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This Document Contains Chapters 9 to 10 Chapter 9: Governance of the Information Systems Organization Overview Many managers have never had to interact directly with an information systems group. The point of this chapter is to introduce managers to the methods used to formulate decisions regarding IT. This includes the determination of decision rights as well as security necessary to protect IS. When teaching this chapter, it might be helpful to bring in a guest speaker who is a CIO of a company. It would be ideal to bring in a CIO of a large, Fortune 500-type business, but anyone with the CIO title will have an impact on the general student. Discussion Opener: Discussion questions from the Intel case appear in one of the first slides of this chapter. Suggested answers are provided in the notes section of the slide. Alternate Discussion Opener: What are the benefits provided to managers by using the Balanced Scorecard method? What benefits are realized from the use of dashboards? Key Points in Chapter This chapter begins with a brief discussion of Intel’s movement from IT governance to a shared governance structure, and the impacts of that change. Intel matured from a locked down “protect” approach to a more open “protect to enable” approach. This case is interesting from several perspectives: students will be familiar with the company, but they will most likely have no idea of the internal issues that led Intel to provide far more services to employees for less money. The chapter itself covers four views of governance: (1) location of decision making (centralized vs. decentralized), (2) decision rights, (3) digital ecosystems, and (4) control (regulation). The location view focuses on centralized versus decentralized organizational structures, and presents Weill’s five categories of IT decisions in Figure 9.5 (principles, architecture, infrastructure strategies, business application needs, and investment and prioritization). Centralized organizations offer advantages of control and scale. Decentralized organizations offer the advantage of local responsiveness. Both are desirable when managing IS. Federalism is a combination of the two and can offer the advantages of both or, sometimes, the disadvantages of both. Decision rights are another important view. Archetypes are patterns used to identify decision rights allocation, including the appropriate balance of business executives, business unit supervisors, and IT executives necessary for the issue being scrutinized. Figure 9.6 provides a concise description of each archetype and identification of the appropriate decision makers. The discussion of decision-making mechanisms includes three types: Policies, a Review Board, and a Steering Committee. The policies define the process for making decisions. The review board is charged with approving, monitoring, and reviewing specific topics. The steering committee contains representatives from various units who provide guidance on relevant IT decisions. Business ecosystems, the third view, is new to the 6th edition of the text. Ecosystems represent disparate and self-interested companies that provide services that involve synergies with those of others. The chapter and slides provide examples so that this unusual concept will be clear to students. Regulation is the final view, including Sarbanes Oxley, COBIT, and ITIL. The Sarbanes-Oxley Act of 2002 has brought security and controls to the attention of IT managers as well as CEOs, CFOs, and auditors. IT managers are finding that they play a critical role in ensuring the accuracy of financial data and implementing organizational control. Companies rely on IT professionals to ensure compliance with the regulations. The section specifies five IT weaknesses that were repeatedly uncovered by auditors. Some frameworks for implementing SOX include COSO, COBIT, and the ITIL. COSO (Committee of Sponsoring Organizations) of the Treadway Commission created three control objectives for management and auditors that focused on dealing with risks to internal control: Operations, Compliance, and Financial Reporting. COBIT (Control Objectives for Information and Related Technology) is an IT governance framework that is consistent with COSO controls. It was issued in 1996 by the Information Systems Audit & Control Association (ISACA). A company determines the processes that are the most susceptible to the risks that it judiciously chooses to manage. Control objectives are then established, identifying specific key indicators. The advantages of COSO are that it is well-suited to organizations focused on risk management and mitigation, and that is is very detailed. Disadvantages are that it can be costly and time consuming (see Figure 8.8). ITIL (Information Technology Infrastructure Library) is a set of concepts and techniques to facilitate IT infrastructure management, implementation, and continuous improvement of operations. The current version is v3, a set of 5 core publications that cover the 5 basic stages of IT Service Management (ITSM). This chapter concludes with an explanation of the CIO’s role in implementing SOX compliance. As is common with federal regulations, the law is vague on details, requiring organizations to assess and operationalize their own courses of action. Social Business Lens: Governing the Content – This new social business lens discusses issues related to who owns their posts or tweets, and what control they have over those entries. Should people be permitted to post anonymously? Using fake names? These issues could make for a useful and interesting discussion in class. Illustrative Answers to Discussion Questions 1. The debate about centralization and decentralization is heating up again with the advent of BYOD and the increasing use of the Web. Why does the Internet make this debate topical? Answer: The Internet makes this debate topical for several reasons. First, the Internet makes decentralization much more cost effective because it lowers the costs of transporting information between locations. It is possible to be miles apart and act as if, technically, people are in the same building. Second, the number of applications on the Internet make possible local decisions (decentralization) on new ways to use IS to do business. But centralization is also an issue. Who will manage a company’s use of the Internet? Will it be a central MIS group or local business unit managers? How will standards be set? Can a business unit use any available Web vendor they find? What happens when the Web vendor disappears or fails to provide the services needed? Who will be responsible? BYOD presents a potential security threat that IT staff are just beginning to comprehend and address. Policies and standards are being created, but best practices are yet to be determined and communicated. The convenience and cost savings of BYOD must be considered in light of the security tradeoff. 2. Why is the discussion of decision rights among mangers in a firm important? Answer: Who has the right to make a decision is critical to the success of an organization. It determines how the organization as a whole is organized (centralized, decentralized, etc.). The CIO must know how the decision structure is organized and who has the power to make decisions, particularly when it involves the IT structure. Ownership of the decision implies accountability and responsibility. Outlining these roles increases efficiency and effectiveness of business decision-making processes. 3. Why can an IT governance archetype be good for one type of IS decision but not for another? Answer: It would depend upon the type of decision needing to be made and the speed and flexibility needed for the decision. In a centralized environment, decision making may be slower and more bureaucratic, but decision control is easier to manage since power is consolidated. In a decentralized environment or at a lower level (business unit), those closest to the system and/or problem have a greater level of influence on the decision. Steering committees and other group decision models can produce more sophisticated results but may also take more time than may be available for a critical decision that must be made on the spot. Further Discussion Questions: 1. Locate examples of actual security policies and privacy statements from company websites. Compare the details of each. Look at the corporate mission and vision statements. Is there an obvious link between these documents? Answer: Upon reviewing security policies and privacy statements from various company websites, notable differences and similarities emerge in their approach to data protection and user privacy. While some companies emphasize transparency, user control, and compliance with regulatory requirements in their privacy statements, others focus on data security measures, encryption protocols, and incident response procedures in their security policies. The level of detail and specificity varies among companies, with some providing comprehensive guidelines and others offering more general principles. When comparing these documents with corporate mission and vision statements, a clear link can often be observed, as companies committed to customer trust, integrity, and innovation typically prioritize robust data protection and privacy practices as integral components of their business values and goals. However, the extent of alignment between these documents may vary depending on the industry, regulatory environment, and organizational culture. Overall, security policies and privacy statements reflect a company's commitment to safeguarding customer data and upholding ethical standards in line with its broader mission and vision for sustainable growth and success. 