Overview and Expected Benefits
The 3 Types of IT Outsourcing
The Outsourcing Lifecycle and Key Considerations
According to Forrester Research, there are three types of sourcing
Traditional Sourcing (Frees up IT resources, Lowers costs)
Transitional Sourcing (Speeds implementation, Allows businesses to operate uninterrupted)
Transferable Sourcing (Leverages competitive technologies, Generates new revenue, Rejuvenates IT with new technology skill set)
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Traditional sourcing delivers technology services that are not critical to the business and can be done more cheaply by a third party
§ The primary goal of traditional sourcing is cost savings
§ In keeping with the primary goal, one should minimise the internal resources managing the contract. One should monitor for compliance, but should not invest a lot of time in managing the vendor
§ The metrics for traditional sourcing contracts should focus on costs and business benefits
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Transitional sourcing helps companies make a business change quickly without disrupting the business
§ The primary goal of transitional sourcing is a smooth transition from the current environment to the new environment
§ One should dedicate a management team (e.g., 2 full-time project managers and 1 business analyst) to oversee the contract and the transition to the new system
§ The metrics for transitional sourcing contracts are speed and quality of work
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Transferable sourcing brings new technologies into companies to attack strategic revenue opportunities
§ The goal of the sourcing contract should be business-driven and not tactical cost savings
§ One should allot high-performing IT personnel to manage and work on the contract (e.g., 2 full-time project managers and 1 business analyst at launch; 3% to 5% of IT’s top talent to learn the new technologies so future work can be done in-house)
§ The metrics for transferable sourcing contracts are based on new skills and revenue gains.
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Overview and Expected Benefits | The 3 Types of IT Outsourcing | The Outsourcing Lifecycle and Key Considerations
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Updated on January 20, 2003
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