ICT Outsourcing Analysis

Question: Discuss about the ICT outsourcing. Answer: Introduction This report introduces the research done to gather information for outsourcing the ICT of an Australia based company, Bulla Dairy. The CEO of the company has a planning to make the outsourcing of the ICT to enhance the overall productivity of the organization and wants to make it happen. The company is the manufacturer and exporter of different dairy products in Australia and it is the oldest and popular dairy firm in the nation. The report gives a detailed study about the ICT outsourcing along with several process flow models. It also tells about the Request for Information step for outsourcing the project along with methodologies for evaluation. The report also gives a suitable solution and recommendations to the CEO for a successful completion of the project. 1.0 Detailed discussion on ICT outsourcing for Bulla Dairy 1.1 Objectives of ICT outsourcing Bulla Dairy is a well known concern for delivering variety of products to their customers. The organization is the oldest firm for producing dairy products in Australia (Bulla.com.au 2016). But as per the changing demands, the company has altered their strategies to make their business in a better competitive position. The company has expanded their business throughout the world where the customers need not to come physically buy their products. They have decided to make a website portal where their customers can place order after checking the availability and price of their products (Bellinger 2014). The customers can make the transactions online to buy the products as per their choice both from Australia and the abroad nations. Figure 1: The Outsource life cycle model (Source: Verma 2014, pp.125) The CEO of the company has felt that as per the growing needs of the organizational products, a dedicated team having an extensive expertise is required who will handle the work for the development of the web portal along with its maintenance and support to the customers. Such expertise is currently not present in the employees he is currently having in his company (Garcia, Vicente and Aragones 2013). If the employees of the IT department make themselves involved in the development work then there are chances that the provided output will not be so effective. Moreover, the in-house employees will have to invest much more time to get the expertise so that they can do the website development, its maintenance and provide support to their customers. Such effort will be very much cost-effective. Due to this reason, the CEO wants to outsource the Information and Communication Technologies to another company who will do the development, maintenance and provide satisfactory support to their customers (Garcia, Aragones, and Vicente 2015). Such actions will eventually save time and additional cost. It will also lead the in-house IT professionals of Bulla Dairy to concentrate on the other business operations of the company. Therefore it can be stated that the objective of outsourcing the ICT of the company is to build an enhanced brand image of the company through savings of additional time and cost. 1.2 Pros and cons of ICT outsourcing 1.2.1 Pros of ICT Outsourcing for Bulla Dairy If the company wants to focus on some work related to ICT, they can do it in the best way. As the company has given the work of ICT to some other company who are dedicated professionals in the segment with ample expertise and experience, they will get the best quality of service from them eventually creating a positive impression in the customers mind. Through the process of outsourcing ICT, the company will be able to save money (Fast-Berglund and Blom 2014). The company if recruits qualified professionals in their payroll to serve the ICT oriented work then there is a high chance that they have to spend amount for their manpower. If the company makes the necessary outsourcing then they can reduce the chances of risk. Normally the company which is been outsourced has the reputation for providing protection to the ICT through an insurance policy if something goes out of order such as system crash. If outsourcing of other company is been done then the main company gets a team of professionals who are well versed in various segments of a particular domain. Therefore an amalgamation of vast knowledge takes place which is beneficial for the quality work of the company (Arroyo, Diaz and Gayoso 2015). Such quality standards cannot be maintained by recruiting a single professional. 1.2.2 Cons of ICT Outsourcing for Bulla Dairy The company has to wait for the service of the outsourced company by waiting in the queue if a system crash happens or a technological emergency arises (Tjader et al. 2014). The company has to wait for the time until they get a response from somebody from the outsourced company. There may be chances of unexpected costs related to the technology requirements (Nevo and Kotlarsky 2014). The third party can ask for a solution support which may be highly expensive and not affordable by the main company. Outsourcing of the ICT department will also reduce the direct control of the company as whatever the operations be done, from top to bottom, its executed and controlled by the outsourced company or the third party. Some security risks are also involved in the case of outsourcing of ICT. Some valuable data maintained in the databases of the company are considered to be maintained with utmost level of privacy (Plugge, Bouwman and Molina-Castillo 2013). Outsourcing the department to the third party will lead to disclosure of those valuable data to them which is not at all expected. 