center. Also any major updates need to be done on-site.
  
• The network itself seems to be half running on a domain. The server technology is a bit old (2000 Advanced Server) but works somewhat well, although there isn't a central file system and users keep files on their own computers. Network services are handled by a local IT services company; we basically have a standing contract with them.
  
• I cannot effectively manage our software licenses. From what I've been told, a lot of the software we have were acquired in liquidation sales or the like from other businesses. This might explain some of the weirdness like running Enterprise Edition (or 2K Advanced Server) in a very small company. However, I'm concerned about licensing in general.

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Basically what I am trying to figure out is if it would be more cost-effective, long term, to bring the web server in-house, upgrade the domain server and include Exchange for in-house mail. I do not wish to have all my time eaten up by support, as my main goal is to help align IT goals with business goals and increase profit; to this end I'd probably look at keeping the existing contract for the networked services and have them perform a network evaluation.

The issue I'm running into is that I'm finding it hard to justify business reasons for doing this, apart from possibly the ease of maintenance in the case of a crisis (and maintenance, period, in the case of the email). I would like to get things in an optimal configuration instead of the current hacked-up solution (although said solution works, it doesn't work *well*), but I'm afraid it will just look like unnecessary spending.

I'm still in the process of evaluating my options and looking at the cost benefits of the two, and I would like to find out if others have been in similar situations, and what the end result was. Basically, if you're a small business owner/executive, what would be your thoughts from the business end of things (would you rather have everything centrally located but pay maintenance for IT, or let someone else take care of it? Remember that in this case there *is* an IT professional on-staff [me]), and if you're an IT professional what would be your suggested way to tackle this? I'm really trying to weigh the options before I jump in and see both sides of the coin. On one hand, outsourcing it means I don't have to worry about it myself; on the other hand it also means I can't easily fix it in the event of a crisis, and also can't set it up the (IMO) optimal way.

Any and all help, advice and suggestions are appreciated.

Hello.
I was considering same option - to host my ecommerce, email, domain, voip server - everything.
For that you need:
T1 Line for data and T1 for voice.
1 server for software
1 server for voip
1 server for backup
1 good switch
1 good firewall
1 web/mail server
You need windows server licenses, software, hardware and EVERYDAY maintenance. Daily backups. It's organized network infrastructure.
If you will be the one who will set up everything, If anything goes wrong - you responsible to restore it's working condition. I mean if you have nothing to do - it's fun, but if time you will spend in the server room will cause you money loss - this is NOT a good idea. Cheaper AND BETTER use third parties (security and stability and safety wise).

Of course, if you can afford multiple t1 lines, good admin (I mean guy who can organise infrastructure, knows about security, ecommerce maintenance, fault tolerance etc), if you think buying software, hardware, pay for spam filters, and you are big company - it make sense. For small business, it's headache, waste of time and waste of money.
It's awesome idea for fake business and lots of time on your hands.

Wow what a long thread I will paste parts of your thread in here and then answer your questions. I also have questions that will further the continued answers of your questions.

I was recently hired as IT Director for a small e-commerce business, and I'm slowly but surely evaluating our current infrastructure in order to determine what could be done to improve it. This is my first manager-level position, and at the time I do not have any staff.

*** This sounds so familiar, you are the IT Director with no one to direct? Did the company agree that you would be able to hired staff as you see fit. Did they agree to a certainly amount of annual salary for your employees? Be careful here it sounds like you may have a title but are really the IT person responsidble for everything. This is typical in a small business ***

???? How many employees, servers, computers, etc do they currently have???

Email is provided by a third-party company. We don't use Exchange; the service is simple mail services and so is dirt cheap. We also have very little ability to administer anything with the email - there is a console to do basic tasks. At this point I'm not sure if Exchange is the best solution since I'm not sure if we would need/use the majority of its benefits.

???? Outsourced or in-house e-communications depends on the need of the company. There is much more to exchange than just email, if they want to have mobile email there is some nice cost saving here instead of going outside to a third party. Only if you will have the staff to support it. Have you though about Small Business Server? ?????

We're an e-commerce business, and our web server is hosted in a data center. The staff there are very knowledgeable but all they do for us is apply updates/patches and backups. The main issue here is that I can only administer the server remotely without having to drive 30 miles to the data center. Also any major updates need to be done on-site.

