Complete the field Study in IM (Information Management) and IT (Information Technology).(Week_3_Lesson_3_Field_Exercise_IM-IT Sourcing)Read the assigned readings before completing the study.
week_3_lesson_3_field_exercise_im_it_sourcing.doc
an_introduction_to_it_sourcing__1_.pdf
it_sourcing_slides.ppt
it_sourcing_examples__1_.pdf
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Week 3/Lesson 3 – Field Study in IM/IT Sourcing
Student’s Name:
Company’s Name:
Edelman Leather
Brief Description of Your Company’s Industry/Market Place:
Leather Import /Export and Leather goods Manufacturing Industry. United states,
Europe, Asia and Middle East
The Tool for Data Collection and Analysis:
We are using two kind of data collection tools. One is Customer Relationship
Management (CRM). And the other one is Sales Force. Both tools help us track our
customers and maintain our customer base stable. It also helps us in tracking our sales
in a much efficient way. We can track our open orders and track the leads which can
ultimately turn in to a live order. We are using Oracle and ACCPAC for our inventory,
Financial reporting and tracking as well.
Please complete the Field Study tool that follows.
Part A: Identify your Organization’s currently deployed IM/IT sourcing strategies. Note: be sure to
explore as many aspects of as possible, including: data center operations, call center operations, Web
site operations, desktop and end user support (help desk), software development and maintenance,
access to specific applications – such as sales force automation, and so forth.
BP Owner/IT
Steward of
Sourcing
Relationship
Sourcing Strategies
in Place Today
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operational value:
managerial value:
strategic value:
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operational value:
managerial value:
strategic value:
operational value:
managerial value:
strategic value:
operational value:
managerial value:
strategic value:
•
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add more as
Benefits to the Organization
•
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Week 3/Lesson 3 – Field Study in IM/IT Sourcing
needed
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Part B: Identify opportunities for your Organization’s adoption of new IT Sourcing Strategies:
BP Owner/IT
Steward of
Sourcing
Relationship
Sourcing Strategies
Opportunity
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add more as
needed
Benefits to the Organization
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operational value:
managerial value:
strategic value:
operational value:
managerial value:
strategic value:
operational value:
managerial value:
strategic value:
operational value:
managerial value:
strategic value:
•
•
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Week 3/Lesson 3 – Field Study in IM/IT Sourcing
Part C: Assess the benefits and issues associated with the deployment of IM/IT sourcing solutions
within your company. Here the instructor is not looking for quantitative assessments, such as ROI
calculations) but rather a sense of the impact of these practices on the organization. Where there are
no such services in place, indicate this but feel free to speculate on how these services might benefit
your organization. Examples are provided for your consideration and possible reuse.
1. Operational:
a. Benefits:
i. e.g. In new system deployments we can rely on the fungible resources of our
partner service provider.
ii. .
iii. .
b. Issues:
i. e.g. We are not growing our own people to deal with our own information
system problems.
ii. .
iii. .
2. Tactical benefits?
a. Benefits:
i. e.g. Frees our management to focus on core business processes and needs.
ii. .
iii. .
b. Issues:
i. e.g. Our management isn’t well training or experienced in dealing with an IT
outsourcing partner.
ii. .
iii. .
3. Strategic uses?
a. Benefits:
i. .
ii. .
iii. .
b. Issues:
i. .
ii. .
iii. .
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Week 3/Lesson 3 – Field Study in IM/IT Sourcing
Key Concepts and Terms
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core business process – All organization possess core business processes that allow the
enterprise to operate, delivering products and services to its customers. A typical
organization has no more than five or six core process, including: (1) financial
management, (2) people management, (3) perhaps supply-chain management, (4)
perhaps sales force management, (5) perhaps product design and development, and so
forth, depending upon the nature of the business under study. Note that a not-forprofit, like a university or hospital, may have very different core processes from those of
a commercial bank or an automobile manufacturer.
core business process activities – Within a given business process, there can be any
number of discrete activities. For example, the activities commonly associated with
financial management include: financial planning and reporting, accounts payable,
accounts receivable, budgeting, payroll, cash management, investment and asset
management, and so forth.
business process (BP) owner – those business leaders/managers who are the primary
“owners” of the core process activities and therefore those who oversee the use of
related enabling IT from an end user standpoint.
