System Organisation - Essay Example

Running Head: System Organization: Outsourcing System Organization: Outsourcing [Institute’s System Organization: Outsourcing IT Outsourcing High standards of processing integrity are part of the expectations that are usually fulfilled by the information technology systems, while 24-hour security and effective performance is offered by it. Presently, our globe is changing tremendously, and in this era of technology, rapid upgrades are the major priority of most of the organizations in almost every part of the world, particularly the Western world. In this regard, it is very necessary that activities related to the information systems should be up to date, which can be an expensive and complicated job in the organizations. Therefore, it has been observed that information system activities are often outsourced by the businesses and organizations, in order to avoid any complication and upgrade their systems at regular intervals. (Sparrow, pp. 43-44, 2003) IT outsourcing is observed when IT functions of an organization are performed by a service provider in place of the organization itself. A single corporate entity, its subsidiary, or a third party can play the role of a service provider at this stage. Increasingly, experts have indicated that costs of IT related services are being minimized by outsourcing the IT activities offshore the country. In this situation, information-processing equipments are usually transferred or sold to the service provider for acquiring effective outsourcing results. Moreover, new business lines and start-up operations are usually involved in the outsourcing according to the reports of one of the business magazines. (Turk, pp. 11-13, 2004) In other words, a third party is contracted by the organizations, in order to avoid costs of entering new markets, as well as, costs that are required for starting and running of different IT related services and processes. Outsourcing cannot be considered as a simple decision related to purchases; however, most of the experts have deemed as one of the most significant strategic decisions in the present time. One of the reasons of such significance is that service delivery of some activities is transferred to the service provider, which can be crucial for the company in times of conflicts. On the other hand, organizations can acquire a successful position in the market by a long-term business relationship with the service provider, and therefore, outsourcing is considered an important decision in any organization. (Sparrow, pp. 37-29, 2003) In terms of IT services, it has been observed that data centre operations, call centre activities, software development services, web hosting services, and desktop support are some of the most prevalent IT related services that are outsourced by the organizations. One of the benefits of IT outsourcing is that it depends upon the organization to outsource a single IT service or a bunch of it, as everything depends on the outsourcing contract. Some of the significant benefits of IT sourcing are discussed in following section of the paper. Advantages Several reasons can be the cause of IT outsourcing by the organizations. In specific, benefits of IT sourcing have been categorized into three classes, which are as follows: Operational Despite the modern business world has been engulfed with IT related processes, a number of organizations are not competent in terms of data processing environments. In this regard, resources of the management can be strained severely during the development of robust systems for the improvement of IT service quality and related personnel in the organization. Moreover, development of such systems often reduces the effectiveness of management in other valuable decisions of the company. (Cullen, pp. 21-22, 2003) At this stage, IT outsourcing plays a vital role in provision of support to the management for acquiring business value, as service delivery of IT services is transferred to a service provider, which results in the release of a lot of stress from the management. In other words, business performances of an organization are improved by the transferring of service delivery of IT services to a third party, which minimizes the resources required for such delivery by the organization. Offers of ready solution outsourcing benefit the organizations by reducing the amount of time given for the development of required IT processes. Technological Outsourcing is usually preferred by the organizations for the achievement of IT efficiencies, which is usually not a kind of competency of the organizations. In other words, efficient IT personnel can be accessed by the organization through outsourcing, which cannot be accessed by them without outsourcing in the similar economical manner. It is an observation that distinct technical leadership is often achieved by outsourcing, as advanced technology is often accessed by the organizations during such process. (Cullen, pp. 23-25, 2003) Financial One of the most significant and attractive benefits of IT outsourcing is the financial benefit. IT costs are usually controlled by outsourcing the service delivery to third parties, which has now become a common habit of most of the organizations. (Cullen, pp. 18-19, 2003) Sometimes, organizations bear losses due to their investment in an inappropriate technology, and therefore, outsourcing results in the reduction of risk of wrong investments in the IT sector, which controls the capital investment, and more strategic decisions can be taken due to availability of financial resources. Disadvantages Although attractive benefits can be acquired through IT outsourcing, a number of experts have indicated some pitfalls in it. In the year 2002, one of the IT related companies analyzed approximately eighty organizations that acquired IT outsourcing activities from the service providers. It was indicated in the reports that problems were experienced by nearly forty percent of organizations. It is observed that systems are often failed during the process of outsourcing, which results in the lack of data integrity that may affect the process of decision making in the organizations. During the IT outsourcing, service providers are able to access the data in an unauthorized manner, which limits the management to take strategic business decisions. Although this pitfall overlaps with the earlier discussed benefit of the IT outsourcing that it allows the management to take strategic decisions. However, a number of organizations have confronted difficulties in making business decisions due to access of third parties. Additionally, a changed operating environment is used for the implementation of different strategies and techniques by different IT personnel during the IT outsourcing, which can be a