13.What are some of the reasons outsourcing is more popular than ever?
•Cost and Quality Concerns—In many cases it is possible to achieve higher-quality systems at a lower price through economies of scale, better management of hardware, lower labor costs, and better software licenses on the part of a service provider.
•Problems in IS Performance—IS departments may have problems meeting acceptable service standards because of cost overruns, delayed systems, underutilized systems, or poorly performing systems. In such cases, organizational management may attempt to increase reliability through outsourcing.
•Supplier Pressures—Perhaps not surprisingly, some of the largest service providers are also the largest suppliers of computer equipment (e.g., IBM or Hewlett-Packard). In some cases, the aggressive sales forces of these suppliers are able to convince senior managers at other organizations to outsource their IS functions.
•Simplifying, Downsizing, and Reengineering—Organizations under competitive pressure often attempt to focus on only their “core competencies.” In many cases, organizations simply decide that running information systems is not one of their core competencies and decide to outsource this function to companies such as IBM and HP Enterprise Services, whose primary competency is developing and maintaining information systems.
•Financial Factors—When firms turn over their information systems to a service provider, they can sometimes strengthen their balance sheets by liquidating their IT assets. Also, if users perceive that they are actually paying for their IT services rather than simply having them provided by an in-house staff, they may use those services more wisely and perceive them to be of greater value.
•Organizational Culture—Political or organizational problems are of ten difficult for an IS group to overcome. However, an external service provider often brings enough clout, devoid of any organizational or functional ties, to streamline IS operations as needed.
•Internal Irritants—Tension between end users and the IS staff is sometimes difficult to eliminate. At times this tension can intrude on the daily operations of the organization, and the idea of a remote, external, relatively neutral IS group can be appealing. Whether the tension between users and the IS staff (or service provider) is really eliminated is open to question; however, simply having the IS group external to the organization can remove a lingering thorn in management’s side.
14.What are the three recommendations made in this chapter for managing an IS outsourcing relationship?
Some advice includes the following:
1.A strong, active chief information officer (CIO) and staff should continually manage the legal and professional relationship with the outsourcing firm.
2.Clear, realistic performance measurements of the systems and of the outsourcing arrangement, such as tangible and intangible costs and benefits, should be developed.
3.The interface between the customer and the outsourcer should have multiple levels (e.g., links to deal with policy and relationship issues and links to deal with operational and tactical issues).
15.List and describe two main types of software licenses.
For organizations using proprietary software, two types of licenses are of special importance. The first type includes the shrink-wrap licenses and click-wrap licenses that accompany the software and are used primarily for generic, off-the-shelf application and systems software. The shrink- wrapped contract has been named as such because the contract is activated when the shrink wrap on the packaging has been removed; similarly, a click-wrap license refers to a license primarily used for downloaded software that requires computer users to click on “I accept” before installing the software. The second type of license is an enterprise license (also known as a volume license). Enterprise licenses can vary greatly and are usually negotiated. In addition to rights and permissions, enterprise licenses usually contain limitations of liability and warranty disclaimers that protect the software vendor from being sued if their software does not operate as expected.
16.What is software asset management, and why is it important or organizations?
Software asset management consists of a set of activities, such as performing a software inventory (either manually or using automated tools), matching the installed software with the licenses, reviewing software-related policies and procedures, and creating a software asset management plan. The results of these processes help organizations to better manage their software infrastructure by being able to consolidate and standardize their software titles, decide to retire unused software, or decide when to upgrade or replace software.
17.What is system benchmarking, and what are some common benchmarks?
One of the methods you can use to evaluate a proposed system is systems benchmarking, which is the use of standardized performance tests to facilitate comparison between systems. Benchmark programs are sample programs or jobs that simulate your computer workload.
•Response time given a specified number of users
•Time to sort records
•Time to retrieve a set of records
•Time to produce a given report
•Time to read in a set of data
Review
Questions
Week 12/ Chapters 8 & 9 19