Outsourcing And Project Valuation - Essay Example

Typically the service that they share is not considered their core-business and the firms that are outsourced specialize in those specific types of work. The outsourced organizations are referred to as - centers for shared services – and are in charge of handling and executing of specific operational tasks, such as human resources, payroll, legal, compliance, security. Outsourcing could take the form of hiring service providers who handle the distinct business processes, for example, employee benefits management (Brown and Wilson 2005).

Currently the management in the organization has not outsourced any service, but plan to use the shared services. The organization is a small computer store and has lately experience massive growth in revenues. This has brought the strain to meet the finance and administrative tasks to support the core program work. Management feels the need for a more professional touch to the operation of the organization since it is dissatisfied with the performance of the in-house paid staff or pro bono professionals.

The impact of not finding better solutions to the transactional and accounting service has been high staff turnover, inefficiency and burnout, cash flow crises, loss of funding, missed opportunities etc. At best, the negative impacts have posed as great distraction for the leaders and have stunted the growth and sustainability. The perceived benefits of using shared service centers have motivated the management to consider this outsourcing option. The decision to outsource has been put down by the strategic managers and they have arrived at that by brainstorming through the stages.

First, they have developed the organization’s principal about the role of outsourcing activities by strategic thinking. Second, the evaluation and selection phase has led them to decide on the appropriate projects to consider outsourcing and the service providers to select. Third phase involved contract development, outlining the legal work and service level agreement terms. Finally management has considered refining the ongoing working relations between the clients and outsourced service providers.

In the plan to use outsourcing the consideration has been the success index. This depends on three factors: timely and efficient communication to affected staff; client’s position to manage the service providers; and executive-level support in the outsourcing mission in the client organization. Management realizes that the service provider being outsourced needs a combination of skills in areas such as, communication, negotiation, project management and the ability to understand the terms and conditions of the contracts.

Most importantly is the service providers’ willingness to change with the changing business needs. DQ2-Measuring return on investment (ROI) How does your company/organization measure returns on investments (ROI) in IT? What process is in place to approve projects, and what weight, if any, is given to using financial metrics in the project approval process? The managing director of the computer store has established a performance measure to evaluate the efficiency of the investment in IT by the company.

The ROI metric is popular in the company because of its simplicity and versatility and it can clearly show if the investment has a positive ROI or otherwise. Adopting the ROI measure was encouraged by the need to have a type of economic justification, specifically to provide the executive and strategic