The Outsourcing Equation: Is IT a strategic asset? (original) (raw)
Nicholas Carr's May 2003 Harvard Business Review article "IT Doesn't Matter", stoked a debate on the idea that IT has become a commodity: That IT has evolved to the point where it can be viewed as a cost center to be controlled instead of an investment center to provide market leadership. If an element of IT proves to be a true cost center, and not a competitive advantage, then a logical approach is to find an outsourcer who specializes in that business and profit from economies of scale. The company can then save money through outsourcing and focus energy and invested capital on areas that are of strategic advantage. Determining which areas of IT to outsource then becomes critical. However, the decision to outsource may not be that simple. If an outsourcer can provide a company domain experience or resources that they do not readily have available, even strategic advantages may be candidates for outsourcing. After it is determined which elements of IT can and should be outsourced, then the remaining staff and projects are important to the company for some reason: Security, Market Leadership, Human Capital, etc. Those remaining areas are best left locally managed and are the areas of IT that are strategic assets.
Related papers
Outsourcing Decisions & Models - Some Practical Considerations for Large Organizations
2006
Outsourcing has recently spurred broad discussions due to the relatively high failure rate of outsourced activities. To analyze how organizations can increase their success rate of outsourcing activities, the authors take a two-prong approach to the outsourcing decision and execution process, covering the “why ” and “how to ” outsource. To determine the optimal setup, the authors introduce six outsourcing dimensions, which trigger the decision process and the subsequent procurement and execution processes. Strategic and operational considerations as well as risk implications are further elaborated.
Outsourcing: Some Strategic Aspects
2013
A firm faces a choice between outsourcing a crucial input and producing it inhouse within the vertical structure. This paper discusses strategic motives behind the outsourcing decision.
Concepts, Methodologies, Tools, and Applications, 2010
This chapter provides both practitioner and academic insights into outsourcing. It begins with a review of the literature and practice of outsourcing, followed by a retrospect of its developments since the 1960s, up to present-day emergent trends such as best/smart-sourcing, rural-sourcing and business application grids. Recent legal developments are highlighted, along with their corresponding impacts. Outsourcing decisions tend to focus solely on the short-term benefits of cost reduction and service level improvement and, hence, often lack strategic direction, thus indicating the need for strategic management frameworks in the decision process. This chapter introduces a generic framework for such decision-making and highlights other strategic frameworks developed by researchers. The chapter then concludes by summarizing suggested action points that enable both clients and service providers to best exploit the recent developments in outsourcing, in order to maintain the strategic ed...
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.