1.3 Different outsourcing delivery models There are several service delivery models that the CEO might consider for the part of his solutions. Such models are the onsite / offshore model, the outsourcing model of offshore project, the model for on-site project staffing, time and materials model and the fixed price model. 1.3.1 Model of Onsite / Offshore It is the virtual model for extension to engage the offshore resources. In such model, for every project, a team is been developed having ample skill sets in technology and management. The team contains full time staffs that have involvement in the work from projects startup to ending (Sako 2015). Normally, the team is dedicated to develop certain functionalities of ICT segment. The members actually work as the extension of the team of the onsite client. A communication of real time is done in the teams that are distributed through the utilization of web collaboration tools, video conferencing or conference calls. 1.3.2 Model of Project Outsourcing The model of project outsourcing is a good option for the ICT projects which are small or medium in size having scope of a clear definition. The design of website, customization of e-business, applications of e-commerce, applications of home software come under this model. In major cases, it is the project outsourcing of full cycle that starts from system design to the testing phase, deployment and the maintenance (Foster et al. 2014). The pricing of the model for project outsourcing can be based on the materials and time on the basis of fixed price. 1.3.3 Model of Onsite Project Staffing This model has the popularity among those organizations that experience with immediate requirement. This model is applied for large scale projects related to public health, insurance, retail along with the vertical markets of pharmacy. In such model, there is a participation of the customer for selection or approval of the development team. The engineering professionals are been pre-screened according to the needs of the customers in terms of technical skills and experience (Brooks 2015). The deployment of the team is done onsite up to the successful completion of the project. It can be done further if the customer prefers for re-utilizing the team for other projects. 1.3.4 Model of Time and Materials The main advantage for such models is that the resources which are professional are been assigned to the duration of a whole project. Apart from that, the model lets the customers for increasing and reducing the resource numbers in case of changes in project demands (Mukherjee, Gaur and Datta 2013). The management by metrics and management by objectives are been utilized to understand the cost structure in a better way during stages of IT development. 1.3.5 Model of Fixed Price This model is the projects ideal choice, which has clear scope, well-defined requirement sets and established methodologies of execution. In such model, the customer has the obligation for paying single price that is agreed during the project initialization. In such models, the customer can make payment in advance, during period of contract and finally in contract completion (Ashrafi et al. 2014). The benefit of such model is that it is quite easier for a customer to make the project budget. 1.4 Recommendations regarding outsourcing of ICT development, acquisition and maintenance The recommendations to outsource the development, acquisition and maintenance of ICT are as follows, The company should select the third party for the purpose of outsourcing their ICT segment that have extensive knowledge and experience in the development of the web portal for placing online orders of dairy products. The outsourced company should have ample expertise to handle issues regarding development of the website as per the customer needs (Shemi, Mgaya and Nkwe 2015). The company should select the service provider for outsourcing who will provide the solutions in the minimum cost and make the development in the minimum time frame. Acquisition is the process for evaluation and selection of the suppliers who are appropriate and making completion of the arrangement of procurements for the needed services and products (Dumas et al. 2013). It contains identifying the alternative sources, generation of the communications such as the RFQs and RFPs along with evaluation of proposals of the supplier. It also makes negotiation of the supplier contracts. Therefore, a proper negotiation should be made with the service provider regarding the outsourcing of ICT to get the best possible solutions in the minimum cost (Laguna and Marklund 2013). The proposals given by the suppliers should be measured in various parameters to make the proper selection of them. Therefore, preparation should be made in such way that if the service provider does not provide satisfactory solutions, then the company should immediately take necessary actions to make contract with a potential alternative source readily available. In case of maintenance, the company should keep track on the customer feedback on regular basis to have the latest updates regarding the ICT services given by the outsourced company (Verma 2014). The company should also involve its in-house IT team to take lessons from the outsourcing company to gain knowledge regarding long term system maintenance. References Arroyo, D., Diaz, J. and Gayoso, V., 2015. On the difficult tradeoff between security and privacy: Challenges for the management of digital identities. InInternational Joint Conference(pp. 455-462). Springer International Publishing. Ashrafi, R., Sharma, S.K., Al-Badi, A.H. and Al-Gharbi, K., 2014. Achieving Business Success Through Information and Communication Technologies Adoption by Small and Medium Enterprises in Oman.Middle-East Journal of Scientific Research,22(1), pp.138-146.