1. COMP301 Information Systems Analysis and Design
Outsource or Not
COMP301 Information Systems Analysis and Design

2. What is outsourcing?
A company requests the services of an outside party to fulfil a function or functions that involve computer systems
Application development
Maintenance of applications

3. Markets vs hierarchies
Large corporations lends to have hierarchical structures with their own data processing department
applications developed largely in-house
Advanced in IT breaks and flattening the structure (become a mixture of teams and sharing of responsibilities)

4. Markets vs hierarchies
Flatter organization and cross company relationships tends to employ outsourcing
A shit towards the market to get the job done

5. Markets vs hierarchies
Existing system not compatible
Resistance from MIS people

6. Why outsourcing? Reduce risks (certain types of applications)
Get away from vertical integration (less problems if fails)
Get optimal talent
Replace services that are not doing well
Quicker solution (usually)
Using more advanced solutions

7. Pure outsourcing Total project is developed outside
Require expertise not available in the company
End user driven (they prefer to go outside)
Isolated systems
Senior management driven (funding concern)

8. Pure outsourcing
Good co-coordinator in-house (who can shepherd (look after) the project well, and maintain smooth relationship with other groups and systems
Having little or no liability for the outside company (if the system fails, limited liability only)

9. Pure outsourcing Short in duration (less than one year)
Small project teams (6 – 12) project team for one year
Already developed software outside, and only some customization, core programs already available

10. Pure outsourcing - example
Sun workstation for financial information display and analysis
Investment company are
Not familiar with the sun workstation
Always have delays in projects
Lack of commitment
Strong negative response to new and unfamiliar technology
Consultant to assess what should be done, and how much would be the cost

11. Pure outsourcing - example
Conduct a feasibility study
Technical aspects present
Business effects discuss
Project done in phases
A short pilot phase for testing
Four months to complete
Project team with four experienced consultants

12. Pure outsourcing - example
Approved by the investment company's president
Need co-operation among the staff in the company (especially data processing department)

13. Pure outsourcing - example
Why this application is successful?
Project is independent
Requirements are well defined
Liability is not a question
Nature of project can permit development outside
Prototype approach (with testing)
Not available expertise in the company
Cost of training existing people's skill sets is too high
Organizational culture is too political (battles over priorities and responsibilities and resources)

14. Pure outsourcing - example
Control over the costs
Control over the time frame
Control over the people
Minimum disruption
Experienced development
Clear understanding of what will happen

15. Characteristics of pure outsourcing
LOW in technology
Expertise within the company
Effect on existing day-to-day business
Knowledge needed in existing hw/sw and business processes in the company

16. Characteristics of pure outsourcing
LOW in project management
Size of proposed project team
Length of proposed project
Liability for outside developer
Size of proposed project

17. Characteristics of pure outsourcing
LOW in business focus
Expertise within the company on business subject matters combined with new technology
Expertise on existing business and applications within the company

18. Characteristics of pure outsourcing
HIGH in Organization
End-user sponsorship
Senior Management Support
(not generated from EDP department)

19. Hybrid outsourcing
If the new systems affect current operations of the transaction sytems in the company
Large amount of liability

20. Hybrid outsourcing - example
Billing system for a major domestic bank
Hire a new experienced staff to conduct an feasibility study
Recommendation is to develop a new system

21. Hybrid outsourcing - example
A new operation system, a new machine, new skill sets
New hire become the project manager
A mixed of in-house and outsider's help

22. Hybrid outsourcing - example
A combined team of in-house and outside people

23. Hybrid outsourcing - example
LOW to HIGH in project management
Size of proposed project team
Length of proposed project
Liability for outside developer
Size of proposed project

24. In-house development Confidential nature of the data
Work done directly involved with users
All skills and knowledge are available in house (training or promoting)
Data and procedures were guaranteed confidentially and all liability rested with the company
Fear of losing control

25. Who gets the outsourcing project?
Hiring the right people is critical to success
Locating the correct skill sets to the project
Experience and track record (successful development of similar projects before)

26. Extra services provided by the outsourcing company
Fully test the system
Installation, training and provide technical and administrative support
Provide technical, administrative and user documentation
Provide system maintenance and technical support at additional costs if needed