John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Overview Outsourcing Information Systems and Technology: Outsourcing Information Systems and Technology: The reasons and benefits Business Technology Management: Business Technology Management: Introduction; communication, collaboration, and evaluation The Synergy: Combining BTM with outsourcing; measuring quality, replacing costs, and realizing benefits

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Outsourcing is… The strategic use of outside resources to perform activities traditionally handled by internal staff and resources. Done because… Perhaps the IT function is not core to the business. Or…

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Reasons for Outsourcing slipping slipping IT Projects keep on slipping Management’s plateis full

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Reasons for Outsourcing Internal staff may lack the expertise or resources to do the job well

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Benefits of Outsourcing Savings for the business Exploitation of innovation Delivery guarantees Increased quality

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Business Technology Management "BTM is a proven and unified approach that enables companies to effectively and continuously align business and technology for improved business performance.” 1 BTM strives to align technology with the rest of management through communication, collaboration, and evaluation. 1 F. Hoque, “Aligning Business and Technology: The Principles of Business Technology Management (BTM)”

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Communication Give decision makers the right information at the right time to draw the right conclusions.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Collaboration Develop and enact strategy through the cooperation of business and technology management.Develop and enact strategy through the cooperation of business and technology management. Unify business and technology decision- making.Unify business and technology decision- making. Collaborate horizontally and vertically within the organization to leverage distributed expertise.Collaborate horizontally and vertically within the organization to leverage distributed expertise.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Evaluation Create reusable business processes and technology tools.Create reusable business processes and technology tools. Enable performance management through continuous measurement and evaluation.Enable performance management through continuous measurement and evaluation. Promote strategy-driven innovation instead of reactionary management by modeling and testing new systems within the context of their real-world scenario.Promote strategy-driven innovation instead of reactionary management by modeling and testing new systems within the context of their real-world scenario.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Combining BTM with Outsourcing Setting priorities Measuring quality Replacing costs Realizing benefits

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Setting Priorities Send out Requests for Proposal (RFP’s) to a number of vendors. Their responses are their blueprints for the outsourced function. The details of their proposals must match the customers technical requirements and priorities.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Measuring Quality Service Level Agreements guarantee delivery and quality. In-house contract management using the right personnel keeps the relationship on track. Risks are unnecessary and easily avoided.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Replacing Costs The cost of outsourcing is meant to replace “visible” and “invisible” in-house IT expenditures DOWNTIME ADMINISTRATION MANAGEMENT OPERATIONS RECRUITMENT R & D

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Realizing Benefits Better management of time and money. A common language and common goals for IT vendors and business strategists.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 Conclusion The best competitors know their business well. They focus on core areas. They may not have specialized capabilities to operate their peripheral areas. Such areas are often more efficiently executed by other parties. Many successful organizations consider outsourcing aspects of their Information Systems. When they do so, they should keep in mind that BTM keeps technology managed as part of the business. BTM, when used by an outsourcing customer to manage their relationship with the vendor, creates a synergy that reaps the benefits of IT best practices combined with business management.

John G.H. Schell Managing Outsourced IT Using BTM November 2002 For more information… Carnegie Mellon Software Engineering Institute: Management Practices.Management Practices CIO.com: Caveat Emptor by T. Field.Caveat Emptor Darwin: The Fine Print by S. Kalin.The Fine Print Gartner Group: IT Services Sourcing Goes Strategic by J. Beck.IT Services Sourcing Goes Strategic Hughes Software Systems: Outsourcing: A Decision of Trust.Outsourcing: A Decision of Trust InternetWeek.com: Competition Driving IT Outsourcing Spending Worldwide by M. Mosquera.Competition Driving IT Outsourcing Spending Worldwide Intermec: Professional Services Overview by M. Harms.Professional Services Overview Kudos: The Theory & Practice of Outsourcing by D. Griffiths.The Theory & Practice of Outsourcing Network Computing India: Reinventing E-Business 2.0 by O. Rist.Reinventing E-Business 2.0 Transition Partners: Outsourcing... The Decision Process by R. Krahl.Outsourcing... The Decision Process Wipro: Aligning Business and Technology: The Principles of Business Technology Management (BTM) by F. Hoque.Aligning Business and Technology: The Principles of Business Technology Management (BTM) Wipro: Outsourcing: Total Cost of Management Benefits.Outsourcing: Total Cost of Management Benefits