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Objectives of Outsourcing of ICT for Organizations

Discuss about the Organization of Information and Communication Technology.

Information and Communication Technology (ICT) is an integral part of any organization in the present world. Outsourcing of ICT refers to the process of using the external service providers and solutions to deliver the demands as per the business. IT-enabled processes, application and utility services along with cloud-aided services are some of the keys areas and functionalities that are generally outsourced by an organization to a third party in the business[1].

The basic objectives of outsourcing that the CEO and other top management officials would try to achieve out of the strategy are:

  • Reduction of unnecessary expenditure that goes in operation costs.
  • Allocating the resources to other areas as per their level of expertise to gain better productivity and efficiency.
  • Maximum utilization of resources that is third party or external to the organization.
  • Streamlining of all the processes and the techniques that are followed in the organization.
  • Successful risk mitigation is another area that is targeted as one of the prime objectives of the strategy Marty Pine[2].

There are a number of advantages that would result for the organization to outsource its ICT which are described as below:

  • First and the foremost benefit that would come out of this process are in terms of cost savings. A lot of operational cost is reduced by outsourcing the parts and services of ICT. Overhead costs can also be avoided with this process.
  • There are a number of technological changes and advancements that take place on a frequent basis. Outsourcing helps in keeping pace with such rapid changes by getting the latest in every field.
  • Outsourcing vendors hire the staff that is qualified and utmost talented when it comes to the knowledge and capabilities.
  • Flexibility is another area that would benefit with the outsourcing process.
  • Internal resource management would also become easy and simpler to manage by outsourcing the staff.

Along with the advantages, there are also certain drawbacks that would require attention by the organization after outsourcing ICT.

  • There would be some of the IT functions related to the organization which would not be easy to outsource such as the core-IT functions or the ones that would be associated with critical and sensitive information.
  • Control and direct management of the functions that would be outsourced would not be possible which may result in alteration from the designated path.
  • There may be a scenario that would come up after the outsourcing of ICT which may result in lesser requirement of resources which may eventually lead to lay-offs. Such a case would result in lower employee morale and involvement.
  • Documentation is another area that would be difficult to monitor after the outsourcing process[3].
Onsite/Offshore Model

This is the outsourcing delivery model in which the staff is associated full-time for the project from the beginning till the end and is chosen on the basis of skills as required by the project. The process would work out as described below:

Onsite/Offshore Delivery Model

Project Outsourcing Delivery Model

It is the model in which the complete cycle of project development such as planning, requirements gathering, design, development, testing and maintenance is included. In this model, the complete project is outsourced to an external vendor which fits perfectly for small and medium sized organizations and their services.

Project Outsourcing Delivery Model

This is the model in which a dedicated software development centre would be set up at a third party location for design and delivery of the services.

Process followed in Software Centres

Project Staffing

This is the model that suffices the need of immediate demands in the varied skill set such as developers, testers and analysts at a very short notice. The resources are screened for selection through a number of different processes and are then selected for a specified period of time or budget[4].

Scope for the Organization

Following are the areas and activities that would be covered in the outsourcing process:

  • Tasks those are critical for the organization but do not play a vital role in the strategy such as shipping and delivery processes.
  • Tasks that would aid in the development and testing processes such as maintenance of the tool, updating of the tool and reporting.
  • Commodity tasks for the organizations would also be outsourced.
  • Maintenance activities such as after-sales support and post-production issues and their handling shall also be outsourced.

Process Flow Model

Request for Information (RFI)

  • Introduction

The document would provide the need for further information from the vendor for the development tool that would be necessary for the organization in its processes and activities.

  • Organization Overview

The organization is a firm that provides web services and solutions to a vast number of people and businesses with the use information and communication technology.

  • Project Overview

The project for which the request is being places is an application to be developed for XYZ Corporations under the finance domain. It would be a portal to manage the operations of the company with three major components as admin, clients and staff members.

  • RFI Process Requirements
  • Participation to RFI

All basic partners who want to participate needs to inform the organization within 2 months from receiving of the RFI, regarding their Intent to Respond.  If they fail to confirm, it will indicate that the basic partners are not willing to participate in the RFI & the organization will have to immediately return the RFI.

Each of the basic partners who confirm their participation needs to send their Intent to respond duly to the organization.

  • RFI Schedule

06/09/2016

RFI made available to the bidders

06/09/2016 +  60 days, 10:00 AM

Deadline for question’s addressing

06/09/2016 + 60 days

Response to all questions

06/09/2016 + 60 days, 12:00 PM

Deadline for bid receiving (all material)

08/09/2016 + 3 weeks

Bids are to be evaluated. All of the bidders will be asked to present their solution to the organization. Live demonstrations may be carried in this presentation.

08/09/2016  + 4 weeks

Decision to e taken  launch an RFP

  • Liabilities

The RFI is basically an application for information on potential services/products and no contractual responsibility on part of the organization would arise from this RFI application and its processes.

The RFI doesn’t require the organization to take care of any costing incurred in the submission or the preparation of their response for the RFI applications.

