The CIO is concerned about the ever-increasing costs of maintaining the growing number of IT applications in the organization. Rapid proliferation of applications, especially cloud and SaaS technologies, has overwhelmed many IT departments and led to issues with integration, security, and maintenance. Application portfolio management (APM) approaches aim to address this by providing visibility into spending, prioritizing applications based on their value and costs, and ensuring applications map to business objectives. Key capabilities for successful APM implementation include developing strategies and governance, inventory management of applications, and reporting and rationalization of the portfolio.

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Michael Punzo
ISQS 4385 STRATIGIC IT & TELECOMMUNICATIONS MANAGEMENT
ASSIGNMENT - 6
Chapter 10: IT Sourcing
1. The CIO is under more and more pressure to improve productivity in the IT Department.
He has asked you to do some research into the possibility of outsourcing some of the IT
activities. Specifically, he wants to know about the evolution of outsourcing.
RESPONSE:
Before we delve into the evolution of outsourcing we need to answer the question what
do we outsource and why?
What should we outsource? A company should outsource where it does not have a niche
in the market. Companies need to focus on what they do best and in turn hire someone to
do what they do best. For example IBM, during the 80’s [the early days of outsourcing]
was one of the bigger companies to provide an outsource service. Running and
maintaining a data center in-house was unheard of during the 80’s; it wasn’t helping
create the niche or so they thought.
In the beginning outsourcing was selected to provide cost production to the company.
Such processes like computer operations, communications, and help desk were set up
with an outsourcer. This helped to reduce the overall cost to the company while creating a
profit for the outsourcer.
It wasn’t until the 90’s when the market of outsourcing expanded offering more of a
variety or more specific functions to businesses that outsourcing began to flourish.
In the late 1990’s companies began to further its use of outsourcing in a more tactical
support manner. This allowed better flexibility for the company freeing up resources and
manpower for other projects. More recently outsourcing has become strategic in nature.
This allows for more focus on the business value of the company rather than just simply
saving money by outsourcing. During this time Active Server Pages (ASPs) evolved and
offered businesses a strategic service allowing them to remotely manage (rent
functionality through a VPN or over the internet) their applications therefore they would
not have to employ and maintain an IT department to develop and maintain their
applications.
Keep in mind for the success of outsource there are five factors to be considered:
1. Use selective sourcing (what to outsource and what to retain in-house)
2. Have joint business-IT sponsorship.
3. Insure a thorough comparison with internal operations (avoiding hidden costs).
4. Develop a detailed contract.
5. Limit the length of the contract.

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2. In a follow up meeting, the CIO wants to discuss the potential benefits and risks of
offshore outsourcing.
RESPONSE:
Clearly the biggest benefit of offshore outsourcing is that it saves money. Big financial
savings come from sending work to third-world countries where salaries are typically
forty to sixty percent lower than in the US. This provides revenue in such a country as
well as saving the company considerable amount of money [creating more capital]
allowing the company to invest in other areas of operations that produce revenue.
The largest country of outsourcing is India. The skills in this particular country are more
refined and focused on than in North America.
By outsourcing some of the mundane day-to-day activities there can be more focus
applied to core operations of the business. Outsourcing allows business managers to
apply their energies where their strengths lie.
With benefits there comes risk. A risk associated with outsourcing is hidden costs. There
are travel and visa costs, drafting a contract, and bargaining and negotiating with a new
vendor. There is reduced control over how a company delivers its services or products
(confidentiality, security, and time schedules).
Certainly some third-world countries seem to be less secure than in North America partly
due to some government regulations or even political parties within the country. Cultural
differences lead to misunderstandings, which can be costly, and devastating.
Another risk associated with outsourcing is accessibility. If a business has to rely on
offshore outsourcing they take a risk of downtime during critical system failures, which
could create a loss of productivity and thus a loss of revenue.
3. Considering the information presented in the previous meeting, the CIO has asked you to
conduct some research on what it takes to be successful at outsourcing.
RESPONSE:
In order to be successful at outsourcing you must have a clear and central line of
communication. Nowadays communication between two or parties is done by and
through the Internet – email. However, that is not the best form of communication
because the inefficiency to keep track of what was said and what concerns have been
addressed or what questions have been asked and answered.
Although email is effective in some forms of communication you might find yourself
trolling through the inbox to find responses or new questions from the outsourcing
company. A more effective way to keep up with your outsourcing, as well as within the
parameters of the company, would be using some form of project management software

