OUTSOURCING IT

Outsourcing of Information Technology by Organizations

1.0Introduction1

2.0Management Information & Communication System (MICS)2

2.1Integration of Various Organizational Functions by MICS3

2.1.1Planning3

2.1.2Controlling4

2.1.3Management Decision Making4

2.2Strategy of MIC systems in different types of organizations5

2.2.1Organizational Chart Strategy5

2.2.2Database Approach5

2.2.3Top-Down Approach6

2.2.4Total-System Approach6

2.3Limitations to MIC systems6

3.0IT & E-Commerce Outsourcing7

3.1Types of IT & E-Commerce Outsourcing8

3.2Advantages acquired through IT and ecommerce outsourcing9

4.0Critique: Reasons for outsourcing IT and ecommerce9

4.1Supporting Theoretical Perspectives10

4.1.1Transaction Cost Economics Theory10

4.1.2Resource-Based Theory11

4.1.3Institutional Theory13

5.0Critical Issues in Management of Outsourced Relationships14

5.1Overselling during Early Discussions14

5.2Service Level Agreements15

5.3Pricing15

5.4Performance Measurement16

5.5Lack of Control & Visibility17

5.6Data Security Concerns17

6.0Conclusion18

7.0References20

Outsourcing of Information Technology by Organizations

Introduction

Information systems have revolutionized the business landscape. From business perspective, Information Systems not only provide operational efficiency but also serve to improve competitive advantage of the organizations. Information systems combine people, businesses processes, and the power of information technology, in order to achieve a business objective. From this description, it can be noted that information systems facilitate business objectives of organizations via IT services. Management Information & Communication System (MICS) is a type of Information System that is used across the globe for providing the necessary information to businesses in order to support operational, managerial and decision making functions. Implementation of MICS is an organization is a complex task that requires substantial resources. There does not exist any organization that has unlimited resources. However, there exist a wide range of requirements in every organization which competes for these resources (Lacity & Willcocks, 2000, p. 15). This leads the organization to select the option of outsourcing for implementation of IT or ecommerce solutions. Outsourcing services helps the organization in increasing the efficiency of the outsourced services and reducing the cost associated with them. Moreover, outsourcing keeps an organization from wasting valuable resources on activities that can be accomplished by others at a lower cost in an efficient manner.

As a business practice, outsourcing is flourishing in almost every organizational domain. The functional areas that are outsourced by organizations include human resource administration, marketing, information systems, finance and accounting. In this study, outsourcing of Information Technology or ecommerce by organizations is shed light upon. The scope of IT outsourcing differs from operations and architecture to user and desktop support, data centres and application development. Outsourcing has provided enormous advantages to organizations. However, there have been identified several outsourcing relationship issues and other pitfalls that can prove to be disadvantageous for this practice of outsourcing. The purpose of this paper is to carry out a critical discussion on the subject of IT or ecommerce outsourcing by organizations. Moreover, this paper aims to discuss the critical issues that occur in managing the outsourced relationships.

Management Information & Communication System (MICS)

Management Information & Communication System (MICS) is an integrated user-machine system that is used to provide information for supporting functions of management, operations and decision making in an organization. MICS makes use of manual and computerized procedures; a database: and models for analysis, plan, control and decision making. MICS facilitates decision making in an organization by supplying the information that is needed in an accurate, up-to-date and usable form to the people who ...