Chapter 10: Information Systems Sourcing Flashcards
what are the four (4) key questions when considering Information systems sourcing?
- Make
- Buy
- How (What Products/Services)
- Where (Where abroad?)
When an organization decides to create to run its applications on its own computers or in the cloud as a result of one of the information systems sourcing questions.
Make
When an organization decides to obtain its applications from an outside provider or providers as a result of one of the information sourcing systems questions.
Buy
The following actions are for which information sourcing question?
Include the scope of the outsourcing and the steps that should be taken to ensure its success.
How
The following decision is for which information sourcing question?
whether the client company should work with an outsourcing provider (i.e., vendor) in its own country, offshore, or in a cloud
Where
What’s the last step once all sourcing decisions have been made?
Unhappy/Review
What types of activities or products are typically considered when sourcing IS?
- Applications
- Systems
- Help Desk Support
- Telecommunications
- Data Centers
- Business Processes
Make =
Insourcing
Buy =
Outsource
Providing IS services or developing them in the company’s own in‐house IS organization and/or in its local cloud.
Insourcing
What are the five (5) most common reasons organizations decide to make/insource
- To keep core competencies in‐house
- So a firm can concentrate on its core competencies
- Security
- confidentiality
- Resources
What is the major risk of insourcing?
Requires management attention and resources
An overseas subsidiary that is created to serve its main “client,” the parent company, but it may serve other clients as well.
Captive Center
What are the three most common types of captive centers
- Basic
- Shared
- Hybrid
Type of captive center that provides services only to the parent firm
Basic
Type of captive center that performs work for both a parent company and external customers.
Shared
Type of captive center that performs the more expensive, higher‐profile, or mission‐critical work for the parent company and outsources the more commoditized work that is more cheaply provided by an offshore provider
Hybrid
Purchasing a good or service that was previously provided internally or that could be provided internally but is now provided by outside providers.
Outsourcing
What is the primary motivation for outsourcing?
Reducing Costs
What are the three (3) primary factors that favor an a decision to outsource,.
- Lower costs due to economies of scale
- Ability to handle processing peaks
- Need to consolidate data centers.
Outsourcing providers derive savings from?
Economies of Scale
How do outsourcing providers achieve economies of scale that the client company cannot? (3 Reasons)
- Centralized data centers
- Preferential contracts with providers
- Large pools of technical expertise
The outsourcing provider’s larger pool of resources allows them?
Leeway in assigning available capacity to its clients on demand
Outsourcing may also offer an infusion of cash by?
Selling its equipment and/or buildings to the outsourcing vendor
If an organization does not have employees with the training, experience, or skills in‐house to successfully implement new technologies, it should consider?
Outsourcing
outsourcing providers generally have larger pools of talent
with more current knowledge of advancing technologies and best practices.
Outsourcing providers also have an added advantage
because they can specialize in IS services.
providers’ extensive experience in dealing with IS professionals
helps them to understand how to hire, manage, and retain IS staff effectively.
What are the seven (7) risks when outsourcing?
- Clients must surrender control
- Adequate anticipation of new technological capabilities when negotiating outsourcing contracts
- Risks the potential loss of competitive advantage
- High dependence on the outsourcing provider
- Harder to protect competitive secrets
- Provider’s culture or operations may be incompatible
- Savings may never be realized
risk of over‐reliance for any number of reasons typically increases as
the size of the outsourcing contract increases.
Increased volumes due to unspecified growth, software upgrades, or new technologies not anticipated in the contract may do what to the clients firm?
end up costing a firm considerably more than it anticipated when it signed the contract
What are the three major decisions about how to outsource successfully?
- Selection
- Contracting
- Scope
This (how) outsourcing decision focuses on finding compatible outsourcing providers whose capabilities, managers, internal operations, technologies, and culture complement those of the client company.
Selection
This (how) outsourcing decision focuses on securing formal outsourcing arrangements
Contracting
Type of outsourcing agreement that defines the level of service to be provided, delivery time and expected performance of the service.
Service-Level Agreement
This (How) outsourcing decision determines whether to pursue outsourcing fully or selectively with one (single sourcing) or more providers (multisourcing).
Scope
When an enterprise outsources all its IS functions
Full Outsourcing
When an enterprise outsources everything, how does it view IT
it does not view IT as a strategic advantage
When an enterprise chooses which IT capabilities to retain in‐house and which to give to one or more outsiders
Selective Outsourcing
This type of outsourcing reduces the client company’s reliance on outsourcing with only one provider, provides greater flexibility and offers better service due to the competitive market.
Strategic (Selective) Outsourcing
When a company decides to use multiple providers when fully or selectively outsourcing practices what?
IT Multisourcing
Delegating IT projects and services in a managed way to multiple providers who must work cooperatively to achieve the client’s business objectives.
