Presentation on theme: "Management information systems"— Presentation transcript:
1 Management information systems Group Name: The IncrediblesManagement information systemsIS Failure due to OutsourcingGroup Members:Vineet Goyal ( )Anshul Popli ( )Abhijit Singh ( )
2 Reasons for outsourcing Cost SavingCost RestructuringFocus on Core BusinessAccess to TalentTax BenefitReduced time to marketEnhance capacity for innovationGaining access to world class capabilities
3 Top IT outsourcing companies ACCENTUREISSSODEXOINFOSYS TECHNOLOGIESCONVERGYSCB RICHARD ELLISCSCWIPRO TECHNOLOGIES
4 Most Frequent Causes of relationship failure in outsourcing Buyers' unclear expectations up frontPoor GovernancePoor communicationProvider’s poor performanceBuyer’s multi-supplier environmentInterest becoming misaligned over timeNot mutually beneficialPoor cultural fit
5 Top IT outsourcing countries 1.India 2.Thailand 3.Mexico 4.China 5.Indonesia 6.Malaysia 7.Philippines 8.Jordan 9.Egypt 10.Bulgaria
6 Involved in outsourcing Also, with remote based managed services, Internet conductivity is critical. The entire support structure relies on being able to maintain access to network nodes via the Internet. If conductivity fails, then the necessary maintenance and support cannot be delivered.If you rely on an outside contractor who generally has to come onsite to support your network, then you live in a world where you simply hope critical services don’t go down at a time when your ability to conduct business will be interrupted.Busy IT contractors may take days before they can come in to help, and this will likely be unacceptable if the problem is making it impossible for your staff to work. All the money saved by using a pay-as-you-go contractor can be lost with one serious issue within your network.
7 How successful outsourcing clients define success in their relationship: Achieving the projected cost reductionDelivering best in class servicesAchieving the SLAs and KPIsAchieving initial process improvementsAchieving Successful implementationAchieving increased business agilityIncreasing innovationWorking together seamlessly despite ongoing changeAchieving approved customer satisfaction
9 Introduction of Sainsbury Case study 1Introduction of SainsburyParent Company: J Sainsbury plc.Headquarters: London, UKFounded in 1869Products: Banking and retailCEO: Justin KingIT Director: Rob FraserSales of FY11: 22,943m GBP
10 SAINSBURY OUTSOURCING IS DISASTER SAINSBURY OUTSOURCED SUPPLY CHAIN SYSTEM FROM ACCENTURE.A 1.8B GBP BUSINESS TRANSFORMATION DEAL.NEW AUTOMATED CENETERS COSTED NEARLY 100MILLION GBP WHICH EVENTUALLY WASTED.SYSTEM FAILED TO GET THE STOCK ON THE SHELVES .REVERTING MANY PROCESS TO MANUAL WHICH WAS HIGHLY TIME CONSUMING.WHICH RESULTED GBP 290M WRITE OFF OF IT EQUIPMENT.
11 SPECIFIC CAUSES FOR FAILURE IN SAINSBURY ACCENTURE OBVERSELL AND SET THE EXPECTION THAT CONNOT BE METSAINSBURY MANAGEMENT FAILURE TO MANAGE ORGANIZATIONAL CHANGEDISCONNECT BETWEEN OUTSOURCER AND SAINSBURY MANAGEMENTLACK OF SUPPORT FROM DIFFERENT HODS (Head of Departments)
12 Introduction of Volkswagen Case study 2Introduction of VolkswagenParent Company: Volkswagen AGHeadquarters: Wolfsburg, GermanyFounded in 1937 (Germany)Products: AutomotiveCEO: Martin WinterkornSales of FY11: €159.3 billion
13 Description of the case Launch of too many models.Required high IT environment to support rapidly growing industry requirements.IT requirements were outsourced from Perot systems with a 10 year deal.IT staff even less than 10.Lack of manpower to even handle outsourcing project.Later to led to introduction of new It projects quickdecision making regarding IT up gradation andsystems.