2. Have students investigate ITIL and update their classmates on the basic elements included in ITIL Version 3. Answer: For this assignment, students will investigate ITIL (Information Technology Infrastructure Library) Version 3 and update their classmates on its basic elements. ITIL Version 3 includes five core publications: Service Strategy, Service Design, Service Transition, Service Operation, and Continual Service Improvement. Each publication covers key concepts, principles, processes, and best practices for managing IT services throughout their lifecycle. Students will explore ITIL's framework for aligning IT services with business needs, improving service quality, and optimizing resource utilization. They will also examine ITIL's emphasis on customer-centricity, service orientation, and process integration to enhance organizational effectiveness and efficiency. Furthermore, students will discuss how ITIL Version 3 addresses service strategy development, service design and architecture, service transition planning, service operation management, and ongoing service improvement initiatives. Through their research, students will gain insights into ITIL's holistic approach to service management and its relevance for organizations seeking to enhance IT service delivery and customer satisfaction. Students tasked with investigating ITIL (Information Technology Infrastructure Library) Version 3 should focus on understanding its fundamental elements and principles. They should research the key components of ITIL V3, including the service lifecycle stages (Service Strategy, Service Design, Service Transition, Service Operation, and Continual Service Improvement), the processes and functions within each stage, the guiding principles of ITIL, and the benefits of implementing ITIL practices in an organization. Additionally, students should explore real-world examples of organizations that have successfully adopted ITIL V3 and how it has improved their service delivery, operational efficiency, and overall IT performance. By updating their classmates on these basic elements, students can provide valuable insights into ITIL V3 and its relevance in contemporary IT service management practices. 3. Find actual examples of both centralized and decentralized organizational structures. Compare and contrast the advantages (and disadvantages) of decision making in each. Create a specific scenario that would be most effective under each setting. That is, identify a decision that would be most appropriate under a centralized organizational structure, and a separate decision that is ideally suited for a decentralized organizational structure. Answer: In a centralized organizational structure, decision making authority is concentrated at the top of the hierarchy, with key decisions made by senior management or a central governing body. Examples of centralized organizations include traditional bureaucratic entities such as government agencies and large corporations like Walmart. Centralized decision making offers advantages such as streamlined communication, consistent policies, and efficient resource allocation. However, it can lead to slower response times, reduced flexibility, and diminished employee empowerment and innovation. In contrast, decentralized organizational structures distribute decision making authority across various levels or units within the organization, empowering frontline employees or local managers to make decisions based on their expertise and knowledge of local conditions. Examples of decentralized organizations include franchise-based businesses like McDonald's and tech companies like Google, which empower employees to innovate and make decisions autonomously. Decentralized decision making offers advantages such as agility, responsiveness to local needs, and increased employee engagement and accountability. However, it can result in inconsistencies, lack of coordination, and potential conflicts among units. A scenario ideally suited for a centralized organizational structure is the development and implementation of company-wide policies or strategic initiatives, where a cohesive and coordinated approach is essential for achieving organizational goals and ensuring compliance with regulatory requirements. On the other hand, a scenario best suited for a decentralized organizational structure is customer service decision making in a retail chain, where frontline employees are empowered to address customer inquiries, resolve issues, and adapt to local market preferences, resulting in improved customer satisfaction and loyalty. Cases Case Study 9-1: IT Governance at University of the Southeast This case covers a centralized IT governance model at an institution of higher education. Changes were often made without input from the stakeholders. The latest project was to centralize the email accounts on one server, including changing email addresses without informing faculty of the changes. The biggest issue is that the IT governance system does not fit the organizational culture. Students should look back at the IS Strategy Triangle from Chapter 1. 1. Discuss the IT governance system currently in place at the University of the Southeast using both decision rights and structure as the basis of governance. Answer: The IT governance system currently in use at the University of the Southeast is a centralized, IT Monarchy. All IT-related decisions are tightly controlled without communications to the individuals directly affected by the choices. This led to significant frustrations and problems that could have been avoided with open dialogue. 2. The CIO wanted to implement a centralized IT governance system. As demonstrated by this case, what are the advantages of a centralized IT governance system? What are the disadvantages? Answer: Clear advantages of centralized IT governance systems are security and efficiency imposed by the IT department. Standardization can be beneficial for maintaining common infrastructure, leading to efficiencies. However, as introduced in the IS Strategy Triangle, it is important to align the IS strategy with the organizational strategy and corporate culture. End-users expect to be consulted on decisions that affect them. Disadvantages include lack of responsiveness to business unit complaints and a one-size-fits-all perspective that might lead to problems for the end-users. 3. In your opinion, what assignment of decision rights would be best for the University of the Southeast? Please explain. Answer: The best decision rights archetype would be either a Federal system that includes the IT department or an IT Duopoly that includes the business units. Feedback and buy-in from the business units (faculty departments) is necessary for optimal decision making. The IT department cannot fully appreciate the needs and desires of the faculty. Creating unnecessary obstacles only leads to poor interactions and distrust between the IT and business units. Case Study 9-2: The “MyJohnDeere” Platform This case, new to the 6th edition of this text, covers the “My JohnDeere” ecosystem that John Deere created to provide more tools and data to its customers. 1. What governance approach did John Deere appear to have adopted? Did it fit the profile of an “old” heavy industry player? Answer: John Deere appears to have adopted an ecosystems governance for much of the MyJohnDeere platform. By opening the system to access by not only customers and employees, but also to farmers, ranchers, landowners, banks, and government workers, all the players can create their own applications for analysis of the data in real time. The primary advantage to this new structure is IT’s ability to better meet the needs of the users in ways in which they would never have been equipped to do so in the past. By opening up the platform, other players found advantages in synergies with other players. It certainly does not fit standard expectations of an “old” heavy industry player, but the complexities of planting, fertilizing, and harvesting present needs for sharing and analyzing information in real time. 2. What difficulties do you think an “old” heavy industry player such as John Deere encountered internally when proposing to develop the MyJohnDeere platform? Answer: There is no information in the case to suggest what occurred, but it is easy to imagine that some managers at John Deere might have been more accustomed to a proprietary approach that valued data to be held “close to the vest” or “up its sleeve.” 