CMGT578 Week2 Assignment
IT Outsourcing In this current IT technology driven age, companies whose primary core competency is not technology may have a difficult time operating and maintaining an IT environment that would give them a competitive advantage in the market place. A large company like Hess, whose mission statement is “…a global company devoted to exploring oil, gas and energy solutions”, would have a difficult time living it’s mission if it was too concerned with how to run their IT infrastructure and the impact it has on their marketing, sales, public relations, communications, and operations capabilities. However, each company must access their unique situation and environment to determine if IT outsourcing is the method going forward. There can be immense fiscal and operational benefits, but also significant risks.
Factors for Outsourcing The most obvious factor in whether or not to outsource is cost. Companies are driven by profits. If the cost of outsourcing outweighs the Return on Investment (ROI) then it is unlikely executive management would consider the option. However, in today’s environment companies like Amazon are able to achieve vast efficiencies by consolidating massive resources into a global Infrastructure as a Service (IaaS) capability. Services like AWS can establish thousands of virtual servers within an hour. All within Amazon’s mature, secure, and stable environment. Another factor for outsourcing is, in by doing so, allowing a company to focus on its core competency and not be burdened by IT requirements. Additionally, companies like AWS provide robust, scalable, and leading edge capabilities that would be, for most, excessively burdensome to plan, implement, maintain, and operate. However, though AWS can deliver organizational requirements to the majority of potential customers, some are more feasible than others. Big data companies which have massive analytics requirements need customized server configurations to attain deliverable efficiencies.
Factors for Outsourcing The most obvious factor in whether or not to outsource is cost. Companies are driven by profits. If the cost of outsourcing outweighs the Return on Investment (ROI) then it is unlikely executive management would consider the option. However, in today’s environment companies like Amazon are able to achieve vast efficiencies by consolidating massive resources into a global Infrastructure as a Service (IaaS) capability. Services like AWS can establish thousands of virtual servers within an hour. All within Amazon’s mature, secure, and stable environment. Another factor for outsourcing is, in by doing so, allowing a company to focus on its core competency and not be burdened by IT requirements. Additionally, companies like AWS provide robust, scalable, and leading edge capabilities that would be, for most, excessively burdensome to plan, implement, maintain, and operate. However, though AWS can deliver organizational requirements to the majority of potential customers, some are more feasible than others. Big data companies which have massive analytics requirements need customized server configurations to attain deliverable efficiencies.
References: Batta, MJ. (2012). Factors Influencing IT Outsourcing. Retrieved on Nov. 13, 2014 from: http://www.streetdirectory.com/travel_guide/17047/outsourcing/factors_influencin g_the_outsourcing_decision.html Sullivan, D. (2013). Amazon AWS as an IaaS. Retrieved on Nov. 12, 2014 from: http://www.tomsitpro.com/articles/amazon-aws-paas-iaas-cloud-computing,2-