April 19, IT Outsourcing overview and training cases

2 What is IT outscoring? Why outsource? Definition –The purchase of goods or services from third-party partners to perform some of a company’s IT/IS work -- operations, tasks,...etc Save money Focus on core competencies – organization can focus on the business that they are in Achieve flexible staffing levels Gain access to global resources Decrease time to market Must be both a remedy for service failures or costs and a strategic choice. Should not be used for strategic information systems with security or privacy issues

3 IT outscoring issue Identify several cultural, political, and geoeconomic challenges that confront managers & developers in the management of global information technologies. Geoeconomic – effects of geography on the economic realities of international business activities Geoeconomic Challenges: Sheer physical distances Difficult to get good-quality telephone and telecommunications services Differences in the cost of living and labor costs

4 IT outscoring issue Political Challenges: Rules regulating or prohibiting transfer of data across national boundaries Severely restricted, taxed, or prohibited imports of hardware and software Local content laws that specify the portion of the value of a product that must be added in that country if it is to be sold there Reciprocal trade agreements that require a business to spend part of the revenue they earn in a country in that nation’s economy

5 IT outscoring issue Cultural Differences Languages Cultural Interests Religions Customs Social Attitudes Political Philosophies Internet Access Issues in Most Restrictive Countries High Government Access Fees Government Monitored Access Government Filtered Access No Public Access Allowed

6 Outsourcing’s Top Ten

7 International Data Communications Top 10 Issues

8 IT decisions

9 GLOBAL IT ISSUES Issues of Interest To what extent does the growing power of information technology enable globalization? To what extent does increased globalization create demand and markets for ever more refined information technology? Do the new technologies enable firms to consider new markets and new activities? Do the desires of firms for international activities create demand for new technologies? Are uses for information technology in a global setting merely the logical extension of domestic information technologies? Does operating internationally create new areas of decision making such as the structure for direct foreign investment?

10 Outsourcing Markets There are many countries competing for outsourcing clients Datz (2004) summarized 24 countries based on: –Maturity level rating (leader, up-and-coming or rookie) –The size of the market –The availability and cost of skilled labor –The infrastructure of government and technology –The geopolitical risks: political, financial and economic risks Leaders: –Canada, India, Ireland, Israel and Philippines Emerging: Mauritius, Morocco, Venezuela, UAE,..

April 19, Case 1: Some People Just Never Learn

12 Case 1: Case Study Questions In some cases projects end up as failures, What are some of the reasons? What key management decisions might help to prevent IT failures? Why are companies often too embarrassed to report their IT failures? IT failures Show up in earnings losses User companies often file lawsuits against vendors or consultants Notorious failures are usually big and complex projects Companies repeat the same mistakes

13 Case 1: Real World Internet Activity The IT failures occurred. Using the Internet, See if you can find examples of recent IT failures. What caused them to occur? Have we learned anything to help prevent such failures in the future?

14 Case 1: Real World Group Activity An IT project can fail as a result of mistakes that occur even during the late stages of implementation. In small groups, –Discuss how you would manage a project to ensure its success. –What are the key success factors that you would pay close attention to in your project.

April 19, Case 2: The Hard Road to Outsourcing

16 Case 2: Case Study Questions The law does not provide for companies to disclose to their customers the fact that they have outsourced access to their data. Is this a potential problem for either the company or the customer? Why or why not? IT outsourcing Can cut the cost of IT work by 39 percent by outsourcing it abroad But it carries privacy risks And threatens US jobs

17 Case 2: Real World Group Activity Outsourcing are controversial issues – particularly when it comes to jobs. In small groups, –Discuss the pros(فوائد ) and cons (مضار) of this issue. –Should we curtail (نقلّل) outsourcing and offshoring to protect jobs? –Are new jobs being created to replace the ones lost?

April 19, Case 3: CIOs Need to Think Globally and Act Locally

19 Components of IT Management Identify each of the three components of information technology management, and use examples to illustrate how they might be implemented in a business. IT Executives: Chief Information Officer (CIO) Oversees all uses of information technology in many companies, and brings them into alignment with strategic business goals Chief Technology Officer (CTO) In charge of technology management: all information technology planning and deployment Managing the IT platform Second in command

20 Case 3, Case Study Questions: What are some of the forces driving IT organizations to globalize? What are some of the local forces and challenges facing modern IT organizations? How does a CIO manage the requirements to both globalize and localize the IT function? CIOs Need to Think Globally and Act Locally –Enterprises globalize for different reasons Examples: global customers, seeking growth opportunities, cost efficiencies –CIO’s IT globalization decisions should Determine the balance of global integration versus local responsiveness Align IT’s major processes with the enterprise’s governance orientation Assign staff, roles, and competencies appropriately

21 Case 3: Real World Internet Activity One of the issues facing the CIO is the assessment of IT maturity in the countries they operate in. Using the Internet, See if you can find examples of countries where the IT maturity is still low and, thus presents a greater challenge. What are the characteristics of a low IT maturity country?

22 Case 3: Real World Internet Activity Some companies shares a common goal, but from a different perspective. there are a variety of reasons why a company may choose to outsource. Using the Internet, See if you can find examples of companies who have chosen to outsource for different reasons. What were their reasons?