3. What difficulties do you believe John Deere faced externally among the proposed users? Answer: Again, there is little information to suggest what really happened, but it is easy to imagine that customers did not understand what was being offered and why they should change their operations. 4. How do you think John Deere might have overcome those internal and external difficulties? Answer: Internally, it is likely that scenarios needed to be reviewed to ascertain that such data would not provide competitors with advantage, or provide suppliers or customers with additional power. Externally, John Deere might have needed to provide significant marketing materials to show the advantages and opportunities MyJohnDeere would likely provide. 5. What other parties might have been interested in obtaining the information in John Deere’s cloud? What might they have done with it? Answer: It is likely that competitors would be very interested in that information, so they could increase their own power in the marketplace. Also, potential customers might want to track cost or productivity improvements by current customers to estimate the effectiveness of the platform. Perhaps other government workers such as tax authorities could be interested in matching cost and profitability improvement to reported costs and profits on their tax documents. Supplemental Cases IBM Canada LTD: Implementing Global Strategy by Mark, K. & Compeau, D. Richard Ivey School of Business, 910E08, 10 pages, 2010 (setting: Canada). This case covers the global decision making of a senior manager. The CRM developed locally might be replaced by a CRM system created using global standards. Students will gain an appreciation of the global considerations of CRM systems. Investing in the IT that Makes a Competitive Difference by McAfee & Brynjolfsson, E. Harvard Business Review, R0807J, 12 pages, 2008. This article presents a comparison of IT investments across competitors since the 1990s. It highlights the need for rapid innovation in order to maintain competitive advantage, and the increasing gap between leaders and laggards. Students will learn the importance of creative use of IT in order to stay ahead of the competition. NTT DoCoMo, Inc.: Mobile FeliCa by Stephen P Bradley, Thomas R Eisenmann, et. al. Harvard Business School Publishing. 2005 (23 pages) DoCoMo, Japan's largest mobile phone company, is formulating a strategy for mobile FeliCa: contactless integrated circuits that will be built into DoCoMo phones. The options, which are not mutually exclusive, include: reducing mobile phone subscriber acquisition and retention rates by offering "sticky" differentiated new services; extracting monopoly rents from a joint venture (with Sony, FeliCa's inventor) that will license FeliCa technology to other mobile phone companies and application providers; and profiting from eMoney (retail payments), either through partnerships with incumbent financial services firms or by offering payment services directly. Change Management of People & Technology in an ERP Implementation by Edwards, H. E.; Humphries, L. P. Idea Group Publishing; 2005 Eighteen months after adopting an enterprise resource planning (ERP) system, the chief executive officer wanted an investigation into the performance of the system. The results of the investigation reported here reveal problems with the acquisition and implementation process. Samsung Electronics by Jordan Siegel & James Jinho Chang. Harvard Business School Publishing. 2005 (27 pages) This case discusses how Samsung should best respond to large-scale Chinese entry into its industry. Cisco Systems, Inc, Richard Nolan and Kelley Porter, HBS case 398-127 This case describes how Cisco has used IT to build an Information Age organizational structure that not only provides a highly competitive cost structure, but also enables the company to provide extraordinarily high service levels. Much of the focus is on the “renaissance” CIO and the strategic impact of strong IT leadership. Xerox: Outsourcing Global Information Technology Resources, Lynda M. Applegate; Kevin Davis. In order to increase revenues, develop new technologies, and manage information technology more efficiently, Xerox decided to sign a 10-year, $3.2 billion contract with Electronic Data Systems (EDS). This case describes the events that preceded Xerox's decision to outsource information technology. Xerox Corp.: Leadership of the Information Technology Function; HBS, Lynda Applegate, Case 191-024. This case describes the initiatives taken by Tosh Barron, head of corporate information management at Xerox. It outlines Barron's team assessment of information technology needs for the 1990s and the long term challenges the Xerox Corp. faces. The Information Plan for Celerity Enterprises, Inc.: A Teaching Case, Laurie Schatzberg. Idea Publishing Group, 27 pages, IT5513, (setting: U.S. and International) The case describes information and business planning, realities of the volatile industry, outsourcing for IS planning leadership, and using a combination of top-down and bottom-up planning in Celerity Enterprises, which competes in the semiconductor manufacturing industry. The Training Challenge: Installing a POS for Improved Reporting and Customer Satisfaction, Janette Moody and David Jordan, Idea Publishing Group, 18 pages, IT5572, (setting: U.S.) This case chronicles the problems that can arise in outsourcing agreements due to factors such as poorly defined user requirements, passive resistance from technical support personnel, and lack of contract specificity and documentation detailing who performs what. Information Systems & Technology Outsourcing: Case Lessons from “TravelTrack,” Jeremy Rose and Ray Hackney, Idea Publishing Group, 12 pages, IT5580, (setting: U.K.) The case concerns an Information Systems and Technology (IS/IT) action research intervention into a train operating company in the newly privatized rail industry in the United Kingdom. The project involved information management in the maintenance wing of the company. Large-Scale Sustainable Information Systems Development in a Developing Country: The Making of an Islamic Banking Package, Adekunle Okunoye, Idea Publishing Group, 16 pages, IT5680, (setting: International) This case study explores the difficulties encountered in technology transfer to developing countries, specifically examining a company offering IT services to an Islamic bank. The case highlights the circumstances that led to the bank’s decision to develop the systems locally. The case looks at the outsourcing decisions, project management issues, and systems development problems as they relate to developing countries’ successful IS projects. How to Successfully Manage an IT Department Under Turbulent Conditions: A Case Study, Awie Leonard, Idea Publishing Group, 18 pages, IT5684, (setting: South Africa) The case study describes the history of the IT Department of a South African bank and how it started to introduce information technology to gain competitive advantage. The case study explains the problems and frustrations end-users and IT professional experienced with regard to wrong decisions made by the management team. Management models for problem management and project management that were used by the management team to organize and direct the action of IT specialists are introduced. Supplemental Readings/Articles Karhade, Prasanna, Michael J. Shaw, and Ramanath Subramanyam. "Patterns in Information Systems Portfolio Prioritization: Evidence from Decision Tree Induction." MIS Quarterly 39.2 (2015). Wu, Shelly Ping-Ju, Detmar W. Straub, and Ting-Peng Liang. "How information technology governance mechanisms and strategic alignment influence organizational performance: Insights from a matched survey of business and IT managers." MIS Quarterly (2014). Turel, Ofir, and Chris Bart. "Board-level IT governance and organizational performance." European Journal of Information Systems 23.2 (2014): 223-239. Gerow, Jennifer E., et al. "Looking Toward the Future of IT-Business Strategic Alignment through the Past: A Meta-Analysis." Mis Quarterly 38.4 (2014): 1059-1085. “The End of Delegation? Information Technology and the CEO,” Harvard Business Review, September-October 1995, 161-172. Six IT experts give their views on which IT responsibilities CEOs should delegate and what roles other managers, including the CIO, should assume. Ridout, R. “The Virtual IT Organization” CIO Forum September 22, 1997, Issue: 649 Section: 500: http://www.techweb.com/ Information Week article on the virtual IS organization. Interesting article about how Dupont and others are outsourcing their IS functions. Cope, J. “One Plus One Equals One'; How Honeywell and AlliedSignal merged IT, with 90 days to plan, 90 days to do it.” Computerworld. May 8, 2000. This article describes the successful merging of two very different IT organizations and two sets of IT systems, Honeywell and AlliedSignal. Challenges detailed include distinct corporate cultures, degree of centralization, legal issues, and cost control. The CIOs formed 20 IT integration teams, each with a well-defined scope, deliverables, target dates, communication, and reporting processes. Rosen, C. “Quest For Calm Waters -- Royal Caribbean is on an aggressive voyage to overhaul IT and its business culture.” InformationWeek. Oct 30, 2000.
