Lecture 7 - Build vs. buy (IT sourcing), Distributed development cloud-technologies (Complexity Theory) Flashcards
Mention the two drivers for considering outsourcing.
Source: slide 6
- Lack of knowledge.
Lacks the skill to make and thus seeks an expert supplier to fill the gap - Lack of capacity
Can build but for reasons of time, money, space, or management attention, chooses to extend its capacity by means of a supplier
What are the Pro’s and Con’s of outsourcing?
Source: Slide 7
PROs
- Capability: cannot make or easily acquire such a capability, i.e. must seek a supplier
- Manufacturing Competitiveness: external supplier has lower cost, faster availability, etc., for what is presumably a directly substitutable item
- Technology: supplier’s version of the item is better for any of several possible reasons
CONs
- Competitive knowledge: the item is crucial to performance, or the skill in producing it has been judged basic to the company’s technical memory
- Customer visibility/market differentiation: a firm should make what matters most to the customer or what differentiates it in the marketplace; it should buy everything else.
Mention some of the Insourcing Drivers
Source: Slide 9: Pearlson, Saunders 2010
- Good for core competencies
- Good for confidential or sensitive IS services or software development
- Time available in house to complete software development projects
- In-house IT professionals have adequate training, experience, or skills to provide services or develop software.
Mention some of the Outsourcing Drivers
Source: Slide 9: Pearlson, Saunders 2010
- Offers costs savings
- Eases transportation to new technologies
- Offers opportunity for better strategic focus
- Provides better management of IS staff
- Offers better ability to handle peaks
- Makes it easier to consolidate data centers
- Provides a cash infusion
Mention some advantage in Cloud-Sourcing
Source: Slide 11: Pearlson et al., 2015
- No/lower upfront investments
- Variable cost structure through pay-per-use licenses
Mention som risks in Cloud-Sourcing
Source: Slide 11: Pearlson et al., 2015
› Vendor lock-in / technical-lock in › Losing your own competence › Dependency on providers › Losing control › Security concerns
Try and see if you can explain what this article is overall about: An empirical investigation of information technology sourcing practices: Lessons from experience by Lacity & Willcocks, 1998
Abstract:
This paper builds on a previous collection of data on 61 IT sourcing decisions made in 40 U.S. and U.K. organizations during the period 1991 to 1995. This paper reanalyzed transcribed interviews from 145 participants. Using “expected cost savings achieved” as an indicator of success, five best practices were identified in the case companies. First, selective out- sourcing decisions had higher success rates than total outsourcing or total insourcing decisions. Second, senior executives and IT man- agers who made decisions together had higher success rates than either stakeholder group acting alone. Third, organizations that invited both internal and external bids had higher success rates than organizations that merely com- pared external bids with current IT costs. Fourth, short-term contracts achieved higher success rates than long-term contracts. Fifth, detailed fee-for-service contracts had higher success rates than other types of fee-for-service contracts. The critical elements of three contracting models are described: fee-for-service contracts, strategic alliances/partnerships, and buying-in of vendor resources. When the practices generated from the case studies are compared with current practices, we begin to understand which practices are proving robust and why new practices emerge. For example, in the participating companies, the rhetoric of a “partnership” was misused to describe con- tracts that are actually fee-for-service con- tracts. Today, practitioners who understand the inherent conflicts in fixed fee-for-service contracts are demanding what they perceive to be more favorable contracting options, such as flexibly-priced contracts, performance-based contracts, and strategic alliances based on shared risks and rewards. This analysis reconciles some of the apparent discrepancies in past findings about the best ways to source IT.
Mention the seven factors considered potential differentiators of success and failures
Source: An empirical investigation of information technology sourcing practices: Lessons from experience by Lacity & Willcocks, 1998
- Decision scope: total outsourcing versus total insourcing versus selective outsourcing.
- Decision sponsorship: senior executive sponsorship versus IT manager sponsor- ship versus joint sponsorship.
- Evaluation process: no formal bid process versus external bids only versus internal and external bids.
