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IT OUTSOURCING DRIVERS

IT OUTSOURCING DRIVERS. GM frustration over IT cost and time Breakdown of IT performance Sub-critical mass costs Need for bullet-proof Intense vendor Simplify general management Financial issues Balance Sheet Fixed to variable cost. IT OUTSOURCING DRIVERS (continued).

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IT OUTSOURCING DRIVERS

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  1. IT OUTSOURCING DRIVERS • GM frustration over IT cost and time • Breakdown of IT performance • Sub-critical mass costs • Need for bullet-proof • Intense vendor • Simplify general management • Financial issues • Balance Sheet • Fixed to variable cost

  2. IT OUTSOURCING DRIVERS (continued) • Unfreezing corporate • Access to quality staff in critical • Access to skills:technology, applications • Better capacity management/need bullet-reliability • More flexible • A global

  3. RISKS IT OUTSOURCING • Loss of control • Cost savings not there (complex) • Mostly one-way street • Vendor stability/inadequate • Doesn’t stay on leading • Contract inflexibility/divorce • Interface between companies conceived • Benefit timing mismatch

  4. Strategic Impact—ApplicationsDevelopment Portfolio High Factory Outsourcing Presumption: YES, unless huge and well managed Reasons to consider outsourcing: • economies of scale possibilities for small and mid-size firms • higher quality of service & backup • facilitates management focus • fiber optic and extended channel • technologies facilitate international IT solutions • Strategic • Outsourcing Presumption: MIXED • Reasons to consider outsourcing: • Access to leading edge technology application and industry skills • Assure bullet-proof reliability • Rescue an out-of-control internal IT unit Strategic Dependence Operating System • Support • Outsourcing Presumption: YES Reasons to consider outsourcing: • access to higher IT professionalism • possibility of laying off a low priority, problem laden part of the firm • access to current IT technologies • reduces risk of inappropriate IT architectures • Turnaround • Outsourcing Presumption: MIXED • Reasons to consider outsourcing: • Access to leading edge technology • application and industry skills Low High

  5. IT OUTSOURCING Support Oriented information resource management Outsourcing Presumption: YES Reasons to consider outsourcing • Access to higher IT applications professionalism • Ability to lay off a low-priority, problem-laden area to experts • Access to current IT technologies/application skills • Better IT planning • Leverage industry applications

  6. IT OUTSOURCING Factory Uninterrupted service-oriented information resource management Outsourcing Presumption: YES unless huge and well managed • Reasons to consider outsourcing • Economies of scale possibilities for small and mid-size firms • Higher quality of service and backup, lower risk • Facilitates management focus on other areas

  7. IT OUTSOURCING Turnaround Information resource management Outsourcing Presumption:MIXED Reason to consider outsourcing • Access to leading-edge technology,application and industry skills

  8. IT OUTSOURCING Strategic Information resource management Outsourcing Presumption: MIXED Reasons to consider outsourcing • Access to leading-edge technology,application and industry skills • Assure bullet-proof operational reliability • Rescue an out-of-control internal IT unit • Tap source of cash • Facilitate cost flexibility • Facilitate future divestitures

  9. IT OUTSOURCINGDECISION INFLUENCES • Position on strategic GRID Support Presumption Yes Factory Presumption Yes BUT Turnaround Presumption Mixed BUT Strategic Presumption Mixed BUT • International application development outsourcing Yes For maintenance and high structure work Yes For low-high technology No For large-low structure [work/organization transformation] • Current structure IT Segregated organization and accounting facilitates outsourcing • Industry pattern (cascading)

  10. NEW OUTSOURCING ISSUES • Risk/Reward sharing • Coalition of partners • Most firms doing some/The line challenge • Facilitators helpful/require management • A web of relationships (Outsourcers outsource) • Public sector focus

  11. GENERAL MANAGEMENT ISSUES • CIO function remains • Partnership management • Architecture planning • Emerging technologies • Continuous learning • Outsourcing comes in pieces • Objectivity is key but hard • Measuring success is hard • Management fit is key

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