David Berlind makes the point and Nicholas Carr jumps in. But blanket statements like that are dangerous. The range of SMBs varies so widely. And their application and infrastructure portfolios are as wide as their industries and geographies.
My recommendation - only consider selective outsourcing Certain segments of the market like mail hosting are mature and at competitive pricing. Others like managed security or hosted enterprise applications still do not.
Andrew, a Carr reader makes s similar point
"As the CTO of an SMB, I've spent months working with various "IT Utility" companies. The goal is to research the viability of outsourcing all non-essential IT functions. The reality is that these companies, even after negotiated discounts, are still 50% more expensive than the current situation. I think what the EMC CTO really means is, "our disk sales are stagnating, so we need to come up with a new annuity stream". I've worked with some pretty scrappy companies only to be shocked by the monthly bill. It adds up to more than the costs of the functions to be outsourced. Please, IT Utility is a pipe dream for the next 5 years. It's a wet dream for VARs."
As I wrote in Utility Computing: Wish it was so easy outsourcers just have not shown ability or willingess to deliver economies of scale
"EDS has over 100,000 employees. The average Fortune 500 CIO has 500 IT employees (and the average SMB has even less. Infosys has delivered over 18,000 projects using its GDM. The average CIO has done fewer than 10. ... Yet vendors cannot price their products or deliver performance on a utility scale model? How much more scale do they need?"
By all means outsource, but only if buy versus build makes sense.