??? Leave this all in the data center. If you are using a good one with high levels of security, intrusion moniotirng, backup and redundancy then I doubt your company will allow you to spend the amount of money needed to bring this inhouse and have the vast array of talents to support it. There are many web-services that offer better management of your website. We develop in ASP.NET and use Discount ASP.NET they have all the great tools plus many extras. Why do you need to go onsite? We do it all from half way accross the country ???

The network itself seems to be half running on a domain. The server technology is a bit old (2000 Advanced Server) but works somewhat well, although there isn't a central file system and users keep files on their own computers. Network services are handled by a local IT services company; we basically have a standing contract with them.

??? This sounds like it needs some serious imporvement and having done this a many times the cost to try and fix it will far outweigh reimplementation as I am sure you most likely do not have ample documentation on the current network infraastructure. This is a mashup and not of the good kind it sounds like. You will have your work cut out for you but it can be done. This issue is it can not be done just by you. You have already listed a bunch of projects that no single person will have the tallents and expertise to fix all on their own. ????

I cannot effectively manage our software licenses. From what I've been told, a lot of the software we have were acquired in liquidation sales or the like from other businesses. This might explain some of the weirdness like running Enterprise Edition (or 2K Advanced Server) in a very small company. However, I'm concerned about licensing in general.

??? Sounds like you need to educate the company on the risks of licensing issues and the recent fines that have been issued to companies much smaller than yours I'm sure. Again this is education not a scare thing. If you do not have proof that a license is your and has been officially transfered from the original owner to you than it is not yours, period. This is not me saying that but any software company that has developed the software. Try running some software search tools on your network and see what you can find. Again, you mention very small company and again I say look at Small Business Server as long as over the expected lifecycycle you will not outgrown the investment. If your company will grow over 75 (says Microsoft) or 50 (says expereince) than built the big network with domain contrllers and the bunch. ????


I hope this informaiton gets you started a bit. Sounds like you have a fun and challenging job in front of you. You said your goal is to help the company further leverage IT, great. Keep in mind here are the keys you will need to make it happen.

1. Support from the executive staff downward. No exceptions! Without this the rest is lost. I have worked on mahy project and the only ones that succeeded not matter how tallented the team was when the executive bought in an supported it.
2. Amply staff - You can do it on your own so you will need internal or external eperts to help you. You willl just guild the ship and deal with the personnel challenges of individuals working together.
3. A culture of change. No matter what you do the company better have a culture that supports change. Even though you are an e-commerce company does not mean the employees understand and support technology changes. (Back to number 1).
4. This is business and you understand that so your justifications for change need to be in writing and also address the financial costs and how those costs cn lead to more profit for the company.
5. Develope a long term plan. prioritize each project and then tackle the first one then the second then the third. You can't do it all. I always start with the foundation as without it you can't build a company (house).

Let me know if you have further questions. The job sounds like a challenge and if you have the right support it can be rewarding to directly affect a companies bottom line with the right use of information technology.

Enjoy, ORITGUY

Sorry for taking so long to reply, I had set up email notification on replies to the thread, but somehow I didn't get them.

Let me address the questions, and explain a bit more

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It's true, I'm really "IT Director" in name only at the moment. Basically, I was hired to help this company maintain their systems, and improve upon them to increase our revenue and profit. Right now, I don't mind this at all; my experience has mainly been working with small companies as their sole IT provider (or pretty much the sole IT provider). The main difference is that senior management respects my opinion and will actually consider what I say, not dismiss it like I have encountered in the past. However, despite the fact I don't have staff, I can (presumably, it was mentioned but I haven't had the need for it just yet) hire consultants/contractors if I need to for a project. The way it was mentioned to me is, if my time is more valuable with something else, we can hire out for the project and I can coordinate the external help.

Our current setup is the following: We have 8 desktops, three of which are used by part-time employees. These require basic internet connectivity and related (e.g. Microsoft Office), as everything is managed via the internet and a modified open-source storefront solution called Comersus. Since the domain is all but nonexistant, people keep files on their own local drives. I have an Alienware laptop which is my workstation. We have two servers at our physical location: An ancient domain controller running 2000 Advanced which doesn't seem to actually be doing anything, and a development server running Server 2003 Enterprise (a "Not For Resale" version, which might be bad) that is, like it's name implies, for development. I plan to convert it into the new domain server. There's a web server, also running 2003 Enterprise (not sure what license it has, something else to look into) which is hosted by another company (we own the server, they just host it). I'll get to this in a minute.

