Companies Suffer Without A Systematic
Outsourcing Approach
Fragmented Outsourcing Contracts Constitute A Complex Puzzle
So...
Integration Methodology for Outsourcing
Source: Forrester Research, Inc.

6 Basic Sourcing Models Cover Most Situations
...
Six Basic Sourcing Methods Cover All Situations
Source: Forrester Research, Inc.
Source: Forrester Research, Inc.
Six Basic Sourcing Methods Cover All Situations (Cont.)
3 Steps To Defining A Strategic Approach To
Outsourcing Approach
Source: Forrester Research, Inc.
IT Centralization & IT Archetype Shape Basic Options
Source: Forrester Research, Inc.
IT Centralization & IT Archetype Shape Basic Options
(Cont)
Source: lecture material from Hasan Cavusoglu

Solid Utility ...
Select Sourcing Models That Fit Your Foundations
Source: Forrester Research, Inc.
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Cathay Pacific Evaluation - 3 Steps To Defining A Strategic Approach To Outsourcing Approach

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In the past, companies have failed to consider all the factors that impact their outsourcing strategy.
Opportunistic initiatives have led to fragmented outsourcing. (embrace the emerging technology)
Focus on the cost!
As a result, many find that outsourcing doesn't deliver the benefits they seek.To understand how firms plan their IT outsourcing strategy...

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  • In the past, companies have failed to consider all the factors that impact their outsourcing strategy.
    Opportunistic initiatives have led to fragmented outsourcing. (embrace the emerging technology)
    Focus on the cost!
    As a result, many find that outsourcing doesn't deliver the benefits they seek.To understand how firms plan their IT outsourcing strategy...
  • As a IT manager or outsourcing professional need to help their firms overcome the poor strategic focus and outsourcing outcomes that happen commonly in companies. This requires a methodical approach to selecting the most efficient outsourcing scenario for each situation. This session will provide a basic guideline that you can take away and hopefully it gives you a better idea about choosing outsourcing model.
  • 1.Global outsourcing: All layers of the IT landscape are globally outsourced to a single service provider.
    2.Infrastructure outsourcing: The IT infrastructure is globally outsourced to a single service provider. Applications remain managed internally.
    3.Vertical outsourcing: Vertical compounds of servers, middleware, and applications are outsourced. Very often, the process supported by the application is also outsourced: We call this business process outsourcing (BPO).
    4. Best-of-breed outsourcing: A small set of applications, server, and middleware are outsourced to different service providers.
  • 5. Infrastructure and vertical applications: The IT infrastructure is globally outsourced to a single service provider. Applications are outsourced by domain. Some applications remain managed internally.
    6. Horizontal outsourcing This is a variant of model five but where all applications are outsourced to a single service provider.
  • For an organized approach to selecting the relevant outsourcing model from these six basic options, there are two parameters concerning internal IT into three categories. Forrester advises buyers to consider the key factors in successive phases:
    1. The IT group's structural issues dictate the shortlist of possible models. IT characteristics like the degree of IT centralization are the foundational issues that rule out some models and preselect others. Companies should not opt for a model before checking that it makes sense.
    2. Staff availability for new projects influences the selection of a model. By considering the resource constraints and plans, buyers can adjust the targeted outsourcing model or eliminate some options.
    3. IT context determines the implementation of the selected outsourcing model. The context for IT activities will underpin decisions about issues like which IT domains are unsuited for outsourcing — or which will require more preparatory work before applying an outsourcing approach.
  • Forrester defined three models of IT organization: centralized, decentralized, and federated.
    Centralized model, all IT resources report to the CIO. In the decentralized model, autonomous IT structures report to their business units. In the federated model, the CIOs of the business units report to their director and the corporate CIO. Each of these models possesses its won distinct practices for decision cycles, reporting, autonomy or integration, and procurement. When setting an outsourcing strategy, IT organization attributes underpin the short listing of the different models.
  • Companies cannot just consider the IT organizational approach, they need to assess their IT delivery structure and style. It’s called IT archetypes.
    Solid Utility:These IT departments work to provide available, cost-effective infrastructure and permanent access to applications. This limited role for IT occurs in a stable business process environment or at national or regional subsidiaries that only run systems. These IT shops often outsource some parts of the infrastructure and application maintenance; they also outsource most application development work. However, with limited vendor management skills in most cases, they may adopt only a partial version of model four (Best-of-breed outsourcing) This IT archetype tends to favor selective outsourcing on a vertical basis (model three). It might also consider infrastructure models five and six, provided that it has fully stabilized infrastructure management before transferring it to a service provider.
    Trusted Supplier. enterprise expects to have all the infrastructure capabilities of a Solid Utility, as well as managing application projects centrally and delivering them on time and within budget. This is the most common model among companies today. Businesses that operate with this IT archetype may seek external service support in any technical or vertical domain. As projects often have a large degree of autonomy, companies in this position prefer best-of-breed services firms. This leads many to prefer outsourcing model four, despite the complexities involved in managing multiple vendors.
    This model operates when IT is closely integrated with the business or contributes directly to product delivery — as with intangible products like retail banking services. Partner Player IT organizations must first master all the elements of the previous two models. In addition, they have the dimension of C-level expectations and are involved in business process design and support. This leads them to outsource routine tasks and highly process-centric operations. They also massively outsource application development and maintenance to concentrate on enterprise architecture and enterprise programs while retaining systems integration in-house.
  • Cathay Pacific Evaluation - 3 Steps To Defining A Strategic Approach To Outsourcing Approach

    1. 1. Companies Suffer Without A Systematic Outsourcing Approach Fragmented Outsourcing Contracts Constitute A Complex Puzzle Source: Forrester Research, Inc.
    2. 2. Integration Methodology for Outsourcing Source: Forrester Research, Inc.  6 Basic Sourcing Models Cover Most Situations  3 Steps To Defining A Strategic Approach To Outsourcing  IT Centralization & IT Archetype Shape Basic Options  How A Typical Company Managed Forrester's Three-Step Methodology  Select Sourcing Models That Fit Your Foundations
    3. 3. Six Basic Sourcing Methods Cover All Situations Source: Forrester Research, Inc.
    4. 4. Source: Forrester Research, Inc. Six Basic Sourcing Methods Cover All Situations (Cont.)
    5. 5. 3 Steps To Defining A Strategic Approach To Outsourcing Approach Source: Forrester Research, Inc.
    6. 6. IT Centralization & IT Archetype Shape Basic Options Source: Forrester Research, Inc.
    7. 7. IT Centralization & IT Archetype Shape Basic Options (Cont) Source: lecture material from Hasan Cavusoglu  Solid Utility (Service Provider) Provides cost-effective, reliable, standardized IT services  Trusted Partners (Facilitator) Provides solutions to business functions’ needs  Partner Player (Enabler) Provides unique and competitive solutions for customers, suppliers, business functions
    8. 8. Select Sourcing Models That Fit Your Foundations Source: Forrester Research, Inc.

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