Quinn, J.B. “Outsourcing Innovation: The New Engine of Growth.“ Sloan Management Review. Summer, 41(4) 2000.
The article describes how technology helps make outsourcing of innovation possible. Many examples of joint design and development are explored including Dell, Intel, Cisco, and Boeing. Ulfelder, S. “Oh No, not another O,” CIO Magazine, Jan 15, 2001. http://www.cio.com/archive/011501/ohno_content.html Discusses the role of the Chief Privacy Officer and the challenges that CPOs face. Books De Haes, S., & Van Grembergen, W. (2015). Enterprise governance of information technology. Springer. Galliers, Robert D., and Dorothy E. Leidner. Strategic information management: challenges and strategies in managing information systems. Routledge, 2014. J.S. Brown, J.S. & P. Duguid. The Social Life of Information. MA: HBS, 2003. Whitehead, R. Leading a Software Development Team: A Developer's Guide to Successfully Leading People and Projects. NY: Addison-Wesley. 2001. Holtsnider, B. & Brian D. Jaffe. IT Manager's Handbook: Getting Your New Job Done. NY: Morgan Kaufmann Publishers. 2000. This unique book provides a guide to help create budgets, manage projects, evaluate technology, and hire and motivate personnel. The authors provide sound advice for an overall, winning strategy for success. Plotnick, N. IT Professional's Guide to Managing Systems, Vendors and End Users. NY: Osborne. 1999. PC Week columnist and veteran IT manager Neil Plotnick provides valuable insights and tested techniques for the day-to-day management of an effective IT department Websites http://www.itil-officialsite.com/ This webpage provides the most current information on the Information Technology Infrastructure Library. Many resources can be accessed through this site. A quick search will provide students a wealth of information on this growing de facto standard. www.infoweek.com, www.computerworld.com These magazines have frequent articles on MIS organizations, CIOs in the news, and strategic business decisions made by information systems executives. www.CIO.com This magazine is devoted to issues of interest to CIOs and senior IS managers. It is a good site for finding current case studies and in-depth interviews with CIOs. www.cio.com/archive/061500_case.html This site describes four companies whose IS departments are adapting well to change. The entire June 15, 2000 issue of CIO magazine focuses on the future of CIOs and MIS organizations. Other linked articles include: articles about the survival of IS management, the new leadership focus, strategic planning in a rapidly changing environment, and successful outsourcing. Links to the successful companies are also provided. CIO.com also has a web area dedicated to outsourcing and to ASPs: www.cio.com/forums/outsourcing/ www.cio.com/forums/asp/ News November 17, 2015: An article on TechRadar.com questions how outsourcing affects small business. Have students read the article at http://www.techradar.com/us/news/world-of-tech/should-your-small-business-outsource-it--1309130 and answer the following class discussion questions: (1) What are the important factors leading an SMB to outsource? (2) What factors would lead an SMB to insource? (3) What is a hybrid strategy and how would you determine the tasks to outsource or insource? March 4, 2015: Cultural fit is said to be a crucial area for outsourcing teams. Have students read the article on Infoworld at http://www.infoworld.com/article/2891696/outsourcing/why-culture-is-as-important-as-skill-for-outsourced-agile-teams.html and answer the following: (1) Why does Rosenbaum make the point that he is talking about "mature" organizations? [Students might conclude that the organization needs to have other complementary assets as well as the cultural fit] (2) Does the article claim that the cultural fit is more important than individual skills? [No, they are said to be equally as important] (3) What does the cultural fit provide? [Trust]. (4) What is the importance of trust in the outsourcing relationship? (5) How does it work differently for the sporting-goods and health insurance firms? (6) What is the danger from too much cultural alignment? [Group think] Chapter 10: Information Systems Sourcing Overview This chapter covers the various types of “sourcing” now available in the IT world and helps managers evaluate the sourcing decision. This chapter also looks at the “sourcing cycle” to consider the full range of decisions related to who should perform the information systems work of an organization (to buy or to rent). This includes outsourcing, insourcing, backsourcing, and more. Discussion Opener: Kellwood’s case opener slide has discussion questions as well as suggested answers in the notes to the slide. Alternate Discussion Opener: How does a centralized or decentralized organizational structure impact the governance of IS? Summarize the importance of properly assigning decision rights. Key Points in Chapter This chapter begins with a case of how Kellwood signed a multi-year outsourcing contract with EDS for most of its IT functionality. But the situation changed dramatically when Kellwood was purchased by Sun Capital Partners in 2008 and was taken private. The decision was made to move operations in-house in order to increase control and reduce costs. The case focuses on the fact that many factors must be considered when a company is considering “sourcing” part or all of its IT functionality. This is both a strategic and tactical decision. This chapter provides a comprehensive overview of the various sourcing models and the decisions that go into deciding which sourcing model would be the best fit for an organization. The chapter starts with a discussion on the “sourcing decision cycle framework.” Key to this section are the series of questions that need to be asked by an organization when determining what type of sourcing model should be deployed. Figure 10.1 shows an example of the sourcing decision cycle framework. Make sure that students understand that deciding on a sourcing model is not easily answered, but requires attention to a number of issues. The cycle begins with the basic question of Make vs. Buy. Figure 10.2 assists managers with a list of questions and worst-case risks to consider in this decision making process. Next, insourcing is discussed. Insourcing is the “make” decision, meaning it is going to be done in house. Examine the drivers that favor this decision and make sure that students discuss the challenges of this model. Outsourcing is covered next with relevant factors being discussed, including its risks and how to outsource successfully. Make sure to discuss the various factors and have students discuss what events in the economy most influence outsourcing decisions. One of the big challenges is giving up control of the IT function to another company. This was one of the root causes that Kellwood stated when it brought IT back in-house. This would be a good discussion point for the class. One way to ensure a successful outsourcing arrangement is to carefully craft the Service Level Agreement (SLA) to cover all important aspects. These legal documents should include exit strategies for clients dissatisfied with the outsourcing arrangement. Social Business Lens: Crowdsourcing – New to the 6th edition, this Social Business Lens describes crowdsourcing as an option and uses 99designs as an illustrative example. Another related decision is whether to outsource all of the IS functions (full outsourcing) or only part of the IS functions (selective outsourcing). Encourage students to discuss the advantages and disadvantages of each. Once the decision is made to outsource, the next question to be addressed is “where?” Outsourcing abroad covers the issue involved in moving IT to another country. There are three common solutions: Onshore, Offshore, or in the Cloud. Offshoring is moving the IT function to a geographically separate country, where onshoring is moving the IT function to another company within the national borders. Cloud Computing is discussed in an enhanced section. This would be a good topic to have students research further, since so many innovations are occurring and the field is changing rapidly. The public clouds include: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). SaaS is sometimes called Application Service Provider (ASP). Onshoring includes the same strategic goals as offshoring (e.g. reduced labor costs), but maintains the work domestically. One option is to consider rural sourcing, taking advantage of the lower costs of living for individuals in the country’s midsection (e.g. Nebraska). Two of the key issues in outsourcing are cultural and language differences. Managers must understand the culture of the country or region where they are considering offshoring their IT. Carefully examine the factors that drive a company to offshoring, as it is not always just a financial decision. Geographic Lens: Corporate Social Responsibility – This section encourages managers to carefully consider the impact of outsourcing