Outsourcing – Сustom Literature essay

Sample essay topic, essay writing: Outsourcing - 1109 words

OutsourcingContents.1 Abstract2 Introduction3 Fundamentals4 The Main Strategy5 Sucessful Outsourcing6 ConclusionOutsourcing and how it can help IT Managers enhance their projects. AbstractWith computer systems / projects and there implementations getting more complexwith every day that passes, the tendering of IT responsibilities to externalparties is becoming more and more attractive to the IT Managers of largeorganisations. The common name for this type of operation is 'Outsourcing'. Itis the attempt of this paper to explain outsourcing, it's pro's and con's andhow it can help our friendly IT Manager enhance developments or implementations. IntroductionOutsourcing can be defined as a contract service agreement in which anorganisation hires out all or part of its IT responsibilities to an externalcompany. More and more companies are leaning towards outsourcing it could be said thatthis may be caused by the growing complexity of IT and the changing businessneeds of an organisation. As a result, an organisation may find that it is notpossible to have all its IT services supplied from within its own company. Giventhis, an IT manager may decide to choose to seek assistance from an externalcontractor/company to supply their services the organisation lacks.

In addition, the business competition has set the pace for an organisation to continue tostrive for internal efficiency. It also needs to look for a way to transfer non-core activities or 'in house' services and support activities to externalspecialist organisations who can deliver quality services at a lower cost. FundamentalsIn deciding whether to use outsourcing or not, the main objective of outsourcingis based on the price of delivery of services by an external contractor/company. Although price of delivery is a primary factor for outsourcing, other issuesshould be considered e. g. price should be measured against the overall packageoffered by the external contractor/company. Briefly if it's a good competitiveprice in relation to the services rendered by the company and in respect totheir skills/competency and experience, and timely delivery. The organisationalso needs to consider outsourcing in light of its long term strategicdirections and its information needs. Competition is a another area to be carefully considered

Competition opens upopportunity for all potential suppliers to conduct business with theorganisation. Through the competitive process, it allows organisations/ITmanagers to derive the best outcome. From the open and effective competition, the organisation is then able to judge soundly in determining the best strategyafter it has taken into account of the competition and value for money principle. IT managers can go through lengthy procedures to minimise problems withoutsourcing, but still things can go wrong and intended objectives may not getachieved. To overcome such mistakes, it may be prudent to look at othercompanies that have undertaken outsourcing and learn from their successes andmistakesListed below are some of the major issues to be considered when usingoutsourcing:- An IT manager that undertakes outsourcing must be able to clearly identify itslong term IT strategic directions and long term information needs.- Organisation must be able to clearly define its business objectives.- To avoid unnecessary friction between the organisation and the externalservice provider, it would be prudent to incorporate an 'extraordinary events'clause into any contract entered into. This clause should cover anyextraordinary changes in circumstance that should occur.

This also allows a lotof flexibility between the two parties.- The IT manager should identify all the external and internal stakeholders andthe impact that the outsourcing may have on stakeholders.- Learn from other companies, use their mistakes and successes to avoidduplication and waste of manpower.- The IT manager should communicate regularly with anyone in the organisationwho is affected by outsourcing, even if the affect is very small.- The IT manager should make sure that the external service provider should knowexactly what is expected of them e. g. the exact services required.- The IT manager should allow adequate time and the correct resources to theproblem at hand, this is to ensure the best possible outcome from the servicearrangement. - The IT manager should assign skilled staff to manage theexternal contractor and to monitor closely the external contractors performance.- The IT manager should monitor and assess the contractor to ensure quality ofthe service not just price of the delivery of services. The Main StrategyIn an organisation, the IT infrastructure components are comprised of a numberof technical and service areas. Before going through any outsourcing decisionprocess, the organisation needs first to assess its sourcing across the entireIT infrastructure. Once this is done, the organisation can then determine thebest sourcing strategy against a number of perspectives. In order to determine the optimum sourcing strategy, an organisation needs tolook at a number of perspectives or alternatives and then balance theseperspectives with the benefits and risks of outsourcing.

With this information, an organisation can derive a more structured methodology for a balanced view ofthe IT infrastructure and its components. It can be stated that there is no one approach to outsourcing. However, inpractice there are three common methods used by the practitioners. They include:1 Outsourcing a significant proportion of the IT services and technicalareas. This approach has a lower co-ordination cost and also has a greaterorganisational impact;2 Assessing each IT service and technical area independently. A number ofvendors are used to match the needs of each outsourcing event. This approachselects the best vendor and deal for each outsourcing arrangement. However, itinvolves higher internal costs and synergy problem;3 Selecting a prime contractor. The prime contractor can select and manageall other vendors.

This approach depends on the importance of learning curve andtherefore, it takes longer. As part of the determination of outsourcing strategy, it is useful for theorganisation to incorporate any experience derived from other organisations thathave outsourced and other forms of outsourcing that the organisation hasundertaken. The organisation should also perform an initial investigation on thepotential vendors background. Furthermore, the organisation should examinedifferent kinds of outsourcing forms that the vendors are able to provide. The organisation must identify all the internal and external stakeholders andthe impact that outsourcing may have on them and their objectives. The internalstakeholders include IT staff, users and management and, the externalstakeholders include unions, customers, and existing suppliers (IT and non-IT).The IT manager should also undertake cost benefit analysis of all internal costsand external provisions. This provision include capital investment, ongoingexpenses and the commitment of time and resources.

Once a cost baseline isdeveloped, an organisation can come up with a more objective cost analysis. Itcan then assess the related components of the vendor's proposal against thiscost benefit analysis before making any decision regarding the outsourcing. Successful OutsourcingFor an IT manager to successfully outsource its IT functions, there are a numberof factors that need to be addressed. An organisation that has outsourced its IT functions to an external contract...

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