Question

Please provide a real life corporate example that would explain control  in makeing an IT sourcing decision.

Answer 1

IT sourcing is the process of procuring information technology resources in-order to provide the desired business goals.The major aim to perform IT sourcing is cost optimisation.

IT sourcing can be performed in three ways :

Insourcing :

• This method is adopted by the companies that are focused on traditional methods.
• They believe in developing in-house skills and capabilities.
• They are minimally dependent on outside organisations.

Multi sourcing:

• ​​​​​​​In this method both in-house and outsourced partners work together to accomplish the business goals.
• It enables risk reduction and taking benefits of multiple partner competitor.
• It is the balanced way of sourcing.

Outsourcing:

• It is a long tern contract with a single partner who is the service aggregator.
• It gives the best outcome when the customer business grows as expected in the long run.
• Therefore a long waiting is required to know the final outcome.

The important factors leading to IT sourcing decisions with respect to real life organisation :

Suppose a company X plans to outsource some other IT service company for it's new department extension. Following are the steps that it'll undergo for choosing the right match for the company.

1. Strategy

It is the foundation step and it includes adoption of liquid workforce and migration to the as-a-service commercial model.It requires brainstorming of parameters like the number of suppliers to be out-sourced, the commercial objective of the deal ,the new technologies to be sourced and which countries / cities should be considered for sourcing.

2. Making a project team

A strong and quality project team is very important for the success of sourcing process. It includes challenges like minimising and avoiding unexpected program cost , avoiding conflicting due to change in the consumer requirements and negotiation of an advantageous contract for the company.

3. Shortlisting a bunch of desired suppliers

In this phase the selection of potential suppliers take place. The selection is done on the basis of parameters like the potential relevance of supplier ,recent supplier success in market and a good supplier and customer relationship.

4. Requirement documentation and definition

The customer must be very clear regarding it's expectations from the outsourced contract. The requirement must contain technical architecture , strategy, vision, cost allocation, employee transfer and legal terms.

5. Document evaluation

The documents are extensively studied and the most capable proposal is selected that is capable of meeting the service and technology requirement. Qualitative and quantitative evaluation is must be performed. Feedback must be taken from existing customers and the market views must be taken into consideration before the final contract.

6. Negotiation

After the selection of the most appropriate IT supplier a timeline must be prepared based on the requirements of the customer.The supplier is then given a chance to review the proposal and propose changes. This phase requires people who are experienced in the sector and have prior knowledge about contract negotiation. During this process the stakeholders are thoroughly informed about the updated contract negotiations.

7. IT governance framework

Good governance is the key to well managed services and a strong consumer-supplier relationship. The governance framework defines the rules, principles and process that enable effective decision making. Good contract governance includes tracking the status of work, managing risks, create and populate supplier scorecard and performing regular contract assessments.