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Managing Outsourced IT Using Business Technology Management

Managing Outsourced IT Using Business Technology Management. John G.H. Schell. November 2002. Overview. Outsourcing Information Systems and Technology: The reasons and benefits. Business Technology Management: Introduction; communication, collaboration, and evaluation. The Synergy:.

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Managing Outsourced IT Using Business Technology Management

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  1. Managing Outsourced IT UsingBusiness Technology Management John G.H. Schell November 2002

  2. Overview Outsourcing Information Systems and Technology:The reasons and benefits Business Technology Management:Introduction; communication, collaboration, and evaluation The Synergy: Combining BTM with outsourcing; measuring quality, replacing costs, and realizing benefits

  3. Outsourcing is… The strategic use of outside resources to perform activities traditionally handled by internal staff and resources. Done because… Perhaps the IT function is not core to the business. Or…

  4. Reasons for Outsourcing IT Projects keep on slipping slipping slipping Management’s plate is full

  5. Reasons for Outsourcing Internal staff may lack the expertise or resources to do the job well

  6. Benefits of Outsourcing Exploitation of innovation Increased quality Delivery guarantees Savings for the business

  7. Business Technology Management "BTM is a proven and unified approach that enables companies to effectively and continuously align business and technology for improved business performance.”1 BTM strives to align technology with the rest of management through communication, collaboration, and evaluation. 1F. Hoque, “Aligning Business and Technology: The Principles of Business Technology Management (BTM)”

  8. Communication Give decision makers the right information at the right time to draw the right conclusions.

  9. Collaboration • Develop and enact strategy through the cooperation of business and technology management. • Unify business and technology decision-making. • Collaborate horizontally and vertically within the organization to leverage distributed expertise.

  10. Evaluation • Create reusable business processes and technology tools. • Enable performance management through continuous measurement and evaluation. • Promote strategy-driven innovation instead of reactionary management by modeling and testing new systems within the context of their real-world scenario.

  11. Combining BTM with Outsourcing • Setting priorities • Measuring quality • Replacing costs • Realizing benefits

  12. Setting Priorities Send out Requests for Proposal (RFP’s) to a number of vendors. Their responses are theirblueprints for the outsourced function. The details of their proposals must match the customers technical requirements and priorities.

  13. Measuring Quality Risks are unnecessary and easily avoided. Service Level Agreements guarantee delivery and quality. In-house contract management using the right personnel keeps the relationship on track.

  14. Replacing Costs The cost of outsourcing is meant to replace “visible” and “invisible” in-house IT expenditures OPERATIONS ADMINISTRATION RECRUITMENT DOWNTIME R & D MANAGEMENT

  15. Realizing Benefits A common language and common goals for IT vendors and business strategists. Better management of time and money.

  16. Conclusion The best competitors know their business well. They focus on core areas. They may not have specialized capabilities to operate their peripheral areas. Such areas are often more efficiently executed by other parties. Many successful organizations consider outsourcing aspects of their Information Systems. When they do so, they should keep in mind that BTM keeps technology managed as part of the business. BTM, when used by an outsourcing customer to manage their relationship with the vendor, creates a synergy that reaps the benefits of IT best practices combined with business management.

  17. For more information… Carnegie Mellon Software Engineering Institute: Management Practices. CIO.com: Caveat Emptor by T. Field. Darwin: The Fine Print by S. Kalin. Gartner Group: IT Services Sourcing Goes Strategic by J. Beck. Hughes Software Systems: Outsourcing: A Decision of Trust. InternetWeek.com: Competition Driving IT Outsourcing Spending Worldwide by M. Mosquera. Intermec: Professional Services Overview by M. Harms. Kudos: The Theory & Practice of Outsourcing by D. Griffiths. Network Computing India: Reinventing E-Business 2.0 by O. Rist. Transition Partners: Outsourcing... The Decision Process by R. Krahl. Wipro: Aligning Business and Technology: The Principles of Business Technology Management (BTM) by F. Hoque. Wipro: Outsourcing: Total Cost of Management Benefits.

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