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  • IT and IT-enabled Business Process Outsourcing ISM 6367 Prof. Mihir A. Parikh

Transcript

  • 1. ISM 6305 Information Resources Management IT and IT-enabled Business Process Outsourcing IT and IT-enabled Business Process Outsourcing
  • 2. Core IT Activities
    • IT operations planning and management.
    • Anticipating new technologies.
      • IT must keep an eye on emerging technologies.
      • Work closely with management to make appropriate decisions.
      • Weigh risks and benefits of new technologies.
    • Strategic direction.
      • IS can act as consultants to management.
      • Educate managers about current technologies/trends.
    • Process innovation.
      • Review business processes to innovate.
      • Survey best practices.
    IT and IT-enabled Business Process Outsourcing
  • 3. Core IT Activities (continued)
    • Supplier management.
      • Carefully manage outsourced IT.
    • Architecture and standards.
      • Be aware of incompatibilities.
      • Inconsistent data undermines integrity.
    • Security
      • Important to all general managers.
      • Much more than a technical problem.
    • Business continuity planning
      • Disaster recovery.
      • “What if” scenarios.
    • Human resource management.
      • Hiring, firing, training, outsourcing, etc.
    IT and IT-enabled Business Process Outsourcing
  • 4. IT Activity Categorization IT and IT-enabled Business Process Outsourcing
  • 5. Outsourcing
    • IT Outsourcing
      • Data network management; data center management; data entry; application hosting; software-as-a service (SaaS); etc.
      • IBM; EDS; TCS; Wipro; Infosys, etc.
    • IT-enabled Business Process Outsourcing (BPO)
      • Call center; medical transcripts; insurance claims processing; accounts reconciliation; content management
      • ADP; Convergys; GE Services; ICICI OneSource; HCL; Genpact; MphasiS, etc.
    • IT-enabled Knowledge Process Outsourcing (KPO)
      • High value addition; knowledge-intensive processes
      • Tax return preparation and audit; legal research; financial research; patents filling services; business intelligence services; technology R&D; animation design; gaming, etc.
        • Accenture; Gartner; Evalueserve; IPPro; Scope; Corbus
    IT and IT-enabled Business Process Outsourcing
  • 6. IT Outsourcing Services
    • Level 1 – IT physical space (real estate) services
      • Floor space and physical facility maintenance; specialized HVAC plant maintenance
    • Level 2 – Network services
      • Internal and external connectivity (local area networks and wide area networks); network management; firewall and other data security services
    • Level 3 – Platform services
      • Support for hardware and operating systems; reboot services; data backup and disaster recovery
    • Level 4 – Application support services
      • Application hosting and Web Services; application performance monitoring; application design and development
    • Level 5 – Business operating services
      • Administering and operating applications; Overall IT operations management
    IT and IT-enabled Business Process Outsourcing
  • 7. Drivers of IT and BP Outsourcing
    • Cost savings
    • Strategic focus on core competences
    • Improve performance/ fix broken IT
    • Instant adoption of best practices
    • Access to IT resources
    • Access to technical staff and special skills
    • Transition to new technologies
    • Handle peak demands
    • Consolidation of IT services
    • Other financial reasons (cash flow; asset management; fixed to variable cost)
    IT and IT-enabled Business Process Outsourcing
  • 8. When to Outsource IT and IT-enabled Business Process Outsourcing Internal versus External IT Service Delivery
  • 9. When to Outsource IT and IT-enabled Business Process Outsourcing Uninterrupted service-oriented IRM (Factory) Outsourcing Presumption: Yes Support-oriented IRM Outsourcing Presumption: Yes Turnaround IRM Outsourcing Presumption: Mixed IRM = Information Resource Management Strategic IRM Outsourcing Presumption: Mixed Impact of IT on Core Strategy Impact of IT on Core Operations High Low High Low
