Thoughts on outsourcing IT to us vs. going in-house

As we're wont to say here, we built Populi to put good software within reach of small colleges. We do that, in part, by giving them access to high-octane technology, otherwise out of reach to most schools, but made affordable by the wonders of economies of scale. This lets our customers offload much of their IT burden—infrastructure, processes, and maintenance—to us. Of course, there's more. Gliding atop those servers and databases and terabytes of storage is some elegant, easy-to-use, ever-improving software that helps a small school do more with its data. And, there's yet another layer: the people who use Populi have access to the people who run Populi. Need help with something? Wanna know how something works? Did something break? Support is always near at hand.

That, in a paragraph, is what's for sale here: high-end technology, excellent software, and people to back you up. And if it doesn't work for you, there's no long-term contract forcing you to continue.

Every now and then, we lose a sale not to an established competitor, but to a school's in-house IT staff. Now, don't get us wrong—if Populi doesn't fit, don't try to wear it (to abuse the old proverb). If a school needs something different than Populi, we're the last ones who'll try to talk you into signing up. But the decision, from what we've heard, usually has little to do with service or functionality. A lot of times when a school says, "We're gonna build it ourselves..." the next line is usually something like, "...because we wanna keep expenses down."*

Now, on the surface, this might make some sense. Your 400-student college didn't get that way without some sort of IT staff and technology investment. And if IT is already baked-in to your institution, then you already have a lot of what you need covered. A little extra development time, judicious use of free open-source technology, a stopgap Access database in the meantime...

Yeah, it could be done. But what will you end up with? Going by our experience, here's the bare minimum of what you'd need to build something comparable to Populi:

  1. A team of ten to twelve full-time employees.
  2. Ultra-conservatively, about a million bucks.
  3. Four years of continuous design, development, implementation, and refinement.
  4. A roadmap for the next several years of the same.
  5. Dedicated support staff, including a full-time writer to manage documentation (we'll assume you won't need to maintain a blog or a Twitter feed).
  6. A well thought-out approach to user interaction design.
  7. Top-end, incredibly secure servers, data centers, backups, file storage, etc.

Here's some of what you'd need to make the month-to-month cost comparable:

  1. No dedicated staff on your payroll (but wait... what about point #2, above?).
  2. Server and infrastructure costs shared among 90+ other colleges.
  3. The ability to deal with problems quickly so your operations don't grind to a halt.
  4. Nimble, proactive security protocols to ward off information thieves.
  5. Justin Bieber haircuts for your staff.**

Now, let's put this in stark economic terms. Say you take a look at what Populi would cost your 400-student college over a five-year period:

  • During the 9-month academic year, you're sending us $2,899 a month (under the Medium pricing plan)
  • During the 3-month Winter and/or Summer downtime, you opt for Small, and send us $199 a month.
  • So, for the year, $26,688. Over five years, you've parted with $133,440, give or take.

So, over five years, you've spent on Populi what you'd spend on—let's assume your saintly staff works for peanuts—three annual IT salaries. All you need now is another seven people, items 2-7 from the first list and 1-5 from the second list. And someone to take over what your three IT guys were doing before you pulled the trigger on a new, in-house system.

So, yeah: we built Populi to put good software within reach of small colleges... because the service we offer—taken as a whole—is generally out-of-reach by other means.

Post script: Read about our own approach to outsourcing software here. To summarize, don't outsource just to outsource—make it part of your strategy to focus on your core competencies.

*The decision to build in-house sometimes comes down to finances, but often also hinges on a perceived need for a different kind of feature or a different way of handling a certain workflow. We'll look at that in another blog post.

**Isaac and Toby like to get their hair cut every three days! It's a good thing that expense is spread out over 90-something customers.