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like MS Project. Through the use of such software you can keep track of all
communications and track the progress of development.
The old adage that a picture is worth a thousand words applies to outsourcing. If the
project you are outsourcing involves graphics, then it would serve you well to either
provide a sketch or some kind of screenshot of what the final outcome should look like.
You should always ask for conformation of understanding. It goes back to having a clear
line of communication.
Another analogy to apply would be using the sandwich approach – feedback. Wayne
Mullins, Marketing Idea Guy, from UGLY MUG MARKETING put it like this: “After
you have received the 20 percent completion status update, it is important that you
provide constructive feedback. If you discover they are doing part (or most) of the project
incorrectly, try using the sandwich approach.
Think about the construction of a sandwich: there are two soft pieces of bread on either
side of whatever the filling happens to be. When providing feedback, try to begin with a
few compliments, then provide constructive criticism, and then finally end with a few
more compliments.”
Finally the rate of change is important to the success of outsourcing. If your business
changes its requirements on a frequent basis, then make sure that you document the
change and what the expectations are for the quality and deliverability. By doing this it
will in turn allow your outsourcing agent (team) to find the appropriate staff to keep up
with the demands and the change.
Chapter 11: Application Portfolio Management
1. The CIO is concerned about the ever-increasing cost of maintaining the inventory of IT
applications in the organization. He has asked you to meet to discuss why this
proliferation of applications is occurring?
RESPONSE:
Technology is rapidly expanding and so widespread that often in different organizations
IT is caught off-guard and unaware. Security, redundancy, compliance, and
recovery/backup tend create a mess as a result of the rapid proliferation.
Over the past ten years Cloud technology and SaaS (software as a service) has erupted as
businesses choose to rely on this technology more and more. In just keeping up with this
technology, many IT departments face an overwhelming challenge. This does not even
include managing their on-site data sources. Because of this proliferation of applications
several companies bought software packages to maintain the effectiveness and efficiency
of their day-to-day business operations. It backfired on the businesses because of the lack
of integration of the software.

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Some organizations can attest to a level of confusion as simply maintaining IT or even
trying to integrate with a takeover firm diminishes budget. Due to the large number of
applications, without eliminating old [previous] applications the company can find
themselves in a quagmire. It is difficult at best to interface with each and every
application. When the number of applications grow then so does the workload on existing
staff and therefore, without increasing an IT budget, problems will arise.
Again, by taking advantage of the onslaught of applications, businesses did not look
down the road for such consequences as integration, business intelligence, and security or
back up/delivery. Companies should keep in mind that the Cloud and SaaS servers are
not necessarily secure, doesn’t necessarily mean your data is safe nor does it mean that
it’s backed up.
2. The CIO has heard of some IT organizations using “Portfolio Perspective” to manage the
number of IT application in their organizations and has asked you to research this
approach and discuss your findings with him. Specifically discuss the 3 primary benefits
of APM.
RESPONSE:
Application Portfolio Management requires the business to successfully merge the
existing applications with potential applications. Factors to look for are what contribution
to the company profitability is the application, is it stable and usable, and has it become
obsolete.
According to the text the three primary benefits of APM are:
1. Visibility into where money is being spent, which ultimately provides the baseline to
measure value creation.
2. Prioritization of applications across multiple dimensions, including value to the
business, urgency, and financial return.
3. Mechanism to ensure that applications map directly to business objectives.

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4. After deciding to implement Applications Portfolio Management, the CIO has asked you
to identify the capabilities that must be developed to ensure success.
RESPONSE:
To ensure success of an APM there are three capabilities that must be developed.
Capability One: Strategy and Governance (See image below).
Capability Two: Inventory Management – Once an organization has established the
necessary criteria to identify applications that are needed, and then inventory can be
completed. Generally there are five headings for categories of applications:
1. General Application Information
2. Application Categorization
3. Technical Condition
4. Business Value
5. Support Costs
Capability Three: Reporting and Rationalization – As stated in the text “the consolidated
view ultimately demonstrates the effectiveness of monitoring and tracking business
performance of the assets across the entire IT application portfolio.