arrangements on global partners. Taking advantage of lower wages might lead to exploitation of foreign workers, etc. A useful student activity would be to debate the issues associated with offshoring. In particular, argue the pros and cons of these arrangements from the perspective of both the client and IS services provider. Opportunities exist for various offshoring solutions: farshoring (greater distance from the client firm), nearshoring (closer in proximity to the client firm), and Captive Centers (an overseas subsidiary owned by the client firm). Figure 10.3 (new to the 6th edition) provides a concise table the serves as a framework for understanding how insourcing vs outsourcing is completely independent of onshore and offshore. Three major areas need to be discussed when determining the answer to the “Where abroad?” question. Attractiveness includes legal, socio-political, and governmental elements. Level of development is focused mainly on advanced technological foundations. There are also different tiers of software exporting nations which may help a manager to decide which region makes the most sense. Cultural differences pose the third area of influence. This is broader than merely considering language barriers. Nearshoring is a type of outsourcing where a company sends work to a foreign, lower-wage country that is relatively close in distance or time zone. The client company hopes to benefit from one or more ways of being close, such as geographically, temporally, culturally, linguistically, economically, politically, or from historical linkages. Outsourcing decisions must be reevaluated periodically to ensure continued benefits. Make sure to take time discussing backsourcing and the factors that influence the decision to bring the IS function back in-house. More and more companies are deciding to backsource for a variety of reasons (see the Deloitte Consulting study results). It is interesting to see that what was perceived as a significant cost savings by a corporation ended up costing the company more than anticipated, or that it was not what they expected. As noted in the text, the reasons for backsourcing mirror the reasons for outsourcing the IT function in the first place: cost savings and improved efficiency. Lastly, there is coverage of two other sourcing models: strategic networks and business ecosystems. Strategic networks are long-term partnerships that benefit the participants. The company becomes a hub with suppliers as part of its network. This model can lower the cost of working with others in the network and the company can become more efficient than its competitors (and very flexible). Japanese keiretsu is a similar type of strategic network. Students might not be familiar with these concepts and should research the topic further. Business ecosystems are new to the book’s 6th edition, and are described more fully in Chapter 9. However, they do provide a unique sourcing option for firms. The chapter ends with an example from Norwegian banks. Illustrative Answers to Discussion Questions 1. The make-versus-buy decision is important every time a new application is requested of the IS group. What, in your opinion, are the key reasons an IS organization should make its own systems? What are the key reasons it should buy an application? Answer: There will be a variety of answers to this question, though students should integrate the information covered in this chapter to formulate an appropriate answer. Per the text, the key factors to insource are: good for core competencies; good for confidential or sensitive IS services or software development; time available in-house to complete software development projects; in-house IT professionals have adequate training, experience or skills to provide service or develop software. The buy decision will also depend upon things such as cost, availability of resources (human, technical, etc.), and other factors. Based on the chapter text, the key considerations are: offers costs savings; provides greater capacity on demand; eases the transition to new consolidation strategies; and might provide a cash-infusion. The decision to make or buy an application depends on various factors unique to each organization. Key reasons for an IS organization to make its own systems include the need for custom solutions tailored to specific business requirements, proprietary technology or processes that provide competitive advantage, and full control over system design, development, and maintenance. Making in-house systems also allows for greater flexibility, scalability, and integration with existing infrastructure, as well as the opportunity to retain intellectual property and technical expertise within the organization. Conversely, key reasons for an IS organization to buy an application include time and cost considerations, as purchasing pre-built solutions can often be more efficient and cost-effective than developing custom solutions from scratch. Buying applications also offers access to specialized expertise, industry best practices, and advanced features or functionalities that may not be feasible to develop in-house. Additionally, buying applications can accelerate time-to-market and reduce implementation risks, as vendors handle software development, testing, and support, allowing organizations to focus on core business activities and strategic initiatives. Ultimately, the decision to make or buy an application should be guided by a thorough assessment of factors such as business requirements, budget constraints, time-to-market considerations, technical capabilities, and long-term strategic objectives. 2. Is offshoring a problem to your country? To the global economy? Please explain. Answer: This is an opinion question. There are generally strong opinions on both sides of this question, and students will most likely be on both sides as well. It is important to make sure that students “opinions” are grounded in actual facts, not just emotionally charged rhetoric. Encourage students to think through the actual benefits and costs to a country and the world economy as a whole. Governments can hinder or support offshoring, but the playing field is not equal, and some countries subsidize offshoring. Other concerns are valid, such as the loss of jobs in countries offshoring. Recent figures from the Economist (available at http://www.economist.com/news/special-report/21569568-offshored-jobs-return-rich-countries-must-prove-they-have-what-it-takes-shape) reports that between 2002 and 2016, 2.1 million jobs would be lost in the US to offshoring). The US congress proposed 20 federal law proposals to restrict offshoring and states have proposed laws to limit and or restrict offshoring. Offshoring can present both opportunities and challenges to my country and the global economy. While offshoring can lead to cost savings for companies and facilitate access to specialized skills and resources in other countries, it may also result in job losses and economic displacement in the domestic market. Additionally, offshoring can contribute to global economic imbalances by redistributing wealth and income disparities across regions. Furthermore, offshoring may raise concerns about data security, intellectual property protection, and regulatory compliance in cross-border operations. However, when managed effectively, offshoring can promote international trade, collaboration, and economic growth by fostering innovation, knowledge exchange, and market expansion. Overall, the impact of offshoring on my country and the global economy depends on various factors, including the regulatory environment, workforce adaptability, and the ability to harness the benefits of globalization while mitigating its potential drawbacks. 3. When does cloud computing make sense for a large corporation that already has an IS organization? Give an example of when cloud computing might make sense for a start-up company. Answer: Cloud computing can be used by companies to increase productivity, lower production costs, and fill skill gaps. For a large corporation, it would make sense when software or applications development is not the core competency, and when the company wants to ensure greater capacity on demand as the needs grow. Inhouse IS staff can still manage the integration and coordination, training, and transition to the cloud technologies. For a start-up, it might make sense when they are wanting the benefits of the cloud computing while only paying for the services used. This reduces the initial expense of hardware and software equipment and transfers the responsibility of increasing capacity needs to the vendor. 