Strategic Information Management Challenges and strategies in managing information systems Third edition

Business:

Are future business needs:

Certain

Uncertain

Is the potential contribution

of this IT service/activity to

business positioning a:

Commodity

Differentiator

Is the impact of this IT

service/activity on the

business strategy:

Useful

Vital

Is the in-house cost for this

IT service/activity compared

to the market-place:

High

Low

Technical

Is this IT service/activity:

Discrete

Integrated

Is the technological maturity:

High

Low

Is the IT capability in-house

compared to the market-place:

Low

High

Tend to

outsource

Tend not to

outsource

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Strategic Information Management

as a better option. As Figure 20.4 suggests the preferred option where possible,

is to outsource useful commodities in conditions of certainty about business

requirements across the length of the contract. Three technical considerations

are also important. It is unwise for an organization to outsource in a situation of

low technology maturity. This exists where a technology is new and unstable,

and/or where there is an existing technology but being applied in a radically

new way, and/or where there is little relevant in-house experience with the

technology. Next, the level of IT integration must influence the sourcing

decision. Generally we found it preferable not to outsource systems/activities

that are highly integrated with other parts of the technical platform, and/or that

interface in complex ways with many business users who will be impacted

significantly by the service. Finally, where inhouse capability is equivalent to or

better than that available on the external market, there would seem to be a less

pressing need to outsource the IT service/activity.

Making sourcing decisions, in practice, involves making trade-offs among

the preferences suggested by these factors. In addition, we note six reality

checks that need to be borne in mind before deciding on a specific sourcing

option:

•

Does the decision make economic sense?

•

How does the decision fit with the rate of technological change?