This document summarizes the key topics from a class on information systems management. It discusses risk management frameworks, categories of IT risk, and approaches to IT outsourcing. The instructor's agenda includes recapping risk management, an assignment, a quiz, and a discussion on IT outsourcing and its benefits, drivers, approaches, and risks. Offshoring trends and implications for IT managers are also briefly touched on.
10. IT Risk Management The process in which potential risks to a business are identified , analyzed and mitigated , along with the process of balancing the cost of protecting the company against a risk vs. the cost of exposure to that risk. Risk Management
15. Risk vs. Technology Maturity Impact of Technology Maturity Risk Early Adopter Mid Adopter Late Adopter hands-on implementation experience little exper / high risk more exper / mid risk much exper / low risk vendor survival for project after shake-out high risk mid risk low risk sudden changes in direction of technology high risk mid risk low risk integrating technology with existing portfolio high risk mid risk low risk Benefits Period for Start of Payoff Short term Mid term Long term Size of Returns per period Biggest Bigger Big
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17. Procurement - Process RFP Process Objective : Identify best solution to meet stated business need while minimizing cost and risk 1. Pre-RFP 2. RFP 3. Proposal Submissions 4. Proposal Evaluations 5. Vendor Selection 6. Procurement Method 7. ROI Analysis 8. Negotiate Contract
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23. IT Outsourcing “ [g]et rid of context and focus on core” - Billy McCarter, former CIO of Fireman’s Fund, who reduced IT staff from 1,100 to 600 with much of the work outsourced to offshore workers A desire to focus on core competencies is frequently the strongest driver to outsource “ [a]llows me and my staff to focus on fun areas . . . be more productive, more visible to the business, understand what the business needs versus worrying about whether one of the servers needs additional RAM” - Daniel Sheehan, CIO at Advo, Inc. (infoweek, 4/14/03)
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30. IT Outsourcing Selective Outsourcing “ Global access to Enterprise Service Providers (ESPs) with low cost structures is accelerating outsourcing adoption rates, leading to the proliferation of mixed-sourcing delivery models in which the ‘best’ provider of a particular service wins.” (Gartner 2003)
31. IT Outsourcing Selective Outsourcing “ Today, businesses look to "selective sourcing & services" for their IT infrastructure, operations and management needs. With selective sourcing the focus is on securing services for very specific needs. Using managed contracts, selective sourcing has proved very successful in limiting risk, motivating vendor performance and achieving goals. With selective sourcing/services organizations have the best of both worlds with the flexibility to select a best practice supplier while maintaining overall control of their IT practices.” -- Strategic Sourcing Advisory Council, http://www.ssacouncil.org/
32. IT Outsourcing Selective Outsourcing “ I don’t believe you should have a dozen partners, because then it’s not a real relationship” -- Mukesh Mehta, VP of IT at Metropolitan Life, InformationWeek, 23 December 2002
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34. IT Outsourcing Survey Results Type of sourcing Success Failure Mixed Total outsourcing 38% 35% 27% Selective outsourcing 77% 20% 3% In house 76% 24% 0% Source: Study of 116 companies by college professors Mary Lacity and Leslie Willcocks, Computerworld, 10 May 1999
35. IT Outsourcing Consider business, economic, and technical factors in deciding whether to outsource Business Considerations Outsource Insource Commodity Differential Critical Useful Strategic Importance Potential for Differentiation
36. IT Outsourcing Consider business, economic, and technical factors in deciding whether to outsource (cont.) Economic Considerations Outsource Insource Subcritical Critical Leading Lagging Managerial Practices In-House Economies of Scale
37. IT Outsourcing Consider business, economic, and technical factors in deciding whether to outsource (cont.) Technical Considerations Low High High Low Degree of Technology Integration Degree of Technology Maturity Outsource Insource
38. IT Outsourcing Give examples of applications that would be good candidates for insourcing and outsourcing based on technical considerations Technical Considerations Low High High Low Degree of Technology Integration Degree of Technology Maturity Outsource Insource
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62. Statement of Work Approach to Quality and Measurement Plan Do Check Act 1. Identify quality standards and goals 2. Measure project performance 3. Compare metrics against goals 4. Conduct quality reviews, e.g., peer reviews 5. Test for defects 6. Eliminate causes of deficient performance - fix defects - fix root causes
63. Statement of Work Quality Metrics Measures customer satisfaction using objective surveys. Customer Satisfaction Identifies defect-prone components of the system Defect Density Measures the number of defects detected and removed over time Defect Removal Rate Measures the percentage of the requirements that have been addressed by the system Requirements Traceability Measure percentage of the actual defects originating in a stage of the project that were actually detected in that stage Defect Detection Efficiency Measures the amount of the software system covered by the testing process Test Coverage Measures the percentage of the development effort spent on internal quality evaluation efforts Quality Evaluation Effort Measures the amount of work accomplished by the development team in each phase Progress
64. Procurement - Process RFP Process 1. Pre-RFP 2. RFP 3. Proposal Submissions 4. Proposal Evaluations 5. Vendor Selection 6. Procurement Method 7. ROI Analysis 8. Negotiate Contract
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