Cmgt 578 Cis Strategic Planning - Outsourcing It Functions

Outsourcing IT Functions

University of Phoenix

Number and Name of Course

CMGT/578 CIS Strategic Planning

Introduction

Outsourcing has been around for a very long time, longer than most people think. There was outsourcing during ancient times, during the industrial revolution, and all the way to today. This is a practice that will not go away, so it is important for a company who is deciding to outsource its IT functions to weigh the risk versus reward. For some companies, this is a profitable avenue to take, or others, outsourcing would not profit the company. In this paper several topics will be discussed, starting with discussing what makes a company turn to outsourcing, next we will discuss the risks and benefits with outsourcing. The next topic that will be discussed will be the costs that are associated with outsourcing and then the last thing will be the implications to the business organizational structure by using an outsourced IT department as well as the potential personnel issues that may arise?

Factors That Lead to Outsourcing

When a company decides that outsource their IT functions, there is a reason behind it, they just do not decide to outsource for no reason. These reasons can very but whatever the reason, a company needs to remember that outsourcing is just not getting rid of the function, it is making a strategic business decision. Some of the reasons that a business would want to outsource their IT functions is to meet IT goals such as reducing costs, help increase the business competitive factor, to help core functions by freeing up resources, or to just to even provide better IT services. When looking into these factors, it is also important to determine if just a portion of the IT functions will be outsourced or if the entire IT department will be outsourced. Organizations management feels that IT daily functions take too much efforts, important resources, and valuable time away from the core business goals, and by outsourcing some or all of their IT functions they can bring IT professional back to focus, and free-up valuable resources for core business goals and objectives to be met, which they believe are too valuable to the organization. Management also believes that IT expenditures are excessive, and are not providing a good return on investment, causing a call to reduce or control costs while improving functionality, and services. Another factor is the need to improve competitiveness. Organizations feel that they must remain competitive in order to not only survive in today’s business environment, but to thrive.

Risks and Benefits

Whenever a company makes a very important business decision like outsourcing IT functions,