Outsourcing-Systems Acquisition




If another organization develops or runs a computer application for your organization, that practice is called outsourcing. Outsourcing includes a spectrum of working arrangements. At one extreme is having a firm develop and run your application on its computers—you only supply input and take output. A common example is a company that runs payroll applications for clients so that clients don’t have to develop an independent in-house payroll system. Instead they simply provide employee payroll information to the company and, for a fee, the company returns completed paychecks, payroll accounting reports, and tax and other statements for employees. For many organizations, the most cost-effective way to manage payroll operations is through outsourcing.

In another example of outsourcing arrangements, you hire a company to run your applications at your site on your computers. In some cases, an organization employing such an arrangement will dissolve some or all of its information systems unit and transfer most or all of its information systems employees to the company brought in to run the organization’s computing. Why would an organization outsource its information systems operations? As we saw in the payroll example, outsourcing may be cost effective. If a company specializes in running payroll for other companies, it can leverage the economies of scale it achieves from running one stable computer application for many organizations into low prices. But why would an organization dissolve its entire information processing unit and bring in an outside firm to manage its computer applications? One reason may be to overcome operating problems the organization faces in its information systems unit.

For example, the city of Grand Rapids, Michigan, hired an outside firm to run its computing center thirty years ago in order to manage its computing center employees better. Union contracts and civil service constraints, then in force, made it difficult to fire people, so the city brought in a facilities management organization to run its computing operations, and it was able to get rid of problem employees at the same time. Another reason for total outsourcing is that an organization’s management may feel its core mission does not involve managing an information systems unit and that it might achieve more effective computing by turning over all of its operations to a more experienced, computer-oriented company.

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Kodak decided in the late 1980s that it was not in the computer applications business and turned over management of its mainframes to IBM and management of its personal computers to Businessland. Outsourcing is big business. Some organizations outsource the IT development and many of their IT functions, at a cost of billions of dollars. The traditional outsourcing market is now a $280 billion industry, and the offshoring market is worth $70 billion. Individual outsourcing vendors sign large contracts for their services. IBM and HP are two of the biggest, bestknown global outsourcing firms. Both companies have multiple outsourcing contracts in place with many different firms. Outsourcing is an alternative that analysts definitely need to be aware of.

When generating alternative system development strategies for a system, you as an analyst should consult organizations in your area that provide outsourcing services. It may well be that at least one such organization has already been developed and is running an application similar to what your users are asking for. Perhaps outsourcing the replacement system should be one of your alternatives. Knowing what your system requirements are before you consider outsourcing means that you can carefully assess how well the suppliers of outsourcing services can respond to your needs. However, should you decide not to outsource, you need to consider whether some software components of your replacement system should be purchased and not built

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Frequently Asked Questions

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Ans: As mentioned in the introduction, networks are everywhere and underpin many everyday services that we now take for granted: the Internet and the associated World Wide Web, web search, online gaming, email, social networks, eCommerce, etc. To illustrate this point further, consider Figure 1.1 , which describes a selected range of key commercial or social application sectors highlighting some of the associated established or emerging uses of distributed systems technology. view more..
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Ans: ion for a given problem domain. This is a large topic, and many architectural patterns have been identified for distributed systems. In this section, we present several key architectural patterns in distributed systems, including layering and tiered architectures and the related concept of thin clients (including the specific mechanism of virtual network computing). We also examine web services as an architectural pattern and give pointers to others that may be applicable in distributed systems. view more..
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Ans: From a system perspective, the answer is normally very clear in that the entities that communicate in a distributed system are typically processes, leading to the prevailing view of a distributed system as processes coupled with appropriate interprocess communication paradigms view more..
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Ans: If another organization develops or runs a computer application for your organization, that practice is called outsourcing. Outsourcing includes a spectrum of working arrangements view more..
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Ans: We can group organizations that produce software into six major categories. view more..
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Ans: Once you have decided to purchase off-the-shelf software rather than write some or all of the software for your new system, how do you decide what to buy? Several criteria need consideration, and special ones may arise with each potential software purchase. view more..
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Ans: Reuse is the use of previously written software resources in new applications. Because so many bits and pieces of applications are relatively generic across applications, it seems intuitive that great savings can be achieved in many areas if those generic bits and pieces do not have to be written anew each time they are needed. view more..
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Ans: Pine Valley Furniture (PVF) Company manufactures high-quality wood furniture and distributes it to retail stores within the United States. Its product lines include dinette sets, stereo cabinets, wall units, living room furniture, and bedroom furniture. view more..
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Ans: During project initiation the project manager performs several activities that assess the size, scope, and complexity of the project, and establishes procedures to support subsequent activities. view more..
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Ans: The next step in the project management process is project planning. Project planning involves defining clear, discrete activities and the work needed to complete each activity within a single project. view more..
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Ans: Project execution puts the baseline project plan into action. view more..
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Ans: The focus of project closedown is to bring the project to an end. Projects can conclude with a natural or unnatural termination. view more..
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Ans: A project manager has a wide variety of techniques available for depicting and documenting project plans. view more..
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Ans: Project scheduling and management requires that time, costs, and resources be controlled. view more..
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Ans: One of the most difficult and most error-prone activities when constructing a project schedule is the determination of the time duration for each task within a work breakdown structure. view more..
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Ans: lthough Pine Valley Furniture has historically been a manufacturing company, it recently entered the direct sales market for selected target markets. view more..
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Ans: A wide variety of automated project management tools are available to help you manage a development project. view more..
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Ans: Defining the general project information includes obtaining the name of the project and project manager and the starting or ending date of the project. view more..



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