Chapter 11

Chapter 11

IS/IT MANAGEMENT

Chapter Contents  2

¾ Acquiring Computer  Services ¾ Managing Computer Systems ¾ Outsourcing  Outsourcing ¾ Managing Outsourcing Arrangement  Managing Outsourcing Arrangement ¾ Acquiring Software q g

Acquiring Computer Services Acquiring Computer  Services 3

Facilities management

Consultancy firms Used in initial planning stages of project and then where specialist assistance needed

Contracting out of some or all of computer operations to a third party

Types of computer services Software houses Develop software solutions specific to individual user requirements

Input & Output preparation B Bureau specializing i li i OCR, COM and similar input/output methods

Turnkey services Purchase of complete system from vendor – hardware, software, training , etc..

Managing Computer Systems 4

Options in managing computer systems: Manage all hardware and software own staff 2 Hardware and software managed by a firm of outside  2. Hardware and software managed by a firm of outside specialist  3. Have the company’s hardware at premises of the firm of  outside specialist used via a communication link t id i li t d i i ti li k Cost Outside suppo t ay be c eape t a ow sta due to: Outside support may be cheaper than own staff due to: 1. More effective at managing technology  2. Economic of scale  1.

Managing Computer Systems ‐ 2 5

Continuity of Supply  Ensure continuity of IT system by: 1. Have alternative processing site (in case main one destroy) 2. Maintain appropriate IT skills in company pp p p y Contracting for Services Contract outside company for service when skills not available in Contract outside company for service when skills not available in‐ house. It include: ¾ Training  ¾ Studies St di ¾ Support ¾ Management 

Outsourcing  6

Key points: ¾ Involves purchasing, from outside the organization, the 

service required to perform business functions. i i dt f b i f ti ¾ Similar to facilities management, but has a broader remit.  Similar to facilities management but has a broader remit ¾ Normally involves long‐term flexible relationship with  y g p

supplier

Type of Outsourcing  7

Type of Outsource Body shop

Project management

Outsourcing to meet short term requirements

Part or all of an specific IS project Total Organization outsources more 70% of IT than 7 capability

Outsourcing ‐ 2 8

Implications for Organizations 1.

No direct management control of outsourcing company.

2.

IS manager now manages contract with service provider – not provision of IS services not provision of IS services.

3.

May be more cost effective than in‐house application  y pp development.

Outsourcing ‐ 3 9

Level of external provision of IS services Specific IS service include within outsourcing: 1 1.

Time share vendors: On line access to a shared processing  Time share vendors: On line access to a shared processing facility. Charge on time‐used basis. 

2.

Service bureaux: Provide specific external service – charge  on a used for basis. 

3.

Facilities management: external specialist manages the  organization’s IS. 

Summary of Outsourcing of IS Arrangements y g g 10

Type

Timeshare vendor d

Service b bureaux

Full facilities managementt

Management responsibility

Almost all retained

Some retained

Almost all divested

Relationship

Product purchasing

Service purchasing

Partnership

Length of contract

Short term

Medium term

Long term

Contract focus

Operational tasks

F t Features

Rationale

Cost saving

Strategic services Access to task expertise

Process quality and access to management expertise

Four Approaches to IT Sourcing  11

I sourcing In i Maintain large inhouse IT department and insource – buy-inskills are required

Total sourcing Already di discussed d

Approaches to IT  Sourcing g

Multiple – selective sourcing The organization negotiate with a range of suppliers for computer services

Joint venture / strategic alliance Risk an rewards of sourcing shared between company and supplier – normally in joint venture agreement

Arguments For And Against Outsourcing 12

Benefits More rapid response to technology changes

Help provide appropriate international systems

Disadvantages

O Outsourcing i

p Improve return on equity

Retain focus on core b i business

Alleviates short of IT and business professionals

Contract lack in

Possible loss of competitive advantage

Unavoidable cost increase Luck of confidential ity

Dependency on supplier

L Lostt expertise

Difficult contractual terms

Outsourcing and Organizational Learning 13

¾

Outsourcing limits the possibilities for organizational  learning because system knowledge is located with the  outsourcing company, and not within the organization. 

Managing Outsourcing Arrangements – What to Outsource? What to Outsource? 14

System a commodity – is so can it be separated?

Is the system strategic? If Y possible not outsource

Questions to ask with outsourcing Will our IT requirement change? g If Y only short term arrangements

Can system be provided more efficiently in-house? If Y keep in-house

If N because complex interface not outsource

Does company have knowledge to outsource new technology? If N – not outsource until have appropriate internal knowledge

Acquiring Software ‐1   15

Bespoke or tailor-made systems Designed to fit the specific needs of the organization – written in-house or externally

g Advantages: 1. 2. 3. 4.

Fit organization’s needs Organization defines data structure Easy to integrate with other applications  Easy to integrate with other applications Modified to fit changes in organization

Disadvantages: 1 1. 2. 3. 4 4.

Long time to develop Long time to develop Costly More bugs Support expensive Support expensive 

Acquiring Software ‐2   16

General purpose packages Provide approximate solutions to a range of different problems.

Advantages: Cheap 2. Training readily available  3. Available quickly  4. Used as prototype for bespoke systems 1.

Disadvantages: Not fit precise needs of organization 2. Organization change to meet package 3 Different data structure  3. Diff td t t t 1.

Acquiring Software ‐3   17

Off-the-shelf packages Software solutions purchased fir specific task – used without modoficatiob.

Advantages: Cheap 2. Few bugs 3. Having training included 4. Updates available  1.

Disadvantages: Not fit precise needs of organization 2. Depend outside supplier for updates / amendment 3 Different data structure  3. Diff td t t t 1.

18

Questions?