THE WHAT, WHY AND HOW OF OUTSOURCING INFORMATION SYSTEMS

Company strategic priority : more focused on service, quality and operational excellence. Company strategic priority : more focused on service, quality and operational excellence. Successful companies: management able to confront and cope with anomalies and contradictions. Successful companies: management able to confront and cope with anomalies and contradictions. Management excellence can separate : Management excellence can separate : - executive “go with the flow” (the contradictions - executive “go with the flow” (the contradictions inherent to company strategies) inherent to company strategies) - executive can develop creative solutions to tough - executive can develop creative solutions to tough dilemmas. dilemmas.

Alert executives : outsource information systems responsive to their rapidly changing requirements. Alert executives : outsource information systems responsive to their rapidly changing requirements. Operational excellence strategy : to develop the line manager capacity and motivation to use systems to enhance performance. Operational excellence strategy : to develop the line manager capacity and motivation to use systems to enhance performance. Less successful companies : manager ignore the need for fine tuning and walk away from information technologies issues. Less successful companies : manager ignore the need for fine tuning and walk away from information technologies issues.

OUTSOURCING AS THE OBVIOUS ANSWER Technology problems, costs, future requirements, lack of unique expertise --- solutions  experience outsider. Technology problems, costs, future requirements, lack of unique expertise --- solutions  experience outsider. Business actions  computer-based contribution  budget increased in hardware and software Business actions  computer-based contribution  budget increased in hardware and software Weakness : Weakness : - management unease on volatile technologies - management unease on volatile technologies - investment doesn’t pay off - investment doesn’t pay off - occasional failure - occasional failure - rapid obsolescent - rapid obsolescent

OUTSOURCING AS THE OBVIOUS ANSWER Outsourcer (external service providers) become the critical resources : Outsourcer (external service providers) become the critical resources : - development more powerful new systems - development more powerful new systems - enhancing (or fixing) existing systems - enhancing (or fixing) existing systems - operating some or all components of company - operating some or all components of company information systems information systems IS more from back office to front office IS more from back office to front office

OUTSOURCING AS THE OBVIOUS ANSWER Mainframe computers (“back office” computers)  provide transaction processing, record keeping  flexible, adaptable information systems (easy access to data, customized analytical tools, integration of information in diverse data banks) Mainframe computers (“back office” computers)  provide transaction processing, record keeping  flexible, adaptable information systems (easy access to data, customized analytical tools, integration of information in diverse data banks)

THE NEGLECTED SIDE OF OUTSOURCING Management can’t outsource its responsibility to systems Management can’t outsource its responsibility to systems Management should play major roles if outsourcing is going to meet company expectations and objectives Management should play major roles if outsourcing is going to meet company expectations and objectives Information systems are part of core of any business and critical inputs from business managers are required both in their design and operations. Information systems are part of core of any business and critical inputs from business managers are required both in their design and operations.

THE NEGLECTED SIDE OF OUTSOURCING Information technology is the heart of company efforts to promote faster adaptation, innovation, cost reduction and stressing to customer satisfaction Information technology is the heart of company efforts to promote faster adaptation, innovation, cost reduction and stressing to customer satisfaction The combined effect of downsizing and reengineering promote relatively stable and even declining in labor cost. But Information Technology cost increased. The combined effect of downsizing and reengineering promote relatively stable and even declining in labor cost. But Information Technology cost increased. Outsourcing can be a very useful strategy, but can also be a high risk effort/try. Outsourcing can be a very useful strategy, but can also be a high risk effort/try.

A SURVIVAL GUIDE FOR MANAGERS INVOLVED IN OUTSOURCING 5 groups of key participants who make or break an outsourced information system initiative : 5 groups of key participants who make or break an outsourced information system initiative : - Client managers who must make major outsourcing - Client managers who must make major outsourcing decisions decisions - Client IT and IS professionals who provide specialized - Client IT and IS professionals who provide specialized counsel and critical inputs to design and operations. counsel and critical inputs to design and operations. Also technical linkages between clients & outsourcers. Also technical linkages between clients & outsourcers.

A SURVIVAL GUIDE FOR MANAGERS INVOLVED IN OUTSOURCING - The line managers who are the actual users of these Information Systems. - Outsourcers professionals : systems designers and analysts, programmers and project architects. - Outsourcer project and program managers.

Software and Systems development issues : Managing IT is a problem for line executives Managing IT is a problem for line executives Trend on outsourcing increased Trend on outsourcing increased Business needs and technology are very dynamics Business needs and technology are very dynamics Managements wants outsourcer to built and operate the new systems Managements wants outsourcer to built and operate the new systems Managements defined outputs as : produced, service on contribution. Managements defined outputs as : produced, service on contribution. Information Systems: not clearly define. Information Systems: not clearly define.

Partnering between outsourcer and company in development and operation of IS are difficult. Partnering between outsourcer and company in development and operation of IS are difficult. Many IS force business to adapt to the new technology not the reverse. Many IS force business to adapt to the new technology not the reverse. Outsourcers provide huge assistance in developing new computer based : management and decision support systems and operating and maintenance. Outsourcers provide huge assistance in developing new computer based : management and decision support systems and operating and maintenance. But they can’t teach manager what their business should be doing, what the technology should be accomplishing. But they can’t teach manager what their business should be doing, what the technology should be accomplishing. Management should be making the choices. Management should be making the choices.