In recent years, it is becoming the increasing trend to hire companies and/or people to design and implement a whole new information system. I will look at how outsourcing can provide different solutions to companies, their main advantages and disadvantages, why outsourcing projects actually fail and also risks that outsourcing information systems can bring to a company. One thing that should also be considered is the relationship between the two companies and how investments made by either one of the company can instil confidence and long-term alignments in the outsourcing contract (Yu T., Cheng H. 2007). Also, it needs to be established why a company is planning to outsource their information system. Has a senior executive read about a competitor outsourcing their IS and noticed a gain in rate of production? Does the senior executive simply want to jump on the proverbial bandwagon in case they get left behind? Depending on the reason, the outcome of the system will be different. (Lacity, M. & Hirschheim, R. 1993). The company that is outsourcing also must understand the risks involved in outsourcing their equipment, projects can fail due to a multitude of problems such as; Early Termination, Incorrect feasibility study and non-renewal of contracts (Qu, W et al. 2010). The company that will be outsourcing there IS will also need to choose the service provider very carefully. Each provider will be different and can bring any number of cards to the table. Does the company go for an experienced company that is renowned for their providing ability and pay that little bit extra for the guarantee that the service provided will be top class? Does the company decide to outsource there IS to a company less known and/or offshore to save spending too much money at the risk of a decrease in productivity or the project falling through? (Power, M. et al. 2006). I will also look at the involvement of several Systems Development Life Cycles and how they can be utilised to ensure that projects do not fail, how each SDLC methodology is different from the next and what are the main advantages and disadvantages for each SDLC methodology.
1.1 Précis sources
Lacity, M. & Hirschheim, R. (1993) Information systems outsourcing : myths, metaphors and realities. New York: John Wiley & Sons.
Lacity, M & Hirschheim,R. (1995) Beyond The Information Systems Outsourcing Bandwagon: The Insourcing Response. New York: John Wiley & Sons.
Power, M., Desouza, C. & Bonifazi, C. (2006) The outsourcing handbook : how to implement a successful outsourcing process. London: Kogan Page Limited.
Yu T., Cheng H. (2007) Information system outsourcing in government: public and private sectors long-term alignment. International Business Academics Consortium. Available from: http://ibacnet.org/bai2007/proceedings/Papers/2007bai7197.pdf [Accessed 15/02/2011].
Qu W., Oh W., Pinsonneault A. (2010) The strategic value of IT insourcing: An IT-enabled business process perspective. Journal of Strategic Information Systems, pp 96-108. Available from ScienceDirect [Accessed 15/02/2011].