IT System Steward – those IT managers who are primarily responsible for the ongoing
operations, maintenance, and support of each key IT system cited previously.
valuing IT within the enterprise – The following set of descriptions/definitions should
help you in this regard:
o operational or transactional value – when information management systems
and processes contribute to the effectiveness and efficiency of day-to-day
business operations/transacting either by automating and or disintermediating
(streamlining) those business processes – reducing costs, speeding up delivery,
improving the quality/reliability of outcomes, and/or adding additional value to
the customer experience.
o tactical or managerial value – when information management systems and
processes generate detailed and summary information on business processes to
inform day-to-day and near-term process controls and management decision
making, concerning the timing, volume and flow of goods and services, staffing
and operational expenditures, the coordination of business unit activities within
the enterprise, and wider supply chain and enterprise operations between the
organization and its up- and down-stream partners.
o strategic or transformational value – when information systems and processes
enable more long-term innovative/transformational thinking, planning and
decision making concerning fundamental change within the enterprise in terms
of its direction and market positions, its scope of activities and product offerings,
its merger and acquisition decisions, and so forth, usually involving the
longitudinal analysis of distilled bodies of key internal performance information
integrated with information drawn from external sources.
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An Introduction to IT Sourcing
Introduction
In today’s marketplace, the proper sourcing of business processes and related information technology
enablement is a competitive reality. To better leverage internal resources, enterprises of all kinds and
descriptions are turning to collaborative arrangements with external, often overseas IT service providers
to reduce cost and raise service quality. At the macro level, Internet-enabled globalization has catalyzed
these developments. With a highly interconnected world, companies can now perform business
operations everywhere. But such a move is not without its challenges and risks to the enterprise’s
culture and its business performance. At the micro level, the active drivers of outsourcing, beyond cost
reduction, include such value added factors as: enhanced innovation, product and service offering
diversification and customization, and speedier time-to-market capabilities.
While the number of sourcing alternatives is growing, there is no magical formula guiding participating
enterprises through these troublesome waters. Success in sourcing requires:
careful IT partner selection
internal organizational commitment
meticulous and rigorous project management
the clear articulation and understanding of service level agreements governing both sides of the
sourcing relationship
effective methods for continuously monitoring service provider performance
a clear process for address issues as they arise
The overall effort also calls for patience since very often any return on investment is realized only within
the context of a long-term relationship. In the end, enterprise leaders must balance the cost, risk, and
quality tradeoffs and process changes inherent in any sourcing solution if they are to obtain real value
from the partnership.
Selection Criteria:
In sourcing business models, management must consider various delivery models: onsite delivery,
offsite in the same country, and offshore. This gave rise to several distinct business models, based upon
a series of decision factors:
cost
appropriate expertise
internal (organizational) process maturity
quality controls; performance history; time-to-market capabilities
past industry work experience
range of outsourcing services provided
quality of the firm’s and host country’s IT infrastructure
collaborative capabilities (i.e. between the enterprise’s and the outsourcer’s teams)
time zones, handoffs, and other process issues
cultural and language compatibility
the onsite as well as the offsite presence of the service provider
existing trade and currency arrangements between the enterprise’s host country and the
offshore service provider’s home country
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An Introduction to IT Sourcing
Today, countries like India and China are the most dominant regions in offshore delivery. India ranks
high on several of the aforementioned parameters, such as: delivery quality, the potential of talent pool,
competitive cost structure, and the country’s educational system. Though culturally very different from
the United States, India is also English speaking. China is well known for it cheap labor pool and its
emerging quality design and production processes but is not as well established overall in terms of IT
service delivery. Both nations draw on a huge population and thriving, expansion-driven economies.
