Overview and Expected Benefits
The
Outsourcing Lifecycle and Key Considerations
Overview:
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Other articles:
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Outsourcing
is contracting with a third-party for a specified period of time to perform
work or take over an activity that was previously performed by in-house staff.
Strategic
reasons to outsource:
1. Improve business focus
2. Gain access to world-class capabilities
3. Accelerate re-engineering benefits
4. Shared risks
5. Free resources for other purposes
Tactical
reasons to outsource:
1. Reduce or control operating costs
2. Make capital funds available
3. Cash infusion
4. Resources not available Internally
5. Function difficult to manage or out of
control
Source: The Outsourcing Institute, 1998
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Cost
reduction is not the primary benefit of outsourcing expected
by IT executives. Expected benefits include:
Acquire
Technology Skills 49%
Gain
Industry Expertise 48%
Increase
Application Expertise 38%
Add
Flexibility / Reliability 25%
Improve
Information Technology Performance 22%
Improve
Competitive Position 13%
Link
Information Technology and Business Strategy 12%
Share
Risk 10%
Reduce
Costs 10%
Note:
Numbers do not add to 100% because multiple responses were allowed
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§
Retain Core competencies in-house; everything
else is a candidate for outsourcing
§
Digital Businesses’ core competencies
o
Knowledge of their customers
o
Definition of new services/service offerings
o
Management of outsourcers/suppliers
o
Monitoring of infrastructure
o
Content creation/management (Scripps’ specific)
§
Candidates for outsourcing
o
Development
o
Operations and maintenance
§
Questions to ask:
o
Is the service being delivered in a timely fashion,
while downtime of services are kept to a minimum?
o
Are you in control of your total costs? Is your
budget on target?
o
Are you migrating your customers or users to the
latest technology in these services?
§
If you have answered “No” to any one of these
questions, outsourcing could be a viable alternative.
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Because of
the cardinal rules of outsourcing, outsourcing growth is expected to continue
across all IT service areas.
Projected
growth from YE1998 to YE2003
25% Data Center
• Operations for Mainframe,
Midrange, Servers
• IT Asset Control/Management
30% Network Services
• Remote Access Services
• End-to-End Network Outsourcing
30% Application Maintenance
• Legacy Code
Management/Maintenance/Update
• Enhancements to Legacy Apps. &
Packages
25% New Applications Development
• Implementation of Packaged
Applications
• Custom Development/Component
Development
15% Distributed Services
• Help Desk and NSM
• PC Asset Management/IT Life Cycle
Management
5% IT Planning
• IT Architecture & IT Strategic
Planning
• IT Resource Planning
Source: Gartner Group
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Overview
and Expected Benefits | The 3
Types of IT Outsourcing | The
Outsourcing Lifecycle and Key Considerations
****
Home | Outsourcing
- IT focus | Outsourcing
- HR focus
Updated on
Oct 30, 2003
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