Chapter 10: Technology Services Procurement Flashcards
what are the reasons why firms may choose to build applications rather than buy them?
- lower costs
- internal expertise
- competitive advantage
- resource availability
- lack of suitable packages
what are the reasons firms may choose to buy applications rather than build them?
- business strategy
- lower costs
- faster implementation
- generic solutions
- benefits of joint development
what is OSS?
Open Source Software, software that is distributed with its source code with a supporting licence which allows organisations to use the code in their own software
what are the advantages of OSS?
- firms can enhance software themselves
- supported by dedicated community
- functionally rich yet inexpensive
what are the disadvantages of OSS?
- firms will need to learn the source themselves
- integration difficulties
- no guarantee or warranty
what is outsourcing?
delegation of non-core operations to an external entity specializing in the management of that operation
what must be considered when outsourcing?
- supplier selection
- migration project planning and management
- legal and commercial arrangements
- SLAs
what are the benefits of outsourcing?
- enables a higher quality of service due to specialization
- cost reduction through specialization
- management can focus on core operations
what are the possible disadvantages of outsourcing?
- information security
- irreversibility of the decision
- work, labour and economic considerations (negative press)
- service quality falling short of expectations
- inadequately documented systems
- existing systems unsuitable for outsourcing
what is insourcing?
when a company sets up an operation to carry out work that would otherwise have been contracted out
Involves centralization of activities previously dispersed across business units and geographical territories
what are the advantages of out insourcing?
- centralisation enables economies of scale, centre of excellence
- retention of ‘institutional memory’ as knowledge remains within the company
- shared goals and visions
- continued employee loyalty
what are the possible disadvantages of insourcing?
- fewer cost saving opportunities
- limited change opportunities
- risk of continuing with old practices
- insourced operation could be seen as a cost centre, difficult to obtain budget approval
what is offshoring?
movement of a business process done at a company in one country to the same or another company in another, different
country, mostly because of lower cost of operations
what are the reasons for lower costs associated with offshoring?
- lower salaries
- lower infrastructure costs
- lower taxes
- currency advantages
- govt grants or other incentives
what is near shoring?
relocation of business processes to (typically) lower-cost foreign locations, but in close geographical proximity