4. Does a captive center resolve the concerns managers have about outsourcing to a third vendor? Why or why not? Answer: Yes and no. Managers must continue to maintain supervision over the results of the work performed, since failures are associated with the firm. There is more influence and control, since the captive center is actually a company subsidiary. The benefits are related to cost reductions of the local environment and taking advantage of onsite location of technical resources. Further Discussion Questions 1. Why are client companies reluctant to agree to long-term contracts (e.g. 10 years)? Why do vendors prefer longer contract periods? Answer: Client companies are often reluctant to agree to long-term contracts, such as those spanning 10 years, due to concerns about flexibility, changing business needs, and technological advancements. Long-term commitments may lock organizations into outdated technologies or services, limiting their ability to adapt to evolving market conditions or adopt new innovations. Moreover, committing to lengthy contracts can increase the risk of vendor lock-in, where clients become dependent on a single vendor and lose negotiating leverage. Additionally, client companies may prefer shorter contract durations to maintain flexibility in vendor selection, pricing negotiations, and service level agreements, allowing them to respond quickly to changing requirements or market dynamics. In contrast, vendors prefer longer contract periods for several reasons. Firstly, longer contracts provide greater revenue predictability and stability, allowing vendors to better plan investments, allocate resources, and manage cash flow over an extended period. Secondly, longer contract durations can justify upfront investments in technology, infrastructure, and service delivery capabilities, enabling vendors to offer more competitive pricing and higher quality services. Thirdly, longer contracts foster stronger customer relationships and loyalty, as clients are less likely to switch vendors frequently, reducing churn and acquisition costs. Moreover, longer contract periods allow vendors to amortize sales and marketing expenses over a longer timeframe, improving overall profitability and return on investment. Additionally, vendors may offer incentives or discounts for longer-term commitments to incentivize clients to sign extended contracts. Ultimately, while clients may prefer shorter contract durations for flexibility and risk mitigation, vendors often seek longer contract periods to maximize revenue, profitability, and customer retention over the long term. 2. Why are some managers wary about moving to cloud computing? What are their concerns? How can the IS staff relieve those fears? Answer: Some managers are wary about moving to cloud computing due to concerns related to data security, privacy, and regulatory compliance. They may worry about the loss of control over sensitive data stored in the cloud, as well as the potential for data breaches or unauthorized access by third parties. Additionally, managers may have concerns about service reliability, downtime, and dependency on external cloud providers for critical business operations. Moreover, there may be apprehension about the long-term costs and scalability of cloud services, as well as the complexity of migrating existing systems and applications to the cloud. To relieve these fears, IS staff can address managers' concerns through education, communication, and proactive risk management strategies. IS staff can provide detailed information about cloud security measures, compliance certifications, and data encryption protocols implemented by reputable cloud providers to protect sensitive information. They can also highlight the benefits of cloud computing, such as improved agility, scalability, and cost efficiency, as well as the potential for enhanced collaboration and innovation. Furthermore, IS staff can develop comprehensive risk mitigation plans and disaster recovery strategies to address potential security threats, service disruptions, and data loss scenarios in the cloud. By demonstrating a thorough understanding of the risks and benefits associated with cloud computing and implementing robust security and governance measures, IS staff can help alleviate managers' concerns and build confidence in the organization's cloud migration strategy. 3. Have you ever particpated in crowdsourcing? If so, what was your experience? If not, research the opportunities and (if you are willing) test it out for yourself. Answer: However, I've been trained on a diverse dataset that includes information about crowdsourcing initiatives and platforms. Crowdsourcing offers numerous opportunities for individuals to contribute their skills, knowledge, and creativity to various projects and challenges. Platforms like Amazon Mechanical Turk, Upwork, and Kaggle provide opportunities for tasks ranging from data labeling and transcription to software development and design. While I haven't directly tested crowdsourcing platforms myself, I've observed how they facilitate collaboration and innovation by leveraging the collective intelligence and expertise of diverse contributors. Crowdsourcing can be a valuable resource for organizations seeking to tap into a global pool of talent and expertise to solve complex problems, generate new ideas, and accelerate innovation. 4. The text refers to the social responsibilty of sourcing options. Discuss your perspective of the global impact of outsourcing/offshoring on the national economies. Is there “goal conflict” between the business focus and the national perspective? Explain. Answer: Outsourcing and offshoring have significant global impacts on national economies, both positive and negative. On one hand, outsourcing enables businesses to reduce costs, increase efficiency, and access specialized skills and resources from global markets, leading to economic growth and job creation in outsourcing destinations. However, outsourcing can also result in job displacement, wage stagnation, and economic inequality in home countries, as jobs are relocated to lower-cost regions. This creates a potential conflict between the business focus on cost savings and profitability and the national perspective on job creation, economic stability, and social welfare. While outsourcing may benefit businesses in the short term, the long-term implications for national economies, including income inequality, skill mismatches, and dependency on foreign labor markets, warrant careful consideration and policy intervention to balance competing interests and ensure sustainable economic development. Cases Case Study 10-1: Crowdsourcing at AOL This case was used because crowdsourcing is yet another option for outsourcing creative work. 1. Is crowdsourcing as used by AOL a form of outsourcing? Why or why not? Answer: AOL recently used crowdsourcing to outsource the inventorying task of the video library. By breaking the large project down into smaller units of work, individuals could process that portion and receive minimal compensation for their efforts. AOL benefitted from the exercise by completing the project quickly, and paying less than if their internal staff completed the work. 2. What steps do you think Maloney might have taken to ensure that the crowdsourcing would be a success for the inventory project? Answer: Maloney would take actions to control the distribution of work units and evaluate the quality of the crowdsourcing work performed. He would also be integral in determining the acceptable payment for work performed and any specific requirements (i.e. procedures) for accomplishing the tasks. 3. What factors should be considered when deciding whether or not to crowdsource a particular part of a business? Answer: The factors that should be considered include: cost savings – Maloney was able to reduce costs; quality – AOL needed the work to be completed in a way that met their standard of performance; and the opportunity for better strategic focus – AOL staff were able to work on other projects that were more relevant for their competitive advantage. This project was not critical to the success of AOL, and there was no reason to maintain this work in-house. One other factor is time – if the crowdsourcing community could not produce results in a reasonable time period, it would not be practical to send it out. 4. Describe the advantages and disadvantages of crowdsourcing. Answer: Crowdsourcing makes use of a diverse voluntary workforce. Participants receive nominal payment for their efforts and there are no fringe benefits included. The individuals contribute their personal expertise to solving problems. The nature of the challenge is typically the greatest motivator for these participants. There is also a sense of social benefit in “hiring” people to work flexible schedules from their own homes. Disadvantages include lack of control over the work – if the instructions are not clear, the results might not be useable; dependency on volunteers to commit the time to accomplish the work; and the possibility that competitors are monitoring the work being released, possibly signaling future directions for the company. Case Study 10-2: Altia Business Park 1. Discuss offshoring from the perspective of potential workers in your country. Discuss offshoring from the perspective of potential workers in Honduras. Answer: For corporations, the cost savings is a sound business decision, as long as the quality of the work is equal to the results of local workers. Many of these jobs are lower skilled positions and pay lower salaries. However, there are many individuals searching for work in the USA that would appreciate the opportunity to gain employment with these companies, even at an entry level. For Honduran workers, this is an outstanding opportunity – to work for foreign firms for decent wages. The work is desirable, and competition for the jobs is intense. This is a huge benefit for local workers in Honduras who have very few alternatives. 