Furthermore, both the Indian and Chinese governments work closely with both domestic industry
leaders and their respective universities systems to create highly competitive partnering opportunities.
Nevertheless, India and China are not the only players to consider, especially for those enterprises with
business interests and distribution channels elsewhere in the world. For these very reasons, the idea of
“nearshoring” in Latin America has emerged as a complementary and alternative option for U.S. firms
operating in that region. Certainly in terms of cost, proximity, and an educated technical work force,
countries like Mexico should be positioned to compete with India and China. However, it remains to be
seen if they can perform competitively in the areas of product and service delivery quality and time-tomarket. Given the rising expectations and operating costs in both India and China for IT service delivery,
the U.S.’s Latin American neighbors may indeed provide a promising alternative in the growing global
marketplace.
SELECTING A SOURCING PARTNER:
It is always dangerous to make sweeping generalizations about such a vast, varied, and rapidly changing
space as India’s or Mexico’s outsourcing capabilities. Nevertheless, recent corporate experiences in
outsourcing do suggest a check list of success factors in identifying the best match between a particular
enterprise and its potential offshore/nearshore partners. The model employed below should help the
reader sort out his/her organization’s priorities in selecting and establishing an appropriate and effective
offshore partnership.
Selection Factor
cost
appropriate expertise,
including the ongoing
investment in staff
certification and training
internal (operational)
process maturity
Observations:
Like any other IT solution, be sure to base your cost decision on the total cost
of ownership (TCO), including the full life-cycle of development,
infrastructure, hosting, maintenance and support, and any other costs that
might enter into your outsourcing decision. Establish a TCO model from the
outset and go into negotiations with a realistic view of what your company
actually needs from its offshore partner(s), and what your organization hopes
to accomplish through the envisioned partnership.
In a global market where some skills are scarce and others are in high
demand, detail the business and technical knowledge required to address
your needs and then map these requirements against the outsource team’s
skills and experience. Be sure to get a formal commitment that locks in the
specific people (if appropriate) as well as the skills required to meet your
needs.
Your outsourcing partner cannot hope to help your organization if their own
processes are broken. Look for signs of mature, successful, complementary
business process capabilities.
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An Introduction to IT Sourcing
Selection Factor
quality controls;
performance history;
time-to-market
capabilities
past industry work
experience
range of sourcing
services provided
cultural and language
compatibility
collaborative capabilities
(i.e. between the
enterprise’s and the
outsourcer’s teams)
the onsite as well as the
offsite presence of the
service provider
time zones, handoffs,
and other process issues
existing trade and
currency arrangements
Observations:
Employ industry standard metrics against the past performance of the
outsourcer. Beyond specific certifications, like ISO 9000, look at the size of
projects/contracts under management, on budget and on time delivery rates,
and customer satisfaction data. And demand reference contacts with existing
customers whose business and outsourcing demonstrate needs are close as
possible to your own requirements.
Since knowledge of the business is paramount in delivering offshore IT
services effectively and efficiently, have the prospective outsourcer
demonstrate his/her experience in your industry, relevant to your existing
needs.
Anticipate the full range of your enterprise’s outsourcing needs and ensure
that your partner has a successful track record in servicing all of those needs.
For example, if you require hosting and ongoing help desk support for an
application once developed, be sure that your partner can readily
accommodate you.
Inevitably when dealing with sourcing, you are faced with a clash of languages
and cultures. Ensure that your partner’s team has a sufficient grasp of English
to work effectively with you but also make sure that your team understands
and appreciates the cultural differences between the U.S. and your partner to
enable a clear line of communication. This may entail establishing ground
rules for providing an open exchange of ideas and feedback with partners
whose culture may be more circumspect than ours.
