Business
Reasons Behind Sourcing Decision
Southwest Bank - outsourcing
IT is a key enabler of the bank’s operational and management activities
Expansion business into the Southwestern United State, Mexico and Latin American countries.
Southwest is not able to run of a successful IT services organization
Need outsourced IT organization to do hardware and software upgrades in order to support business growth
Reliable Utilities - partnering
IT needs of the parent organization and all of its subsidiaries
Increased efficiency and cost management led the company to employ increasingly sophisticated and complex IT
Challenged to find, hire, and retain staff to deploy and maintain these systems, so they need a partner who provide technical personnel
Need a work-in-house partner, in order to maintain relationships with user community and to anticipate staffing and expertise requirements
State Retirement System - Insourcing
SRS members make payroll contributions to the system
Investment management also provided by the external third-party vendors.
Federal and State tax law changes, so that reprogramming is required
Increasing administrative costs and difficulties in modifying the payroll system to accommodate legislative changes
2. What were the risks associated with each of these undertakings?
Business
Risks with Sourcing Decision
Southwest Bank - outsourcing
Lack control over the financial information and confidential data as it stored in the vendor’s server
Risk of contracting with an unreliable firm
Loss of Personal Touch as the outsourcing company uses its own staffs
Reliable Utilities - partnering
Unreliability
Loss of control over information as partner executive operates as a member of the Reliable Utilities Inc.
Problem raise after expert leaving
State Retirement System - Insourcing
Incomplete requirements
Lack of planning
Budget creep
Unreliability
3. What actions on the part of each company mitigated these risks?
Business
Risk Mitigation Steps
Southwest Bank - outsourcing
Maintaining confidential data internally
Send request to candidate companies and wait for response
Make decision by evaluating and visiting the facilities of those who responded,
Sign contracts
Reliable Utilities - partnering
Request for proposal
Choose a final bidder after evaluating all responses and interviewing with key personnel,
The partner’s people will leave once the project is completed
“Technology Transfer”
State Retirement System - Insourcing
First developed the overall requirements for the new system
Developed a RFP
Required to define all kind of possible costs/ cost measurement
Sign separate agreement with each vendor
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