IT Multisourcing
What are the five (5) advantages of Multisourcing?
- Limits the risks associated with working with just one provider.
- Lowers IT service costs
- improves quality through best‐of‐breed services,
- Enhances flexibility
- Provides easier access to specialized IT expertise and capabilities
What are the three (3) disadvantages of Multisourcing?
- Requires more coordination
- Finger-Pointing
- Unexpected competition among providers can hurt the client if not managed well
Balancing provider cooperation and competition among the providers is called what?
Forced Coopetition
What are the four (4) where outsourcing decisions?
- Onshore
- Offshore
- Cloud
- Crowd
The dynamic provisioning of third‐party‐provided IT services over the Internet using the concept of shared services
Cloud Computing
How can client companies realize cost savings through cloud computing?
by sharing the provider’s resources with other clients
What are the three (3) advantages of cloud computing?
- Cheaper
- No Upfront Costs
- Flexible
- Scalable
What are the three (3) disadvantages of cloud computing?
- overdependence
- Loss of control
- Security
What are the five (5) cloud computing options?
- Private Cloud
- Community Cloud
- Hybrid Cloud
- Multi-Cloud
- Public Cloud
This type of cloud infrastructure is when data are managed by the organization and remain within its existing infrastructure, or it is managed offsite by a third party for the organization in the third party’s private cloud
Private Cloud
This cloud infrastructure is shared by several organizations and supports the shared concerns of a specific community
Community Cloud
This cloud infrastructure combines two or more other clouds, with a combination of public and private clouds where the services are integrated with one another
Hybrid Cloud
This cloud infrastructure icludes multiple clouds under centralized management with no distinction between private and public clouds, and none of the clouds need to work in combination
Multi-Cloud
This cloud infrastructure is when data are stored outside of the corporate data centers in the cloud provider’s environment.
Public Cloud
What are the 3 major types of public clouds?
- Software-as-a-service
- Infrastructure-as-a-service
- Platform-as-a-service
Public Cloud type that provides infrastructure through grids or clusters or virtualized servers, networks, storage, and systems software designed to augment or replace the functions of an entire data center.
Infrastructure-as-a-service
Public cloud type that provides software application functionality through a web browser.
Software-as-a-service
Public Cloud type that provides services using virtualized servers on which clients can run existing applications or develop new ones without having to worry about maintaining the operating systems, server hardware, load balancing, or computing capacity
Platform-as-a-service
A form of outsourcing that is provided by a very large number of individuals.
Crowdsourcing
What are the two forms of crowdsourcing?
- Collaboration
- Tournament
Type of crowdsourcing when individuals use social media to collectively create a common document or solution.
Collective Crowdsourcing
Type of crowdsourcing that uses social media to solicit and collect independent solutions from a potentially large number of individuals but selects one or a few of the contributions in exchange for financial or nonfinancial compensation
Tournament Crowdsourcing
Performing outsourcing work domestically (i.e., in the same country)
Onshoring/Inshoring
may be considered the “opposite” of offshoring.
What are the two types of onshoring scope decisions?
- Selective
- Full
Type of onshoring that hires outsourcing providers with operations in rural parts of the country.
Rural Sourcing
Type of outsouring that occurs when the IS organization uses contractor services, or even its own hybrid captive center in a distant land
Offshoring
What are the two (2) where abroad (offshoring) decisions?
- Nearshoring
- Farshoring
A form of offshoring that involves sourcing service work to a foreign, lower‐wage country that is relatively far away in distance or time zone (or both).
Farshoring
A form of offshoring that uses providers in foreign, lower‐wage countries that are relatively close in distance or time zones to the client company
Nearshoring
To answer the where abroad question, client companies must consider what three (3) criteria?
- Attractiveness
- Level of development (Development Tiers)
- Cultural differences
What seven (7) criteria make a country more attractive for outsourcing?
- Geographic orientation
- English Proficiency
- Political Risk
- Regulatory Restrictions
- Data Security
- Legal Systems
- Technical Infrastructure
What model measures the level of proficiency of the development process within an IS organization?
Capability Maturity Model Integration (CMMI)
Level 1 is worst, level 5 is best
How is the development tier determined
- Industrial Maturity
- Extent of Clustering
- Export Revenues.
Tiered countries tend to offer higher levels of skills but also charge higher prices.
Development Tier 1
Tiered countries, the software industries are mostly “cottage industries” with small, isolated firms
Development Tier 2
A business practice in which a company takes back in‐house assets, activities, and skills that are part of its information systems operations and were previously outsourced to one or more outside IS providers
Backsourcing
may involve partial or complete reversal of an outsourcing contract
A long‐term, purposeful “arrangement by which companies set up a web of close relationships that form a veritable system geared to providing product or services in a coordinated way.
Strategic Network
An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world.
Business Ecosystem