  • High Level Requirements

The development tool that is required for the project shall fulfill the following specifications:

  • Compatibility with the operating systems such as Windows 7/Vista/10 on 32 and 64 bit platforms and Linux
  • Easy to use interface
  • User manual and specification document should come along with the tool
  • The tool shall be licensed for a minimum of one year and shall be installed on at least 15 different workstations
  • The tool shall allow the development of the code in the languages such as HTML, JSP, PHP, ASP.NET, JAVA and C++
  • The tool shall also allow the feature of debugging
  • The tool shall be connected to the database such as SQL Server or MySQL
  • The tool shall allow easy connectivity over a local area network
  • The tool shall not cost above USD 2500
  • The tool shall have the scope of up-gradations
  • Reporting facility shall be integrated with the tool

Tenders will be evaluated on the basis of the following parameters:

  • Firstly to make sure the offer is agreeable, and that all of its parts are done, then to look at & survey every parts, to recognize the best regard for cash offers. It is very important to make sure that the vital aptitudes are considered into the group. For example, a money related master, a specialized master, an acquiring master and, if important, a business or legitimate master.
  • Financial assessment is the next major step in the evaluation process of a tender for a potential supplier which shall include
  • All the costs are clearly stated and covered in the price that is quoted
  • All the price escalation criteria and formulae that are applied are accurate
  • Cost of spares is included
  • Eligible discounts are applied
  • Retentions are clearly identified
  • Technical Assessment shall be carried out by the technical experts and members present in the group. In the event that point by point explanations were supplied for some specific reason, everything about be thoroughly checked to ensure it conforms to the first. Assuming, be that as it may, a utilitarian particular was issued, and then the checks that needs to be constrained to guarantee the hardware or management offered will fulfill the requisites of the end-client. And any of the choices or changes offered needs to be checked exclusively, & whether someone is more practical than other. This will, again must be confirmed with whatever remains from the group, preceding positive options being come to. Where important, it is allowable to check with the bidder to determine that the creation limit or labor asserted is truth been told accessible. This is probably best done by doing according to the bidders' premises and completing a proper investigation.
  • Capacity assessment should then be done in order to make sure there are no underlying costs and efforts associated. This would then be followed by a final decision review[5].

Assessment of Supplier Performance

  • Key Performance Indicators (KPIs)
  • Quality of the product
  • Accuracy of the delivery process
  • Mean time between failures
  • Response time
  • Status of the costs – Reduced or maintained
  • Delivery time
  • Adherence to schedule
  • Terms and conditions around payments
  • Account management
  • Responsiveness[6]
  • Service Level Agreements (SLAs)
  • The type and category of services that are being provided
  • Delivery schedule for the services
  • Roles and responsibilities of supplier and consumer
  • Handling of disputes
  • Termination specifications
  • Legal compliance

Recommendations and Conclusions

Outsourcing of ICT is a key step that is being taken by the organization and the following recommendations are made for successful execution of the same.

  • Adaptation to the strategies defined in project outsourcing delivery model.
  • Commodity tasks, maintenance tasks and critical components that do not take part in strategy definition shall be outsourced.
  • Incremental-iterative approach shall be followed in data migration and conversion process.
  • Evaluation of suppliers and tenders shall be done on the basis of requirement, quality, delivery, cost and key features.

References

Advantages&Disadvantage To Outsourcing IT (2016) Smallbusiness.chron.com<https://smallbusiness.chron.com/advantages-disadvantages-outsourcing-it-764.html>

CIPS, (2016)<https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/9-Supplier-Bid-Tender-Evaluation/Supplier-Evaluation-and-Appraisal/POP-Monitoring_the_Performance_of_Suppliers.pdf>

CIPS.org,(2016)<https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/9-Supplier-Bid-Tender-Evaluation/Tendering/How_to_Prepare_and_Evaluate_Tenders-Knowledge_How_To.pdf>

Delivery And Project Outsourcing Models (2016) artezio.com <https://www.artezio.com/company/howwework/delivery-models>

IT Outsourcing: The Reasons, Risks And Rewards (2016) Corpcomputerservices.com <https://www.corpcomputerservices.com/articles/outsourcing-reasons>

Outsourcing Definition - IT Outsourcing - Gartner IT Glossary (2012) Gartner IT Glossary <https://www.gartner.com/it-glossary/it-outsourcing/>

Pine, Marty,Top7ReasonsCompanies ChooseToOutsource (2016) About.com Money <https://outsourcing.about.com/od/clouds/a/Why-Do-Companies-Outsource.htm>

Process flow, (2016) Image.slidesharecdn.com <https://image.slidesharecdn.com/webinar-rfptool-20100114-100122104025-phpapp01/95/rfp-20-the-doityourself-rfp-tool-9-728.jpg?cb=1264156844>

RFI, RFP, RFQ (2016) https://www.purchasing-procurement-center.com <https://www.purchasing-procurement-center.com/rfi-rfp-rfq.html>

Outsourcing Definition - IT Outsourcing - Gartner IT Glossary (2012) Gartner IT Glossary <https://www.gartner.com/it-glossary/it-outsourcing/>.

Top 7 Reasons Companies Choose To Outsource (2016) About.com Money <https://outsourcing.about.com/od/clouds/a/Why-Do-Companies-Outsource.htm>.

Advantages & Disadvantages To Outsourcing IT (2016) Smallbusiness.chron.com <https://smallbusiness.chron.com/advantages-disadvantages-outsourcing-it-764.html>

Delivery And Project Outsourcing Models (2016) artezio.com <https://www.artezio.com/company/howwework/delivery-models>

CIPS.org(2016)<https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/9-Supplier-Bid-Tender-Evaluation/Tendering/How_to_Prepare_and_Evaluate_Tenders-Knowledge_How_To.pdf>.

CIPS (2016) <https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/9-Supplier-Bid-Tender-Evaluation/Supplier-Evaluation-and-Appraisal/POP-Monitoring_the_Performance_of_Suppliers.pdf>.

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