When to License, Rent or Outsource
Factors to consider include company size, degree of integration with other applications, need for customization and, of course, price.So, a company has decided to invest in a new customer relationship management or enterprise resource planning system. Should it go the traditional route and license the system? Should it outsource the entire process and application management? Should it experiment with renting the application on the SAAS model? The decision isn't always clear-cut. The outsourcing option often is chosen by companies that either don't want to deal with a process that's not a core competence or that lack the staff to handle the work. Applications that companies often consider outsourcing are payroll, benefits administration and recruitment. It's rare, however, for a company to decide to outsource a core business process or anything that is directly tied to revenue generation.
"The smaller the company, the less likely it is to have specialists. In a 50 to 100 person company, for example, you may have one human resources generalist, so they won't know a lot about payroll or about the compliance issues surrounding HR," said Jim Holincheck, a research vice president at Gartner.