Module 4 - Case: Financing Organizational Technology



Module 4 - Case: Financing Organizational Technology

Introduction

This assignment is based Module 4 - Case: Financing Organizational Technology. I agree that standard financial investment information and criteria are all that is needed to effectively evaluate IT outsourcing decisions. Balancing the benefits of IT outsourcing in business enhances operating and financial performance. Through specialization and economies of scale, Supplier Company can significantly reduce operating costs. Outsourcing can thus be adapted to different business needs as simple process for improvement for increasing its competitiveness and to reduce costs, or for the high-profile projects that lead to permanent strategic alliances.

IT outsourcing in relation to capital budgeting and risk helps the organizations to manage financial risk management, structuring and management of financial derivatives and hedging, audit of financial derivative instruments, management of domestic and international investment, portfolio management and special financial analysis. My observation reveals that outsourcing eliminates the need for available cash for investing in sophisticated automation for proper financial management. Outsourcing work also meant that employers could save huge amounts of employment taxes and other expenses that arise from having people on their payroll (Thor, 2011).

Discussion and Analysis

Financial Outsourcing is a strategy that frees up resources that can be directed to create or strengthen weak operational areas, such as the area or finance department. This will keep the comparative and competitive advantages of the organization. The financial accounting outsourcing services includes supplementary taxation and social benefits of management, areas that are changeable and subject to continuous regulation by different control bodies, situations that are managed responsibly by the professionals responsible for the financial accounting outsourcing areas of competence, since they are at the forefront of the requirements and continuous updates to meet the varied needs of enterprises. It outsourcing helps organizations to avoid heavy debt burdens. Therefore, the more equity is saved by the companies that can be used in other weak functional areas.

The business model based on outsourcing is one of the most anticipated market trends of recent years. It is understood as a transfer of an external supplier management process. The contract regulates how accurately the scope of activities and how much is to be posted in terms of material resources, machinery, and equipment, human resources and management responsibility.

Furthermore, outsourcing of IT services allows companies to reduce the consumption of technical equipment budget and measurably reduce the risk of investment in technology and systems which are not performing properly as per the business needs. The decision to use an external provider may result not only from the lack of adequate staff and specialists. IT outsourcing decisions improve business quality; shorten the implementation of new solutions and the use of technological development partners for the development of products and production processes. It's hard to ignore the fact that offset some of the processes to achieve contractors can reduce the investment in fixed assets. This allows the remaining capacity can be used more efficiently, and the integration of the changes occurring in the environment ...