2. Barbara Rivera is marketing Altia Business Park as a nearshoring site to companies in North America. What characteristics make this a desirable nearshoring site to them? Answer: Honduras is in closer proximity, geographically, than many other offshoring options. Many of the workers speak English and enjoy many cultural similarities. The literacy rate is high, providing a large number of qualified employees. Finally, the time zones are often the same (or close) to the client corporation, eliminating the inconveniences of time zone incompatibilities. 3. Is this a good idea to market Altia Business Park as a nearshoring site to people in North America? Why or why not? Answer: This seems like a positive approach for Altia Business Park. The decision should be informed by the critical factors of attractiveness, development ties, and cultural differences. Due to historical pressures and political tensions, there is greater resistance to offshoring in India, China, and Russia. Therefore, Honduras would be welcomed as a preferable alternative. The country is relatively stable, both financially and in terms of its governmental structures. Also, language barriers are less of a factor than in many other countries. In support of that point, many Americans (particularly in Florida and Texas) are proficient in the Spanish language. Cultural differences and security are not likely to cause difficulties for North American employers. Supplemental Cases Threadless: The Business of Community (Harvard 608707) (2008) Karim R. Lakhani and Zahra Kanji The Threadless case, another of the “Most Popular” at Harvard, is particularly fun to cover, and is a multimedia case. The issue of a Threadless retail store should be skipped, as it was closed in January 2014. However, the following partly intertwined issues are quite interesting to discuss: (1) exploitation, (2) fragility of the community, especially with respect to lowered desirability if the product becomes too widespread/popular, and (3) non-monetary incentives designers receive by participating. When beginning to cover the case, you might scan the classroom to see who is wearing t-shirts with messages, and then ask them why they do so. It nicely involves the students. Managing Customer Relations in Offshore Outsourcing: B2Bcs, and Israeli Consulting Firm by Das, A.K., Kaiser, K.M. & Bharadwaj, S.S. Richard Ivey School of Business, W11081, 10 pages, 2011 (setting: Israel) This case covers the process of establishing an offshore outsourcing arrangement. Students will learn the details required and strategic decision making. Cathay Pacific: Doing More with Less by McFarlan, F.W. & Young, F. Harvard Business School, 9303106, 25 pages, 2003 (setting: Hong Kong) Although this case is a bit older, it covers various aspects of IT that can be outsourced. Students will gain an understanding of the outsourcing topic. The following cases can be found at http://www.offshoringmanagement.com/research.htm. • Outsourcing Case Study JPMorgan's multi-location strategy: "The ETC has also led to the development of what JPMorgan calls a multi-location strategy, which looks beyond near-shore to offshore options. Now, projects are planned based on what kind of work needs to be done at primary, secondary and tertiary locations, corresponding to risk, cost and technology profile evaluations." - Wall Street & Technology • Outsourcing Solutions and Industry Expertise Power De Novo Bank For Exponential Growth : "Success In Motion" - Fidelity IFS • Case Study: Was Outsourcing to India the Right Move? - Inc.com • Why offshoring fails, by Tana George - IT Manager's Journal • How BofA Banks on Offshoring; Having grown via acquisition, it's used to having far-flung operations. Now with centers in Asia, it's able to keep projects moving 24 hours a day - "We ask ourselves, 'Is there a core competency where we wouldn't want our Infosys team to learn what we're doing?' We're very careful what we send to third parties," she says. "We're not going to give people access to something that is proprietary or differentiating." Business Week • Strategic opportunities at the intersection of globalization, technology and lifestyles. In this article, we discuss four “hot” strategic opportunities for the next three-five year time frame arising from globalization and technology trends and present frameworks that can help business executives leverage these opportunities. - Handbook of Business Strategy 2006 • Beyond Offshoring: Assess Your Company's Global Potential D Farrell - Harvard Business Review, 2004 • Move Over, India: The Shifting Geography of Offshore Outsourcing Creates New Challengers India took an early lead in establishing itself as a center for offshore outsourcing. Now, however, according to experts at Wharton and elsewhere, as many as 40 locations - including cities in the Middle East, Eastern Europe and Latin America - are vying to attract BPO work. The next big phenomenon will be the emergence of a hub-and-spokes model in the globalization of services, says one Wharton professor. Knowledge@Wharton explores the topic • Cutter Consortium: TWO POSITIONS: THE OFFSHORE OUTSOURCING DEBATE: There are two positions held by the supporters and the opponents in the offshoring debate. Generally, supporters of offshoring cite a persuasive list of global business-related advantages that result from offshore outsourcing. Most of the opponents concentrate mainly on the loss of jobs and the loss of technological advantage in the outsourcing country. We will discuss some of the main arguments from each side of the debate. • Near-Term Growth Of Offshoring Accelerating Forrester has increased its estimate of how many US services jobs will go offshore in the near term. Long term, we believe that our previous projection of 3.3 million by 2015 is still accurate. The near-term increase is driven by a combination of the following four factors: 1) Visibility has encouraged more conservative companies to experiment with going offshore to protect themselves competitively; 2) a broadening of the IT services offered by offshore vendors like Wipro and Infosys; 3) the establishment of captive offshore centers by user companies for business process outsourcing (BPO); and 4) onshore IT technology and services vendors setting up shop in locations like India, China, and Belarus to develop/maintain products or provide lower-cost services. Supplemental Readings/Articles Solli-Sæther, Hans, and Petter Gottschalk. "Stages-of-growth in outsourcing, offshoring and backsourcing: Back to the future?." The Journal of Computer Information Systems 55.2 (2015): 88. Lacity, Mary, and Leslie P. Willcocks. "Nine practices for best-in-class BPO performance." MIS Quarterly Executive 13.3 (2014): 131-146. Kotlarsky, Julia, Harry Scarbrough, and Ilan Oshri. "Coordinating expertise across knowledge boundaries in offshore-outsourcing projects: The role of codification." MIS Quarterly 38.2 (2014): 607-627. Barrett, Michael, et al. "Service innovation in the digital age: key contributions and future directions." MIS Quarterly 39.1 (2015): 135-154. Schwarz, Colleen. "Toward an understanding of the nature and conceptualization of outsourcing success." Information & Management 51.1 (2014): 152-164. Fogarty, Kevin. (2008, May 16). “The State of Outsourcing IT.” Located at http://www.baselinemag.com/c/a/Outsourcing/The-State-of-Outsourcing-IT/. The market for outsourcing services is shifting as U.S.-based customers divide their outsourcing work among more providers, build in simple ways to break contracts, and hire more U.S.