Another reason of hiring an external data agency and contracting them to work on specific period and after the built still relying on same data agency to support and maintain is the financial model: opex vs capex. When done in-house, the comany needs to invest upfront on tools, licenses and hire permanent staff that are usually counted as capex or capital expense. But when contracted to a data agency, they still pay but count it as opex or operational expense. Maintenance and support are considered as BAU expense and contract can be terminated after certain period, i.e. 5 years which is usually tied with the review whether to decommission the applications kr reports. The company sometimes have budget for opex when revenue is forecasted, usually annually and that makes the cost manageable as it is spread across the period. Paying it upfront like in capex needs huge investment and it appears as a huge portion of the budget, making it difficult to convince the decision makers to do data analytics in-house. I know tbis because I have hired data analyts as contractors. Their rates are higher but has a definite end-date which makes it easier to calculate in the budget and count it as opex. In government organisations, it’s easier to get funding for opex than capex, making it favorable to hire external data agency.
That is an excellent point, and I've also experienced this when budgeting. Much easier to get contractors or an agency signed off then a permanent team, as it's not a fixed cost and if budgets are tight the following year, that expense is easy to cut from the budget.
Another reason of hiring an external data agency and contracting them to work on specific period and after the built still relying on same data agency to support and maintain is the financial model: opex vs capex. When done in-house, the comany needs to invest upfront on tools, licenses and hire permanent staff that are usually counted as capex or capital expense. But when contracted to a data agency, they still pay but count it as opex or operational expense. Maintenance and support are considered as BAU expense and contract can be terminated after certain period, i.e. 5 years which is usually tied with the review whether to decommission the applications kr reports. The company sometimes have budget for opex when revenue is forecasted, usually annually and that makes the cost manageable as it is spread across the period. Paying it upfront like in capex needs huge investment and it appears as a huge portion of the budget, making it difficult to convince the decision makers to do data analytics in-house. I know tbis because I have hired data analyts as contractors. Their rates are higher but has a definite end-date which makes it easier to calculate in the budget and count it as opex. In government organisations, it’s easier to get funding for opex than capex, making it favorable to hire external data agency.
That is an excellent point, and I've also experienced this when budgeting. Much easier to get contractors or an agency signed off then a permanent team, as it's not a fixed cost and if budgets are tight the following year, that expense is easy to cut from the budget.
Good job brother ❤
Thanks