Create a plan up-front for how your local (in-house) team will work with your
partner’s team. Establish schedules for the frequency of meetings, the
exchange environment (e.g. phone or Web conferencing) and set agendas.
Ensure that your prospective partner is committed to these processes,
technologies and infrastructure components before signing a contract.
Though the point of sourcing may be to shift work to a lower-cost
environment, no successful partnering relationship can existed in walled-off
isolation. Successful offshore arrangements still require that your partner
place personnel on site or at the very least schedule regular visits to the client
site for requirements gathering, quality control and customer feedback. From
the enterprise’s perspective, it is also important to get to know your service
provider, hence the need to periodically visit the outsourcer as well. Here
again, ensure that your contract with any outsourcing partner includes
language concerning the placement of onsite personnel and regularly
scheduled visits.
With the Web, a global model for IT product and service delivery works to
your advantage. By exploiting time zones, you can turn a ten hour work day
into a twenty to twenty-four hour work day. For example, requirements
collected onsite can be turned into code over night at your outsourcer’s
location and then returned to you for testing the next day. But to leverage
this arrangement, your contract will need strong, articulated processes, clear
performance measures, and continuous quality improvement.
For some enterprises who do business overseas but who cannot extricate
their profits in a hard currency, such as US dollars or Euros (e.g. in India or
China this can be a problem), purchasing outsourcing services with local
currencies is a real win/win. The organization typically purchases the IT
services at rates below those in the U.S. while putting its local assets in the
partnering country to work.
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An Introduction to IT Sourcing
By employing these simple principles as part of your enterprise’s selection and negotiating stance with
potential outsourcing partners, you will ensure that the final agreement once struck will address
expectations on both sides and will limit ambiguities that could lead to troubles later on in the
relationship.
CRITICAL SUCCESS FACTORS (CSF’s) IN SOURCING1:
In this closing introduction, we provide a framework to assist businesses to effectively manage sourcing
arrangements. It perhaps goes without saying that the selection of a partner is critical to the success of
any sourcing scenario, but even the best partnerships will fail if the arrangement is not properly
managed. The following check list identifies those areas that require enterprise management’s
immediate and ongoing attention. Consider these simple guidelines as you scope out your working
relationship with your external IT service providers.
CSF’s
1. Focus on the enterprise’s core
value and be open to outsourcing
everything else.
2. Align your sourcing decision with
executive thinking and sponsorship.
3. Own and manage the project
internally.
4. If your underlying business
process is broken, fix it before
offshoring it.
5. Map your most important
outsourcing requirements against
the core competencies of your
partner.
6. Demand measurable processes
and outcomes.
1
Comment
As illustrated in this article’s case studies, letting go those activities
that are not core to your business allows you to focus on your
organization’s competitive competencies while leveraging the
expertise of others in those areas where they excel, thus reducing
costs/risks while increasing flexibility and time-to-market.
Outsourcing relationships are strategic partnerships requiring the
attention and ownership of executive management. Though the
outsourced services in question may not be core to your business,
they will in all likelihood support/enable that core and therefore
merit the same focus and attention devoted to other, internallymaintained business capabilities.
Outsourced projects and services must be managed internally.
Assign accountability to the most senior executive with a stake in
the outcome of that project or service and make certain that
performance measures are in place for both this internal manager
and his/her team and your external partner. Monitor
performance. and results!
Offshoring a broken process will only make it more unmanageable.
Invest in making the process sound and functional and then
introduce outsourcing and offshoring into those aspects of the
process where it makes sense to do so.
In preparing for outsourcing, your enterprise must make explicit its
needs and concerns. This requirements effort must comprehend
staffing, business process, and technology issues as appropriate
and will serve as a measuring stick against the qualifications of
competing external IT service providers.
You cannot manage what you cannot measure. For that matter,
your partner cannot perform up to your expectations if that firm
has no concrete way of knowing how its work will be measured
against requirements needs. The contra …
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