Southwest Bank-Outsourcing: Reasons Behind Sourcing Process
1. What drove the sourcing decisions on the part of all three business organizations described in the case studies for this session?
Business
Reasons Behind Sourcing Decision
Southwest Bank - outsourcing
Devote more time and effort into research & development
Allow an expert to specialize in IT needs
Lower the cost of IT
Focus on and excel in core business processes
Reliable Utilities - partnering
Over all need for staff to deploy and maintain mapping systems
Need for partner that could dispatch employees for assignments as needed
Acquire technological knowledge from another company
Expand the business capabilities of the company
State Retirement System - Insourcing
Current lack of alignment between business needs and system capabilities
Cost …show more content…
reduction
Updated system to comply with updated regulations
Protection of sensitive and confidential data
2. What were the risks associated with each of these undertakings?
Business
Risks with Sourcing Decision
Southwest Bank - outsourcing
May be outsourcing a key processes
Outsourcing ideas can be a security threat
Avail. of IP to other parties:
Create competition
Loss of control
Reliable Utilities - partnering
Integration:
Conflicting company practices
Lack of alignment between personnel and jobs they are assigned to
Unanticipated costs/delays in integrating operations
Technology transfer hindered:
Mismatch of core competencies
State Retirement System - Insourcing
Conversion process:
Important data may be corrupted or lost
Misalignment with business strategy
Technical:
Infrastructure incompetence
Data consolidation/migration
Difficulties in implementation:
Phasing out old system to test new
3.
What actions on the part of each company mitigated these risks?
Business
Risk Mitigation Steps
Southwest Bank - outsourcing
Not outsourcing a critical competency
RFP:
Only target companies with capabilities and experiences that align w/ needs
Protection of IP:
IT staff is deployed to work with outsource vendor
Southwest staff hired:
Maintain control of information and how it’s used
Reliable Utilities - partnering
On-site partner executive acts as mediator:
Attends staff meetings
Participates in strategic planning
Bring ideas from one company to another
Partner Executive working in house:
Maintain close relationships with user community
Anticipate staffing/expertise requirements
Effective communication to identify issues and solve
RFP:
Well-defined technology agreement
State Retirement System - Insourcing
Compatibility:
Old records converted to run on new
system
User training and system acceptance training
Parallel tests conducted and certified by auditors
Costs:
Outline costs and strategy through RFP
Research of systems equivalent to in-house system
Business
Reasons Behind Sourcing Decision
Southwest Bank - outsourcing
Devote more time and effort into research & development
Allow an expert to specialize in IT needs
Lower the cost of IT
Focus on and excel in core business processes
Reliable Utilities - partnering
Over all need for staff to deploy and maintain mapping systems
Need for partner that could dispatch employees for assignments as needed
Acquire technological knowledge from another company
Expand the business capabilities of the company
State Retirement System - Insourcing
Current lack of alignment between business needs and system capabilities
Cost …show more content…
reduction
Updated system to comply with updated regulations
Protection of sensitive and confidential data
2. What were the risks associated with each of these undertakings?
Business
Risks with Sourcing Decision
Southwest Bank - outsourcing
May be outsourcing a key processes
Outsourcing ideas can be a security threat
Avail. of IP to other parties:
Create competition
Loss of control
Reliable Utilities - partnering
Integration:
Conflicting company practices
Lack of alignment between personnel and jobs they are assigned to
Unanticipated costs/delays in integrating operations
Technology transfer hindered:
Mismatch of core competencies
State Retirement System - Insourcing
Conversion process:
Important data may be corrupted or lost
Misalignment with business strategy
Technical:
Infrastructure incompetence
Data consolidation/migration
Difficulties in implementation:
Phasing out old system to test new
3.
What actions on the part of each company mitigated these risks?
Business
Risk Mitigation Steps
Southwest Bank - outsourcing
Not outsourcing a critical competency
RFP:
Only target companies with capabilities and experiences that align w/ needs
Protection of IP:
IT staff is deployed to work with outsource vendor
Southwest staff hired:
Maintain control of information and how it’s used
Reliable Utilities - partnering
On-site partner executive acts as mediator:
Attends staff meetings
Participates in strategic planning
Bring ideas from one company to another
Partner Executive working in house:
Maintain close relationships with user community
Anticipate staffing/expertise requirements
Effective communication to identify issues and solve
RFP:
Well-defined technology agreement
State Retirement System - Insourcing
Compatibility:
Old records converted to run on new
system
User training and system acceptance training
Parallel tests conducted and certified by auditors
Costs:
Outline costs and strategy through RFP
Research of systems equivalent to in-house system