Management processes[ edit ] Globalization and complex supply chainsalong with greater physical distance between higher management and the production-floor employees often requires a change in management methodologies, as inspection and feedback may not be as direct and frequent as in internal processes. This often requires the assimilation of new communication methods such as voice over IPinstant messagingand Issue tracking systems, new time management methods such as time tracking softwareand new cost- and schedule-assessment tools such as cost estimation software. This is exacerbated when outsourcing is combined with offshoring in regions where the first language and culture are different. The visual cues that are missing in a telephone call may lead to misunderstandings and difficulties.
Share through Email advertisement During the s, executives learned of the strategic role that information systems IS could provide to organizations. Through IS, companies could squelch competition, secure suppliers, obtain customer loyalty, and reduce the threat of new entrants.
Executives read about the IS victory stories of American Airlines, American Hospital Supply, and Merrill Lynch as evidence of the success to be found in exploiting information systems. Many executives applied strategic IS models to their own organizations.
As we enter the s, one would assume that the role of IS would escalate as the United States grows from a domestic, industrial society to a global information society. However, many practitioners, academics, and consultants now advise executives to outsource their IS services along with their cafeteria, mail delivery, and custodial services.
By farming out many or all of their information services, executives are promised savings of 10 percent to 50 percent off their IS expenditures.
Has IS suddenly become a commodity service that is best managed by a large supplier?
Several practitioners believe so. Henry Pfendt, director of information technology at Eastman Kodak, claims outsourcing comes down to one question: A strong argument for the IS as utility metaphor is that information, rather than information systems, provides a company with a competitive advantage.
The old models no longer apply. Under the theory of economies of scale, these executives would argue, mass production and specialized labor allow large vendors to provide utilities least expensively. The notion that IS is a utility and therefore most efficiently provided through outsourcing has been reinforced by many trade reports.
Computerworld and InformationWeek, for example, track outsourcing arrangements in which customers report savings of 10 percent to 50 percent.
Many companies, in their exuberance to duplicate savings advertised in these reports, jump on the IS outsourcing bandwagon. Press reports, however, portray an overly optimistic view of outsourcing because they are made during the honeymoon period when a customer and vendor first sign a contract.
At this point, the reported savings are only projected, not actual, savings. In addition, outsourcing failures are underrepresented in the press. After all, no organization wishes to offer a failure for public scrutiny.
Thus the outsourcing phenomenon can be explained by at least two trends. First, many executives believe that IS is quickly evolving into a utility.
As such, utility services are more efficiently acquired through specialized vendors that achieve economies of scale. Second, a significant bandwagon effect has been noted. In this article, we question the widespread endorsement of outsourcing by exposing several myths generated by press reports.
Under specific circumstances, such as when companies cannot control IS costs on their own or need to sell IS assets to generate cash, companies may still wish to outsource.During the s, executives learned of the strategic role that information systems (IS) could provide to organizations.
Through IS, companies could squelch competition, secure suppliers, obtain customer loyalty, and reduce the threat of new entrants. Outsourcing and Offshoring Information System Projects outsourcing of information systems services is a relatively recent phenomenon.
The including human resource issues, scheduling, relationships management, communication, quality control, risk, and evaluation.
The new realities of outsourcing and offshoring present information systems executives with legal, cultural, and managerial challenges that are not yet fully understood and educators with. – Outsourcing is currently going through a stage of unstoppable growth.
The purpose of this paper is to make a proposal about the main reasons, which may lead firms to adopt outsourcing in information systems (IS) services. The benefits of outsourcing seem obvious, touted by experts across numerous industries as the answer to cutting costs for business functions ranging from information technology to accounting, marketing and human resources; it seems possible that you could run an entire company without ever hiring a single employee.
In Beyond the Information Systems Outsourcing Bandwagon, the authors concluded that managers often reported glowing success stories during the honeymoon period when the outsourcing contract was first signed.
At that point, the client and vendor possess high outsourcing expectations.