Outsourcing

Contents.

1 Abstract
2 Introduction
3 Fundamentals
4 The Main Strategy
5 Sucessful Outsourcing
6 Conclusion

Outsourcing and how it can help IT Managers enhance their projects.

Abstract

With computer systems / projects and there implementations getting more complex
with every day that passes , the tendering of IT responsibilities to external
parties is becoming more and more attractive to the IT Managers of large
organisations. The common name for this type of operation is "Outsourcing". It
is the attempt of this paper to explain outsourcing , it\'s pro\'s and con\'s and
how it can help our friendly IT Manager enhance developments or implementations.

Introduction

Outsourcing can be defined as a contract service agreement in which an
organisation hires out all or part of its IT responsibilities to an external
company.

More and more companies are leaning towards outsourcing it could be said that
this may be caused by the growing complexity of IT and the changing business
needs of an organisation. As a result, an organisation may find that it is not
possible to have all its IT services supplied from within its own company. Given
this, an IT manager may decide to choose to seek assistance from an external
contractor/company to supply their services the organisation lacks. In addition,
the business competition has set the pace for an organisation to continue to
strive for internal efficiency. It also needs to look for a way to transfer non-
core activities or "in house" services and support activities to external
specialist organisations who can deliver quality services at a lower cost.

Fundamentals

In deciding whether to use outsourcing or not, the main objective of outsourcing
is based on the price of delivery of services by an external contractor/company.
Although price of delivery is a primary factor for outsourcing, other issues
should be considered e.g. price should be measured against the overall package
offered by the external contractor/company. Briefly if it\'s a good competitive
price in relation to the services rendered by the company and in respect to
their skills/competency and experience, and timely delivery. The organisation
also needs to consider outsourcing in light of its long term strategic
directions and its information needs.

Competition is a another area to be carefully considered. Competition opens up
opportunity for all potential suppliers to conduct business with the
organisation. Through the competitive process, it allows organisations/IT
managers to derive the best outcome. From the open and effective competition,
the organisation is then able to judge soundly in determining the best strategy
after it has taken into account of the competition and value for money principle.


IT managers can go through lengthy procedures to minimise problems with
outsourcing, but still things can go wrong and intended objectives may not get
achieved. To overcome such mistakes, it may be prudent to look at other
companies that have undertaken outsourcing and learn from their successes and
mistakes

Listed below are some of the major issues to be considered when using
outsourcing:

- An IT manager that undertakes outsourcing must be able to clearly identify its
long 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 external
service provider, it would be prudent to incorporate an "extraordinary events"
clause into any contract entered into. This clause should cover any
extraordinary changes in circumstance that should occur . This also allows a lot
of flexibility between the two parties.

- The IT manager should identify all the external and internal stakeholders and
the impact that the outsourcing may have on stakeholders.

- Learn from other companies, use their mistakes and successes to avoid
duplication and waste of manpower.

- The IT manager should communicate regularly with anyone in the organisation
who is affected by outsourcing, even if the affect is very small.

- The IT manager should make sure that the external service provider should know
exactly what is expected of them e.g. the exact services required.

- The IT manager should allow adequate time and the correct resources to the
problem at hand , this is to ensure the best possible outcome from the service
arrangement. - The IT manager should assign skilled staff to manage the
external contractor and to monitor closely the external contractors performance.

- The IT manager should monitor and assess the contractor to ensure quality of
the service not just price of the delivery of services.

The Main Strategy

In an organisation, the IT infrastructure components are comprised of a number
of technical and service areas. Before going through any outsourcing decision
process, the organisation needs first to assess its