  • 10. Support-Oriented IRM
    • Impact on Core Strategy and Operations
      • Low and Low, respectively
    • Outsourcing presumption: YES
    • Reasons to consider outsourcing
      • Access to higher IT professionalism
      • Ability to lay off a low-priority, problem-laden area to experts
      • Access to current IT skills
      • Better IT planning
      • Reduce the risk of inappropriate IT architecture/conform to industry practices
    IT and IT-enabled Business Process Outsourcing
  • 11. Uninterrupted Service-Oriented IRM
    • Impact on Core Strategy and Operations
      • Low and High, respectively
    • Outsourcing presumption: YES
    • Reasons to consider outsourcing
      • Economies of scale for SMEs
      • Higher quality of services and backup
      • Reduce IT risks
      • Facilitate management focus on core business
    IT and IT-enabled Business Process Outsourcing
  • 12. Turnaround IRM
    • Impact on Core Strategy and Operations
      • High and Low, respectively
    • Outsourcing presumption: MIXED
    • Reasons to consider outsourcing
      • Access to technologies and skills not available with the internal IT department
      • Instant improvement in IT performance
      • Transition to new technologies
    IT and IT-enabled Business Process Outsourcing
  • 13. Strategic IRM
    • Impact on Core Strategy and Operations
      • High and High, respectively
    • Outsourcing presumption: MIXED
    • Reasons to consider outsourcing
      • Rescue and out-of-control internal IT unit
      • Assure high level of IT reliability
      • Tap source of cash
      • Facilitate cost flexibility
      • Divestiture of management attention
    IT and IT-enabled Business Process Outsourcing
  • 14. Managing Outsourcing IT and IT-enabled Business Process Outsourcing Vendor Selection Outsourcing Contract Implementation Operations/ Relationship Evaluation Decision to Renew Decision to Outsource
  • 15. Structuring Offshoring IT and IT-enabled Business Process Outsourcing
  • 16. Structuring Offshoring IT and IT-enabled Business Process Outsourcing
  • 17. Structuring Offshoring IT and IT-enabled Business Process Outsourcing
  • 18. Offshoring Agreement
    • Three types
      • Third-party agreements
        • Arms-length
        • Tight control
      • Captive agreements
        • Subsidiaries
        • Acquisitions
      • Build-operate-transfer (BOT) agreement
        • Reverse BOT
    IT and IT-enabled Business Process Outsourcing
  • 19. Legal Contractual Components
    • Scope of service
    • Service level and fees
    • Managing service providers
    • Coordination of project activities
    • Intellectual property rights
    • Privacy and data protection
    • Non-compete and non-solicitation
    • Labor/HR issues
    • Representations, warranties, and indemnities
    • Disaster recovery, limited liabilities, and insurance
    • Termination and transition
    • Tax implications
    • Jurisdictions and arbitrations
    IT and IT-enabled Business Process Outsourcing
  • 20. Risks in Outsourcing
    • Loss of control
    • High switching costs
    • Complex cost conversion (production costs versus coordination costs)
    • Vendor incompetencies/ instability/ stagnancy
    • Contract inflexibility
    • Knowledge loss
    • Over reliance on vendor
    IT and IT-enabled Business Process Outsourcing
  • 21. Avoiding Outsourcing Pitfalls
    • Do not focus negotiation solely on price
    • Craft full life-cycle services contracts that occur in stated
    • Establish short-term supplier contracts
    • Use multiple, best-of-breed suppliers
    • Develop skills in contract management
    • Carefully evaluate your company’s own capabilities
    IT and IT-enabled Business Process Outsourcing
  • 22. Avoiding Outsourcing Pitfalls (continued)
    • Thoroughly evaluate outsourcers’ capabilities
    • Choose an outsourcer whose capabilities complement yours
    • Base a choice on cultural fit as well as technical expertise
    • Determine whether a particular outsourcing relationship produces a net benefit for your company
    • Plan transition to offshoring
    IT and IT-enabled Business Process Outsourcing