three case Literature review--about IT problem

Outsourcing Information Technology : Assessing Your Options

by Amir Hormozi , Erin Hostetler , Cynthia Middleton

Introduction

Although the term outsourcing may be relatively new to business , the practice of it is not . Historically , numerous businesses have enlisted the help of outside experts to assist with tasks too cumbersome to complete in-house . Legal and financial experts , along with countless other specialists , have long been called on to assist businesses in areas outside their core competencies . Jones (2000 ) notes that outsourcing has been a common business term for approximately 20 years Krajewski and Ritzman

(2002 ) define outsourcing as "allotting work to suppliers and distributors to provide needed services and materials and to perform those processes that the organization does not perform itself " While such a definition is easy to comprehend , knowing when and how to outsource is much more complex . When thinking about outsourcing modern businesses must consider not only functions traditionally outsourced but also their rapidly evolving information technology (IT requirements

Just how does a business determine if it should outsource its IT needs Unfortunately , there is no "one size fits all " approach . A small company with limited resources may feel comfortable outsourcing all of its IT needs while a larger company with its own IT department may outsource only carefully selected functions . Regardless of where an organization lies in the outsourcing spectrum , the following are typical IT goals : to focus on core business strategy , to reduce or control costs while improving functionality , to improve competitiveness , to provide better management control , to improve IT flexibility , to free up resources for core functions , to gain access to world-class capabilities , and to provide better IT service "IT Solutions , 2003 Lacity , 2000 . The ability to meet these goals requires careful analysis of the organization 's IT requirements , capabilities , and expectations , along with the vendor 's ability to meet them . Accordingly , this research suggests three guidelines for businesses to consider when making IT outsourcing decisions

Current Issues in IT Outsourcing

Although outsourcing has been practiced for hundreds of years , the history of outsourcing information technology is relatively brief Companies have been outsourcing payroll and accounting functions for years , but only recently have they discovered the benefits of relinquishing control over their IT departments . Specifically , Yost and Harmon (2002 ) identify Enrol Corporation 's 1989 750 million contract as the first important IT outsourcing arrangement , while Benamati and Rajkumar (2002 ) credit Kodak similarly , noting its 1989 landmark move to outsource IT needs . To keep pace with the information technology advances of the last decade , many large organizations have chosen to outsource the departments that handle their information systems and network services . Companies embracing IT outsourcing have benefited from the expertise and technological capabilities of their vendors , but they have had to deal with decreased control as well . For example , four case studies presented by Peled (2000 ) demonstrate the highly influential role IT vendors can play in the development of public projects . Rather than merely working to meet the needs of the bureaucrats employing them these vendors incorporated elements of...