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A Case Study of an Outsourcing Decision Project in a Large Public Organization

A Case Study of an Outsourcing Decision Project in a Large Public Organization. Sven Carlsson Informatics, Lund University Björn Johansson CAICT, Copenhagen Business School. The Case. MeLo’s (Messaging and Logistics) Outsourcing project 35 000 employees

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A Case Study of an Outsourcing Decision Project in a Large Public Organization

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  1. A Case Study of an Outsourcing Decision Project in a Large Public Organization Sven Carlsson Informatics, Lund University Björn Johansson CAICT, Copenhagen Business School

  2. The Case • MeLo’s (Messaging and Logistics) Outsourcing project • 35 000 employees • The outsourcing project started in 2002 (after a major restructuring) • Completed in 14 months • Resulted in a 6 years contract • And that MeLo decided to use an external partner for hosting of ICT

  3. Organization of the EffectIT project

  4. A timeline for the outsourcing decision project

  5. Request for information and invitation of tender • This step consisted of three main activities: • producing the request for information, distribution and evaluation of the information, • producing a business case that described an outsourcing case, • development of a tender invitation

  6. Tender invitation • This step consisted of three main activities: • construction of a package with additional information for the invitation of tenders, • answering of questions from possible providers, • planning and preparation for the evaluation of tenders.

  7. Evaluation of tenders • There were four main activities in the step: • evaluation of tenders, • develop a “short-list”, • the start of preparing the contract, and • preparation of due diligence.

  8. Due diligence and Agreement proposals • The next step in the project consisted of two activities: • to conduct a due diligence with the two potential providers from the short-list, • to create the proposal of agreement.

  9. Negotiation • The next step in the outsourcing project was the negotiation with providers. The step consisted of three activities: • negotiationpreparation, • final negotiation, and • the delivery to the provider that were finally chosen.

  10. Table 1 Decisions made in MeLo's outsourcing project

  11. Discussion • Decided on outsourcing before the outsourcing decision project started • The aim of the project was not clear enough and this raised a lot of problems • Low commitment for the project leading to a lack of support in the project • Lack of resorces in combination with different perceptions of outsourcing benefits and drawbacks made the ordering unit did not materialize • Unclear and misleading information influenced the final steps in the project negatively

  12. Conclusions • Based on the case study, two conclusions can be made • Extremly important in an outsourcing decision project that the reason for starting the process is clear and that the aim of the project also is clear • Having well developed ICT governance and management is also important for the success of the process

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