- Contract duration: short-term contracts versus long-term contracts.
- Contract type: standard versus detailed versus loose verses mixed fee-for-service contracts.
- Contract date: recently-signed contracts versus older contracts.
- Size of IT function: small versus large IT functions.
Try and see if you can explain what this article is overall about: IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success, by Lee, Miranda, & Kim, 2004
Focus on individual outsourcing decisions in IT research has often yielded contradictory findings and recommendations. To address these contradictions, we investigate a holistic, configurational approach with
the prevailing universalistic or contingency perspectives in exploring the effects of IT outsourcing strategies
on outsourcing success. Based on residual rights theory, we begin by identifying three dimensions of IT outsourcing strategies: degree of integration, allocation of control, and performance period. We then develop a
model of fit-as-gestalt, drawing from literatures on strategy, governance, interorganizational relationships, and outsourcing.
Next, based on data from 311 firms in South Korea, we test universalistic and contingency perspectives in
explaining the relationship between IT outsourcing strategies and outsourcing success. We then identify three congruent patterns, or gestalts, of IT outsourcing strategies. We term these strategies independent, arm’s-length, and embedded strategies. To establish the predictive validity of these gestalts and the viability of a configurational perspective, we then explore the effects of these congruent gestalts vis-à-vis noncongruent patterns on three dimensions of outsourcing success: strategic competence, cost efficiency, and technology catalysis. We also contrast the effects of each of the three gestalts on each of the three dimensions of outsourcing success. Our findings indicate the superiority of the configurational approach over universalistic and contingency perspectives in explaining outsourcing success.
Mention the three dimensions of IT outsourcing strategies.
Source: IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success, by Lee, Miranda, & Kim, 2004
- Degree of integration
- Allocation of control
- Performance period
These three dimensions leads to ‘Fit’ in IT Outsourcing Strategies, which leads to three dimension of outsourcing success. (see other cards)
Mention the three dimensions of outsourcing success.
Source: IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success, by Lee, Miranda, & Kim, 2004
- Strategic competence
- Cost efficiency
- Technology catalysis
Try and see if you can explain what this article is overall about: Toward a complexity theory of information systems development by Benbya & McKelvey, 2006
Findings:
This article provides a conceptual model explaining how top-down “official” and bottom-up “emergent” co-evolutionary adaptions of information systems design with changing user requirements will result in more effective system design and operation. At the heart of this model are adaptive tension, requisite complexity, change rate, modular design, positive feedback, casual professionals can use them to better enable the co-evolutionary adaption of ISD projects to changing stakeholder interests and broader environmental changes.
The framework in the article is defined by seven principles of adaptive success. Mention these seven principles.
Source: Toward a complexity theory of information systems development by Benbya & McKelvey, 2006
- Adaptive tension
- Requisite complexity
- Change rate
- Modular design
- Positive feedback
- Casual intricacy
- Coordination rhythm
In the article a typology of ISD complexity has been made. It consists of four components. Mention these four components.
Source: Toward a complexity theory of information systems development by Benbya & McKelvey, 2006
- Organizational
- IT
- Structural
- Dynamic
These four can be combined.
- Organizational/Structural:
Reflects the nature and strength of the relationships among project elements in an organization’s environment, including project resources, support from top management and users, project staffing, and skill proficiency levels of project personnel. - Organizational/Dynamic:
Captures the pattern and rate of change in ISDP intraorganizational environments, including changes in user information needs, business processes, and organizational structures; it also reflects the dynamic nature of the project’s effect on an organization’s external environment. - IT/Structural:
Captures the complexity of relationships among IT elements: the diversity of user units, software environments, nature of data processing, variety of technology platforms, need for interrogation, and diversity of external vendors and contractors. - IT/Dynamic:
Measure the pattern and rate of changes in the ISDP’s IT environment, including changes in IT infrastructure, architecture, and software development tools.
What does CAS stands for?
Source: Toward a complexity theory of information systems development by Benbya & McKelvey, 2006
Complex Adaptive System
