No cost analysis is good enough to suffice in Insourcing/Outsourcing decisions.Broader criteria must be considered, as stated in the article.
As for instance, can you compete with the nimbleness offered by the Cloud in instantiating, upgrading and scaling of the IT environment?
Can you really maintain a state of art technology and team taking into account that IT is a competitive asset today when the enterprise evolves to Digital?
The Cost criteria may fail to include dear factors.
For the outsourcing case, while the business as usual IT maintenance, support… outsourcing costs may be apparently small, the cost of exceptions, e.g. a simple business or IT change, not clearly negotiated in the contract and catalogue of services, may be disproportionately high. And there may be so many changes dictated by business needs or various fixes for which you may end up paying more than for the business as usual outsourced operation.
For the insourcing case, managing IT in house at today’s rapid pace of technology change and fine state of art looks like mission improbable for such a political outfit and, in general, for any company not in the IT business.
In essence though, what was outsourced to private companies years ago can now be outsourced to public/government cloud infrastructure and applications, security permitting. In this case, an inhouse team can manage this smaller task of managing the cloud. No more Data Center worries, no more server and OS updates, no more costly and intensive application suite upgrades, no licensing burden…
I concur then with the transition of the IT department from a Technology and Service Provider to a Technology and Service Broker.
But I would add that the IT function shall have an architecture, hybrid cloud integration, supervision and digital strategy function today.
Rather than the team of specialists today, it will consist of a flexible team of business and IT generalists, enterprise architects, that will explore what technologies and services are significant for the firm and how would they integrate in the existing landscape and vision. This team will establish requirements and roadmap in consultation with the business and will supervise deployments and proper integration and operation.