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Firms should beware e-business ‘black hole’

Outsource instead, suggests outsourcing firm

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Firms which choose to run and manage their e-business systems and infrastructure in house are throwing resources down an IT "black hole", according to new research out today.

E-business specialist PSINet Europe found a staggering 115 million person hours of working time would be wasted across Europe dealing with an activity related to internal hosting - 23 times more hours than were needed to organise and run the Sydney Olympics in 2000.

According to the research, UK firms alone would lose an incredible 31 million man hours in 2003 because they were underestimating the amount of time, capital, equipment, services, planning and management required to keep their infrastructure on track.

The research found, rather than being a costly undertaking for companies, targeted investment in outsourcing of infrastructure could have considerable benefit and firms did not need to make a stark choice between e-business based competitiveness and cost-cutting.

Author of the study, Scott Smith, said the days of running your e-business infrastructure on a shoe string were long gone along with the ability of businesses to survive by cobbling together systems with minimal staff, equipment and know-how.

"Even if a single company believes it is technically feasible to do it themselves, in almost every case the 'hidden costs' mean it does not make economic sense.

"Outsourcing is not in itself a silver bullet - but now more than ever it represents a cost-effective way of getting additional value from a company's human and technology assets while extending reach and capabilities," he said.

And Stephen Scott, UK Managing Director for PSINet Europe, said the black hole the research had identified should act as a warning shot across the bows of every business looking to save money or cut costs through bringing their IT infrastructure in house.

"Firms are rightly looking for ways to unlock value from their ICT spend, but too often the management and complexity of in-sourcing is ignored in the decision-making process, only to rise up and hit them later on," he warned. ®

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