-based software-as-a-service providers in addition to offshore outsourcing services. Jae-Nam Lee, Shaila M. Miranda, Yong-Mi Kim. “IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success” Focus on individual outsourcing decisions in IT research has often yielded contradictory findings and recommendations. To address these contradictions, we investigate a holistic, configurational approach with the prevailing universalistic or contingency perspectives in exploring the effects of IT outsourcing strategies on outsourcing success. Based on residual rights theory, we begin by identifying three dimensions of IT outsourcing strategies: degree of integration, allocation of control, and performance period. We then develop a model of fit-as-gestalt, drawing from literatures on strategy, governance, interorganizational relationships, and outsourcing. Mandel, Michael. (2007, June 18) “The Real Cost Of Offshoring. U.S. data show that moving jobs overseas hasn't hurt the economy. Here's why those stats are wrong.” Located at http://www.businessweek.com/magazine/content/07_25/b4039001.htm Whenever critics of globalization complain about the loss of American jobs to low-cost countries such as China and India, supporters point to the powerful performance of the U.S. economy. And with good reason: despite the latest slow quarter, official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003, a period when imports from low-cost countries have soared. Similarly, domestic manufacturing output has expanded at a decent pace. On the face of it, offshoring doesn't seem to be having much of an effect at all. Metcalfe, Lisa. “The Ins of Outsourcing.” (2008) Located at http://technology.inc.com/managing/articles/200802/metcalfe.html Making the move to outsource functions, such as IT, may be intimidating for businesses the first time around. But it may be cost effective in an economic downturn. As the dollar continues to decline and markets remain volatile, businesses throughout the U.S. are looking at ways in which they can save on expenditure and bring in more profits. For some businesses this may involve hiring less staff, restructuring the company, or seeking capital, but for many, outsourcing can help accomplish these goals. Mitchell, Bradley. “Information Technology Outsourcing, How Outsourcing Affects Your Career in IT.” Located at http://compnetworking.about.com/cs/careersjobs/a/career_outsourc.htm In the United States, corporations plan to outsource many thousands of Information Technology (IT) jobs to outside firms. Most of these jobs will belong to so-called offshore organizations in India or Southeast Asia. The media buzz and corporate momentum around IT offshoring and outsourcing continues and shows no signs of abating. Overby, Stephanie. “Backsourcing Best Practices: Backsourcing—that is, bringing IT functions back in-house after they’ve been outsourced—may be the right move to make for some ...” Located at http://www.cio.com/article/10510/_Backsourcing_Best_Practices_ Backsourcing—that is, bringing IT functions back in-house after they’ve been outsourced—may be the right move to make for some companies, such as JPMorgan Chase. But it isn’t easy. "There isn’t a lot of quantitative data out there on how to do this right," says Jeff Kaplan, senior consultant with the Cutter Consortium’s Sourcing and Vendor Relationships Advisory Service and the managing director of ThinkStrategies. But some best practices are beginning to emerge. Rosenthal, Beth. (2008) “How Outsourcing Helped John Wiley's IT Department Keep the Business Going During an Acquisition.” Located at http://www.outsourcing-information-technology.com/wiley.html.
Several years ago book publisher John Wiley & Sons was about to purchase Blackwell Publishers. The acquisition created a challenging situation for Wiley’s IT department: it had to keep its other businesses going before, during, and after the acquisition. But the publisher didn’t want to grow its internal IT staff. Offshoring was the answer. (2008) Books Galliers, Robert D., and Dorothy E. Leidner. Strategic information management: challenges and strategies in managing information systems. Routledge, 2014. Brown and Wilson. (2005) “The Black Book of Outsourcing: How to Manage the Changes, Challenges, and Opportunities.” Wiley; 1 edition (May 2, 2005) ISBN-10: 0471718890. The Black Book of Outsourcing is a comprehensive guide and directory for the emerging field of outsourcing, including expert advice on how to operate an outsourcing program, how to deal with the political aspects of outsourcing, and how to find a career in outsourcing. A controversial and emotional subject among business leaders and workers in the global business community, outsourcing is fast becoming one of the greatest organizational and industrial shifts in modern history. In this one-of-a-kind resource, outsourcing gurus Douglas Brown and Scott Wilson chart a course for business leaders charged with managing outsourcing initiatives and present a wealth of employment opportunities for workers who want to enter this growing field. Kennedy and Sharma. (2009) “The Services Shift: Seizing the Ultimate Offshore Opportunity.” FT Press; 1 edition (January 19, 2009). ISBN-10: 0137133502. “Global Sourcing of Services is a powerful source of competitive advantage as economic borders become thinner... Kennedy pulls up the curtain and explains the what, why, and where of offshoring. His work with both providers and customers illuminates both the potential and the challenges of global sourcing. The Services Shift provides insights on the shifting business paradigms. This book cuts through the rhetoric and provides managers practical advice. A must read!!!” –Anurag Jain, Managing Director, Asia Pacific; President for Applications Solutions (AS); and President of Insurance & Business Process Solutions (IBPS) for Perot Systems. Power, Desouza and Bonifazi. (2006) “The Outsourcing Handbook: How to Implement a Successful Outsourcing Process.” Kogan Page (February 28, 2006) ISBN-10: 0749444304. “A comprehensive, 'user-friendly' nicely organised reference and guide which is confidently recommended reading." -The Midwest Book Review "Provides a strategy that any manager can implement." -European Foundation for management development "A hands-on and applied approach to exploring the intricacies of commencing, managing, renewing and/or terminating outsourcing engagements." -Journal of Economic Literature "Helps the reader understand each stage of the outsourcing process, improves and strengthens the process once it has been implemented and gives important details needed to ensure success." -Abstracts of Public Administration, Development and the Environment "Provides detailed insight into the processes, issues, pitfalls and successes for any type of outsourcing activity. The detail and advice given in the core of the book are first class; the authors do not assume any prior knowledge of the subject matter and they provide a valuable set of customer outsourcing methodology activities." -E-Code Tjia and Carmel. (2006) “Offshoring Information Technology: Sourcing and Outsourcing to a Global Workforce.” Cambridge University Press (June 13, 2006). ISBN-10: 0521843553. 'there are some fascinating insights here for IT executives ... The superb content isn't surprising once you realize that co-author Erran Carmel ... was a leading expert on globally dispersed software teams long before CNN's Lou Dobbs ever heard of offshore outsourcing. As you'd expect, the book has country sketches and thoroughly covers subjects such as managing contractors, risks and legal issues. But for me, the richest sections deal with 'soft' topics like cross-cultural issues and overcoming the problems of distance, time zones and language. For example, there's a great danger of miscommunication with Indian IT workers if Americans use slang, business code words or too-subtle hints. An American who says, 'I was a bit disappointed that ...' may actually be upset, but the Indian may interpret that statement as 'It doesn't really matter.' And while American IT workers use the word contractor as a business term, in India, the term could mean one who cleans toilets. Don't fly to Bangalore without reading this book.' -Computerworld Websites http://www.outsourcing.com/ Outsourcing Institute http://www.sei.cmu.edu/cmmi/ This site explains the Capability Maturity Model Integration (CMMI) framework. The level of maturity is relevant for determining the stability, efficiency, and standards that exist in the organization. www.cio.com http://news.cnet.com www.wired.com http://www.outsourcing-information-technology.com/ - this site has lots of articles and information about outsourcing. http://www.unisys.com/services/outsourcing/it__outsourcing/ - IT Outsourcing at Unisys http://www-935.ibm.com/services/us/index.wss/itservice/so/a1000414 - IBM Outsourcing and hosting. News November 17, 2015: An article on TechRadar.com questions how outsourcing affects small business. Have students read the article at http://www.techradar.com/us/news/world-of-tech/should-your-small-business-outsource-it--1309130 and answer the following class discussion questions: (1) What are the important factors leading an SMB to outsource? (2) What factors would lead an SMB to insource? (3) What is a hybrid strategy and how would you determine the tasks to outsource or insource? March 4, 2015: Cultural fit is said to be a crucial area for outsourcing teams. Have students read the article on Infoworld at http://www.infoworld.com/article/2891696/outsourcing/why-culture-is-as-important-as-skill-for-outsourced-agile-teams.html and answer the following: (1) Why does Rosenbaum make the point that he is talking about "mature" organizations? [Students might conclude that the organization needs to have other complementary assets as well as the cultural fit] (2) Does the article claim that the cultural fit is more important than individual skills? [No, they are said to be equally as important] (3) What does the cultural fit provide? [Trust]. (4) What is the importance of trust in the outsourcing relationship? (5) How does it work differently for the sporting-goods and health insurance firms? (6) What is the danger from too much cultural alignment? [Group think] Solution Manual for Managing and Using Information Systems: A Strategic Approach Keri E. Pearlson, Carol S. Saunders, Dennis F. Galletta 9781119244288, 9781118281734
