Finally, we come to the category of classic data center outsourcing. Data center outsource efforts are driven by a desire to shove older, nonstrategic legacy systems--and, at times, accompanying staff--out the door so other network employees can concentrate on new projects and technologies. Let's define legacy as "something that works" and nonstrategic as "something we can't do better than our competition."

Outsourcing the data center, more than either the network or desktop, provides an opportunity to move beyond simple cost-cutting measures. Outsourcing the data center provides an opportunity for the client organization to grow by partnering with a potentially more mature organization. The nature of the transaction is fundamental: The client organization delegates the lion's share of operational responsibility for the systems, not the least of which is maintaining a dedicated staff, and at the same time, obtains access to a higher tier of IS professionals. The outsourcing vendor, in turn, profits from its ability to meet its contractual responsibility at a lower cost, presumably due to superior abilities, economies of scale and tactical focus.

If IT is to make any contribution to competitiveness, it will occur at the core of any IT shop--the data center, or "ground zero" for all applications and data. For the client, data center outsourcing is a rare chance to refocus its efforts and leverage its partner's expertise. This makes data center outsourcing much more strategic than the simple potential savings of outsourcing relatively generic functions, like network and desktop support.

Conventional wisdom holds that data center outsourcing, or the practice of selling off your servers and transferring the people who work with them to a different business, traditionally has been the realm of mainframe shops. However, midrange systems, such as AS/400s, also have been targeted by outsource vendors, many of which approach the Fortune 100, or even the Fortune 50. Meanwhile, the opportunity to reduce costs and free up labor appeals to managers of data centers of all sizes.

Cards on the Table
Negotiating an outsource contract is not for the faint of heart. You can sugarcoat it or rationalize it as a step toward better technology or refocused efforts, but the bottom line is that you're seeking to leverage an asset --your IS infrastructure--to finance efforts in another area. However, no industry is able to simply delegate IT to a cost center. The outsource vendor, for its part, will basically pitch the perception that it can provide the service better, cheaper and faster than your in-house departments. There are obvious fundamental challenges to building trust into the relationship.

While few IS vice presidents or CIOs have the opportunity to negotiate an outsourcing contract, the outsource vendor negotiates them every day. The CIO has to weigh several options: Will outsourcing deliver the promised benefits? How will it affect remaining IS staff? Will the resulting organization be able to react favorably to future changes in the market?

The outsource vendor has no such distractions. Its goals are simple: Identify sections of the operation it can successfully and profitably deliver on, and convince the client to outsource those areas at the highest price. It might be worthwhile to hire someone who has done this sort of thing before; the outsourcing trend has spawned an industry of analysts, consultants and lawyers.

One point to keep in mind: Insist on unbundling. Unbundling makes it easier to verify that a particular service can be handled better or for less money by the outsource vendor than by your staff, or more important, than by its competition. You also will be able to determine which services you want at the lowest possible cost versus those you believe justify paying a premium price.