breach in the privacy and security of the organization. It is a usual habit that the service provider gets the IT assets, as well as, IT personnel in most of the outsourcing arrangements. In the result, knowledgeable staff is transferred from the management level to the service providers, which limits the intellectual capacity of the organizations. In other words, effective operation and management of the organizations are usually affected by the transfer of IT personnel during the IT outsourcing. Moreover, it is very important that IT outsourcing should be planned in an adequate manner, which is usually ignored by the organizations that results in a number of unexpected financial costs during the transfer of resources and other processes of IT outsourcing. It has been shown by the research that one of the biggest difficulties of IT outsourcing is the lack of knowledge regarding the costs of IT resources and personnel. In the result, service providers often cheat with the companies to charge higher costs. Therefore, it is very important that IT outsourcing contract should be planned in an adequate manner with columns of additional costs, operational costs, etc. A number of real life examples related to the IT outsourcing have been published in different magazines, newspapers, books, journals, etc., which has provided a detailed understanding in this area. (Turk, pp. 11-13, 2004) Some of the basic parts of an IT outsourcing contract are the name of parties that are concerned, aspects of the specific organization, such as its representation and reporting. Moreover, a contract consists of general conditions such as property that is often transferred to the service provider, and secrecy, which is kept by the service provider during the contract. Additionally, an IT outsourcing contract usually defines the duration of the contract, which should be followed by the both parties. In most of the contracts, proper infrastructure and service management is explained, and different procedures of service levels are included in the contracts. Organizations and businesses in the Western world, especially the United Kingdom, the United States, Canada, etc, are usually involved in outsourcing their IT related services in countries like India, Pakistan, Philippines, China, etc. For example, a UK consumer related company has contracted a service provider in India for the service delivery of its IT services in terms of call centre activities. Duration of three years was selected by both parties, and some of the IT personnel were sent to India for proper maintenance and management. (Sparrow, pp. 62-66, 2003) The company was quite successful in achieving their expected results, which resulted in the continuation of a long-term relationship of both parties. Another major example of IT outsourcing is Neoris Company, which is one of the major UK companies that provide IT outsourcing services, and other technological services to its clients. Different objectives and technology engagements are fulfilled by the ingenious solutions of Neoris employees. In specific, Neoris provide applications managed services, nearshore development services, hosting services, and software development services. Such company ensures provision of quality services in terms of global delivery of strategic functions. Moreover, it has been observed that a number of companies provide IT outsourcing services to thousands of individuals and companies. Some of the major benefits of utilizing IT outsourcing services of Neoris are that business can acquire extra resources and time to accomplish their strategic missions. Moreover, Neoris Company can achieve operational improvements that cannot be achieved by the companies itself. It is very important that a company should focus on other strategic management issues while focusing on IT related issues. In this regard, IT outsourcing allows the companies to run their businesses effectively by outsourcing their technological requirements. According to the offerings of Neoris UK Company, application maintenance and support services are also provided to the clients, so that they can focus on their strategic issues, which is one of the major advantage of utilizing the services of an IT outsourcing company. Some of the other advantages of utilizing an IT outsourcing company are reduction of labor costs and unnecessary employees required for the completion of technological issues. Moreover, network infrastructure can be upgraded by outsourcing IT designs, as well as, its implementations. On the other hand, such outsourcing may result in conflicts, if outsourcing contract is not made properly, and some issues are not focused, such as, application maintenance, network upgrade, etc. (Cullen, pp. 89-94, 2003) In order to understand the significance of IT outsourcing, the paper will discuss one of the case studies of IT outsourcing. In this regard, CEMEX is one of the major companies in the cement industry, which has been selected for case study in this paper. CEMEX contracted the services of Neoris Company for increment in the level of service provided to its customers. Moreover, the company expected optimization of the available services, as well as, the effective monitoring of IT services. In this regard, Neoris Company provided its IT outsourcing services to the CEMEX Company, and a number of IT solutions were provided. For instance, scheduling algorithm was ordered, automatic status was captured, etc. In the result, the CEMEX Company benefited significantly by employing the IT outsourcing companies of the Neoris Company, as it saved hundreds of its hours to implement the above-mentioned solutions. Productivity, as well as, effectiveness was increased. In this regard, IT outsourcing is an effective way to increase the productively while saving the labor costs and other maintenance costs. It has been observed that call centre activities and web hosting are two of the most usual and common IT activities that are outsourced by the companies in the Western world, which can be proved by one of the lines of an IT-related magazine, “Web hosting and Call Centre Activities…..a New Source of Income for the Outsourcing Asians”. (Turk, pp. 11-13, 2004) Many organizations are benefiting from an attractive option of IT sourcing, and a number of steps are being taken by the organizations to ensure its effectiveness. Conclusively, it is hoped that the paper will be beneficial for the students, teachers, experts, and nonprofessionals in the better understanding of the topic. References Sara Cullen. (2003). Intelligent IT Outsourcing. Butterworth-Heinemann. Elizabeth Sparrow. (2003). Successful IT Outsourcing. Springer. John Turk. (2004). IT Outsourcing. Guardian Technology. March 15, UK. Word Count: 1538 Words Checked by Copyscape.com & Turnitin.com Read More