Email is, as I said, very basic. They pretty much found the cheapest, bog standard POP3 package they could that still allowed [email protected] email formats, and purchased it. I really want to move this to Exchange - SBS2003 is what I'm looking at, due to the integrated package. The biggest issue here is that email is only used for messaging, nothing else, so I'm going to have to find out more benefits of using Exchange. Whether this is due to not having Exchange, or because they aren't aware of the collaboration tools, I'm not sure.

Back to the web server: The main reason I'd love to move it back in-house is because the hosting company doesn't seem to do anything with it. They supposedly run updates, but I can do that just as easily. Also there's the physical location difference; any time something needs to be done with the server beyond basic administration, I'm unable to do it without physically traveling to the location. They have it configured so it's not part of the domain (by design), plus whoever set it up in the first place did a pretty lousy job, so it's really a hassle to do any sort of maintenance with it. There's also an issue of licensing - in effect the web server has two processors, but is running a single-processor SQL Server license. I want to move it back to the development server (we recently swapped it out because the web server is more powerful) since that one has only one processor ans therefore would be totally legit. I just feel that keeping it ourselves would make it much easier to maintain and configure to suit our needs; unless I'm overlooking a simpler way to do things, it's rather difficult and tedious now. Moving it back in-house would save the company about $8,000 a year, and give us more control over the environment.

The setup itself is in dire need of a redesign. The consultant they were working with before I was hired (for several years, so it would seem) was a self-taught Access developer who barely knew SQL, as a result the database is a mess and nearly everything important has to be done via Access first and manually exported. We require consolidating disparate data from several sources, so I'm looking at utilizing more modern tools to accomplish this and, hopefully, phasing Access out completely. The same goes for the web site itself; it's currently a stinking pile of Classic ASP code (again, based off of this Comersus open-source application) that's a nightmare to read through.

From what you've said about the situation, here's my 2 cents.

Your main pain points seem to be the web server's inconvenience and the disparate nature of the local network, so I'll start there.

Web Server- I'm assuming the web server is hosted for uptime and the company hosting has some SLA to keep it up. Being a very much mission critical part of your systems, I would lean towards keeping it hosted. Especially since the issue seems to be the service provided, not the fact that it is hosted. You should definitely have remote access to manage the server and shouldn't have to go there to fix issues.

Maybe you could take that server and use it in-house while moving the site/application to a different fully hosted solution. A host should provide superior uptime, redundancy, and server management than a typical small business. If you bring it in-house you definitely need adequate bandwidth, redundant data services (at least T1s), backup power, and server redundancy. If the site isn't up, your company isn't making money.

Network- Get that domain up and going and start using it. There are plenty of cost savings to be found in using a domain. Are the computers connected in any way or are they all independent? Make sure the network is secure as well. Before I started working there, my company had a consumer grade router/firewall, a hodgepodge of AV/spyware software on desktops and no virus protection on the servers. Not to mention most computers had never performed a Windows update. Yikes!

Once the network is stable and on the domain, then I'd go after the database. Building a good foundation is key. As always with technology, try and build a flexible and scalable foundation to support future growth.

Email- Don't go any further until finding out if they need or want collaboration tools. Also, if anyone accesses email remotely, via phone or a method other than remote accessing their work computer, then an exchange or similar solution could be beneficial. Otherwise, keep the good ole' POP email or at least put it low on the priority list.

I Hope I was of some help!

You were very helpful, thank you.

I do agree that we would need extra bandwidth to host the server ourself, and in that regards keeping the hosting external would be beneficial. My main issue with it is how ridiculously complicated it is to send files back and forth. Right now, to run a simple report for my boss, I have to:

* Remote Desktop to the server (because it's set up so I cannot connect to the Database remotely from SQL Management Studio)
* Run the query; export the results to CSV
* Back on my machine, FTP download the CSV file
* Import the file into Excel, do some formatting things
* Email it as an attachment to my boss

A ton of steps that should be much easier. Now, I realize that a lot of this deals with the way the server is set up as a host, so I guess I have to look at that.

Anyways, You've given me some helpful advice. Thanks lots, and happy holidays!