14 REASONS FOR OUTSOURCING FAILURE IN VOLKSWAGEN Multiple IT service providersNo single point for governance for IT issuesCost overrun as budget was only $60 million whereas $210 million was required.IT projects behind scheduleLack of internal IT department
15 Introduction to Boeing Case study 3Introduction to BoeingParent Company: The Boeing CompanyHeadquarters: Chicago, Illinois, U.SFounded in 1916Products: Aerospace and defenseCEO: James McNerneySales of FY11: US$ billion
16 Description of the case Boeing manufactured 787 as one of its biggest achievements.It faced a lot of difficulties in its manufacturing.787 revolutionized the way it manufactures.It went into partnerships with a number of contractors to help them financing it 10 billion dollar project.In an article issued by the AINonline shows that both Boeing and airbus incorporate outsourcing lessons learned by their counterparts.The relationship between the international association of machinist and the society of professional engineering employees in aerospace improved the negotiation process.The two bodies have warned Boeing to control its outsourcing activities as it is curtailing the recruitments of new aerospace engineers.
17 Causes for failure Boeing faced a lot of supplier problems. Because of a number of suppliers they were not able to manage properly.Overrunning of cost.
18 Due diligence required by the client during the RFP phase Financial verification: Baseline costs for each element of service to be provided by the vendor. Usually these costs refer to the initial or baseline year of the contract.Procurement verification: Third party software licenses and associated costs. This includes both initial license fees and subsequent maintenance costs.Infrastructure verification: Asset inventory and associated costs, including computers, peripherals and networks.Human Resources: Employee costs, including benefit plans, salary scales, union involvement, and organizational structures.Processes and systems: Processes and methodologies used by the client organization.There are oter aspects that are equally important such as culture, governance models and so on.
19 Critical success factors for outsourcing ExplanationCareful selection of what to be outsourcedExample: Volkswagen’- It is very important for organization to select carefully what to be outsourced however company should also keep some IT processes in-house especially when it is involving future plan for It departmentChoose the right outsourcing service providerExample: Sainsbury- choosing the right service provider is really important for the success of outsourcing. Focus need to be done on suppliers competency and capabilities three capabilities needs to be focused delivery competency, transformation competency and relationship competency.Develop detailed contract with some flexibilityExample: Boeing- before outsourcing a detailed contract should be developed for risk mitigation. Flexibilities are required to anticipate changes in business environment. Length of contract varies on nature of business.Build relationship between the business and outsourcing companyExample: Volkswagen- when company commits outsource of business procedures there is requirement of change in internal management and relationships. Both IT and Business executive should involved in decision making. Since their commitments are important for outsourcing arrangements
20 ReferencesMathew, G. (2005). Reasons for Outsourcing Failure. Doing Due Dilligence Right. Available: Last accessed 21st March, 2012.Dave . (2010). The Real Reason Outsourcing Continues To Fail. Available: Last accessed 21st March, 2012.Goolsby, k. (2004). What Causes outsourcing failures?. Available: center.com/ what-causes-outsourcing-failures-article html. Last accessed 21st March, 2012.Accounting Web. (2007). ..Accounting Web's 10 notable outsourcing failures . Available: failures. Last accessed 21st March, 2012.Hiltzik, M. (2011). 787 Dreamliner teaches Boeing costly lesson on outsourcing. Available: Last accessed 21st March,Austin, R. (2006). Volkswagen of America: Managing IT priorities. Horward Business School.
21 ReferencesInformation-age. (2006). Sainsbury's to axe CIO. Available: axe-cio.thtml. Last accessed 21st March, 2012IAOP. (2011). The 2011 Global Outsourcing 100. Available: Last accessed 21st March, 2012.IT business edge. (2010). Six key success factors for outsourcing market survey. 1-9.Putra, J. IT Outsourcing, Benefits and Critical Success Factors. Available: and-critical-success-factors.pdf. Last Accessed on 22nd March, 2012. McCue, A. (2004). Sainsbury's puts brakes on IT after £290m write-off. Available: after-290m-write-off /. Last accessed 21st March, 2012.McCue, A. (2004). CIO Jury: Is IT to blame for £290m Sainsbury's loss?. Available: 290m-sainsburys-loss /. Last accessed 21st March, 2012.