Chapter 11

The advantage to the vendor is that there is no change of staff and therefore no learning curve for the new people. The employees already know the systems, applications, and infrastructure so the vendor shouldn’t receive any complaints about service or performance. The advantage to the organization is that there will be no disruption in service while the new vendor learns their system. 1. Hiring an organization’s existing IS staff is common practice when starting a new outsourcing arrangement. What are the advantages of this practice to the outsource vendor? What are the advantages to the organization?

I would say that its not true because the organization ultimately needs to be happy with the performance of the outsource vendor or they will find a replacement. If the outsource manager does not keep both the vendor and organization happy, he could risk losing his job. 2. Suppose you work for an outsource vendor. How do you respond to the charge that your managers care only about how they appear to their employer (the outsource vendor), not how they actually perform for the organization?

A company may outsource because they may lack the personnel that has the knowledge and capabilities of managing the IT portion of the company. Outsourcing can be a bad thing for a company because now there are personnel that have access to your network that may not adhere to your policies and procedure. This can cause problems with the way that your company wants to run its business. The outsource personnel are managed by different policies than your own. 3. Consider the statement, “We can’t figure out how to manage an important function in our company, so you do it!” Do you agree with the sentiment of this statement? If this is true, is it necessarily bad? Why or why not?

The outsourcing vendor is able to achieve economies of scale, because they have the people with the knowledge to run all aspects of the network and fix its problems. They are able to achieve these goals because they conform the company’s to their forms, procedures, committees and reports. They don’t want each company to be different from each other. It is better if the company hires its own IT people, because then they would have to adhere to the companies policies and procedures. The outsourcing vender has an advantage because it has all the knowledge of your company and no incentive to work for you. 4.Explain how it is possible for an outsource vendor to achieve economies of scale that are not possible for the hiring organization. Does this phenomenon justify outsourcing? Why or why not?

It is like getting used to the taste of the stake, and then all of the sudden the same stake tastes totally different. General conclusion: infrastructure outsourcing could have two outcomes – better or worse. Different people will never do the same routine as people before them or after them. In what ways is outsourcing IS infrastructure like outsourcing the company cafeteria? In what ways is it different? What general conclusions can you make about infrastructure outsourcing?