Evaluating Outsourcing IT Infrastructure Decisions:
Considerations for Chief Information Officers (CIOs)
Introduction
The decision to outsource the critical infrastructure platform of an enterprise, which often includes support for enterprise applications essential for the business ot function, is one with long-range, strategic implications. The role of the CIO is quickly changing to be a strategist first and technologist second, concentrating on how IT infrastructure can be successfully used for aligning IT resources to strategic plans and programs. This decision to outsource a critical component of the overall architecture needs to balance the cost reductions possible on the one hand and the potential to augment internal expertise on the other. This is a complex decision that needs to take into account the business case, cultural factors, IT-based technology factors, and managerial implications as well. The intent of this analysis is to provide guidance to CIOs who need to make this decision and emerge with a stronger IT infrastructure capable of getting their enterprises to their goals and objectives.
Business Case Analysis of Outsourcing IT Infrastructure
The business case for outsourcing IT infrastructure most often is anchored in the benefits of gaining expertise external to the enterprise first, despite the commonly-held belief that this strategy is purely for cost reduction. The value of gaining external expertise in critical IT infrastructure processes and
Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,
The case identifies struggle and problem faced by organizations outsourcing IT projects and allows us to ponder on how to manage outsourcing well.
Today most of the companies wants cost cutting in their business. Nowadays outsourcing helps to achieve such goals. According to the internet, (www.flatworldsolutions.com), outsourcing can be to as the allocation of specific business processes to a specialist external service provider. Outsourcing is an arrangement in which one company provide services for another company that missing or don't have a specialist in the certain area of expertise. Most of the times, an organization cannot handle all aspects of a business process internally. Additionally some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks.
There are many benefits of outsourcing that companies and countries seize to take advantage of. The biggest benefit is reduced costs of infrastructure and labor. According to the OneNeck IT Solutions, “The attraction to overseas outsourcing has traditionally been reduced costs. By moving support services to India or China, for
Companies that decide to outsource do so for a number of reasons. The primary reason is to achieve cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function more efficiently than
This paper details a project that transitioned the responsibility from an outsourced IT service delivery model to an insourced delivery model within a Military Department (MilDep). The purpose is to understand why the goals of the insource service are not being met and more tactically, why IT governance is not working.
It is recommended that Richter’s outsource the more routine IT functions. The current governance model should be changed for decisions that relate to IT architecture, infrastructure and business application needs while the model for IT principles and investment should remain as is.
Office Supply Incorporated (OSI) is a company in crisis, with challenges in its cost structure and poor IT performance. Outsourcing to Technology Infrastructure Solutions (TIS) is an opportunity to both reduce costs and complexity for the firm, but first must consider whether outsourcing is a good strategic fit for OSI. Outsourcing is known as the practice of turning over responsibility of some or all of organizations information systems to a foreign firm in order to stay competitive. Outsourcing is not new to the business world, as it dominated the manufacturing sector the past couple of decades. There are various advantages and disadvantages. Advantages include lower costs, better quality, and downsizing to focus on the
Schaeffer Corporation must have improved information technology services in order for them to achieve their ambitious growth goals. Schaeffer’s IT is not one of their core competencies and they are able to save some money by outsourcing and expending into additional countries and acquiring these new companies will require extraordinary IT support efforts.
Md B. Sarderl K.J. Rogersi, Edmund Prater2 'Department of Industrial and Manufacturing Systems Engineering, University of Texas at Arlington, Texas - 76019, USA 2Department of Information Systems & Management Science, University of Texas at Arlington, Texas - 76019, USA Abstract--Outsourcing is proven as a good idea for many firms that need to reduce operating costs and improve information technology operations. But it remains important for them to select the appropriate outsourcing activities. Many companies will be hurt by hastily following the herd down the outsourcing path without thoroughly evaluating the benefits
While it lessens the burden on organizations, reducing and shifting the cost and risk of its IT operation, security and management issues to an external service provider or vendor, outsourcing any portions of an organization's Information System has significant risks that can sometimes become detrimental to the outsourced organization. According to the Commission on Government Outsourcing, "when outsourcing an organization exposes itself to significant risks in terms of security, accuracy, and completeness of information (Holroyd City Council, 2008)". Comprised in the rest of this document is an
The wrong IT can lock you into yesterday's practices, in effect 'fossilizing' your business. Many companies outsource in order to open up their IT to new levels of flexibility and adaptiveness. At Cap Gemini Ernst & Young, our global experience spanning all significant technologies and all business sectors empowers us to match your IT support to your ongoing business needs, however far and fast they might evolve.
Outsourcing refers to hiring an outside, independent firm to perform a business function that internal employees might otherwise perform. Many organizations outsource jobs to specialized service companies, which frequently operate abroad. The outsourcing trend stands to continue; the latest wave of outsourcing impacts the information technology field. IT outsourcing includes data center operations, desktop and help desk support, software development, e-commerce outsourcing, software applications services, network operations and disaster recovery.2
IT is one of the most commonly outsourced operations due to the array of complex challenges that fall under the IT umbrella. Having an experienced and diverse team of in-house IT experts on staff that is qualified to handle a range of scenarios is not practical
Because of the important relationship between insourcing/outsourcing and competitiveness, organizations must consider many variables when considering an insourcing/outsourcing decision. This may include a detailed examination of a firm’s competency and costs, along with quality, delivery, technology, responsiveness, and continuous improvement requirements. Because of