john g.h. schell november 2002 managing outsourced it using business technology management
TRANSCRIPT
John G.H. Schell November 2002
Managing Outsourced IT Using
Business Technology Management
John G.H. Schell Managing Outsourced IT Using BTM November 2002
OverviewOverview
Outsourcing Information Systems and Technology:Outsourcing Information Systems and Technology:The reasons and benefits
Business Technology Management:Business Technology Management:Introduction; communication, collaboration, and evaluation
The Synergy:The Synergy:Combining BTM with outsourcing; measuring quality, replacing costs, and realizing benefits
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Outsourcing is…Outsourcing is…The strategic use of outside resources to perform activities traditionally handled by internal staff and resources.
Done because…Done because…
President
Sales Shipping Finance IT
Perhaps the IT function is not core to the business.
Or…Or…
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Reasons for OutsourcingReasons for Outsourcing
slippingslippingIT Projects keep on slipping
Management’s plate is full
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Reasons for OutsourcingReasons for Outsourcing
Internal staff may lack the expertiseInternal staff may lack the expertise
or resources to do the job wellor resources to do the job well
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Benefits of OutsourcingBenefits of Outsourcing
Savings for the business Savings for the business
Exploitation of innovationExploitation of innovation
Delivery guaranteesDelivery guarantees
Increased qualityIncreased quality
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Business Technology ManagementBusiness 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)”
John G.H. Schell Managing Outsourced IT Using BTM November 2002
CommunicationCommunication
Give decision makers the right information Give decision makers the right information at the right timeat the right time
to draw the right conclusionsto draw the right conclusions..
John G.H. Schell Managing Outsourced IT Using BTM November 2002
CollaborationCollaboration
• Develop and enact Develop and enact strategy through the strategy through the cooperation of business cooperation of business and technology and technology management. management.
• Unify business and Unify business and technology decision-technology decision-making. making.
• Collaborate horizontally Collaborate horizontally and vertically within the and vertically within the organization to leverage organization to leverage distributed expertise. distributed expertise.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
EvaluationEvaluation
• Create reusable business processes and Create reusable business processes and technology tools.technology tools.
• Enable performance management through Enable performance management through continuous measurement and evaluation.continuous measurement and evaluation.
• Promote strategy-driven innovation instead Promote strategy-driven innovation instead of reactionary management by modeling of reactionary management by modeling and testing new systems within the context and testing new systems within the context of their real-world scenario.of their real-world scenario.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Combining BTM with OutsourcingCombining BTM with Outsourcing
• Setting priorities
• Measuring quality
• Replacing costs
• Realizing benefits
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Setting PrioritiesSetting PrioritiesSend 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.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Measuring QualityMeasuring Quality
Service Level Agreements guarantee delivery and quality.
In-house contract management using the right personnel keeps the relationship on track.
Risks are unnecessary and easily avoided.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Replacing CostsReplacing Costs
The cost of outsourcing is meant to replace The cost of outsourcing is meant to replace “visible” and “invisible” in-house IT “visible” and “invisible” in-house IT
expenditures expenditures
DOWNTIME
ADMINISTRATION
MANAGEMENT
OPERATIONS
RECRUITMENT
R & D
John G.H. Schell Managing Outsourced IT Using BTM November 2002
Realizing BenefitsRealizing Benefits
Better management Better management of time and money.of time and money.
A common language A common language and common goals and common goals for IT vendors and for IT vendors and business strategists. business strategists.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
ConclusionConclusion
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.
John G.H. Schell Managing Outsourced IT Using BTM November 2002
For more information…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.