Week12B - Week12,LectureB Outsourcing&theSDLC...

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Week 12, Lecture B:  Outsourcing & the SDLC Dr. Brian Detlor Associate Professor, Information Systems DeGroote School of Business, McMaster University [email protected]   Commerce 2KA3 – Winter 2010
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Housekeeping Items Remaining lectures o Today: finish off Chapter 10 o Thursday: Chapter 11 o Monday: review for final exam Will post a Word doc on Monday re: the speaking points for  Monday’s lecture The exam o 100 multiple choice questions Test concepts; emphasis on lectures; still read chapters o Chapters 7, 8, 9, 10 & 11 
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Today’s Lecture Outsourcing SDLC o Revisit o Strengthen connection with the Project Management  lecture
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Systems Development There are two primary choices to build IT  systems (of great size and complexity): 1. Insourcing  -  a common approach using the  professional expertise within an organization to  develop and maintain the organization's information  technology systems. 2. Outsourcing  - an arrangement by which one  organization provides a service or services for  another organization that chooses not to perform  them in-house
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Outsourcing
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Outsourcing The Outsourcing Phenomenon o According to PricewaterhouseCoopers “Businesses  that outsource are growing faster, larger, and more  profitable than those that do not” o Most organizations outsource their noncore business  functions, such as payroll and IT
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Why Outsource?
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Outsourcing Reasons Why Organizations Outsource
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Outsourcing  Advantages: o Focus on unique core competencies o Exploit the intellect of another organization o Better predict future costs o Acquire leading-edge technology o Reduce costs o Improve performance accountability 
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Outsourcing   Disadvantages: Reduces technical know-how for future innovation o Effective and innovative use of IT can be lost to outsourcing service  provider Reduces degree of control o Increases dependency on other organizations  Increases vulnerability of your strategic information o Confidential information might be breached by an outsourcing service  provider, especially one that provides services to competitors Requires the need to engage in contracts o Takes time to negotiate; often locked into long-term contracts; hard to  forecast future needs when creating contracts Loss of jobs o What happens to the internal IT department?
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Outsourcing IT outsourcing for software development can  take one of four forms:
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Outsourcing When outsourcing, two vitally important  documents are involved: 1. Request For Proposal (RFP) This is a formal document that describes in excruciating  detail the logical requirements for a proposed system and  invites outsourcing organizations (vendors) to submit bids 
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