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INFORMATION TECHNOLOGY SOURCING

Information Technology Sourcing Harshit Rawat Wilmington University

INFORMATION TECHNOLOGY SOURCING

Outsourcing can be understood as a settlement or a process in which one company provides services for another company that could be provided in-house. In the era of cloud computing and cloud technology growing at a stupendous rate with big data and mobile technology, outsourcing has become a viable option for many organizations that lack the resources or budget to manage software and services within its own IT department. Outsourcing and offshoring were initiated as a cost cutting measure by companies but companies that create real sustained value routinely use them keeping in mind a far better action plan in mind - either to gain abilities that the company does not have in-house or to strengthen the capabilities the companies do have (Heric, Singh, 2010). It has been found in a survey that 85% of the companies that make it big in the industry use capability sourcing openly and look to develop world class talent to bring new products and services to the market. In an article about McKinsey & Company, Jonathan Silver highlights diverging sourcing trends for producing and for IT and business processes (Merk, Silver, Torrisi, 2014). A major part of onshoring measure are in manufacturing. This is mainly due to the rebound in domestic demand for goods such as equipment and automobiles that are assembled close to final demand. Based on a research conducted by Forbes, a global media company, it has been concluded that companies use outsourcing to build mainly five strategic capabilities which are mentioned as follows: 1. To tap into global talent. 2. To build partnerships that both capture value and reduce risks. 3. To seize new market opportunities. 4. To get to market faster and boost innovation. 5. To disrupt traditional business models.

INFORMATION TECHNOLOGY SOURCING

The conclusive report of the survey suggested that if an organization does not get a return of at least 25% on its sourcing investment, then it needs to review and mend its current projects before taking on any new projects (Heric, Singh, 2010). There are certain factors that are critically important in sourcing strategy. To make sure that scheduled tender runs according to plan, strategic planning is essential. There are definite steps that require engagement with the market, as well as end users and stakeholders to make sure the planned work achieves its desired output. Market analysis is the first step in procurement planning . This means that the company engages with the market directly in order to understand the market dynamics. Established factors to be taken into account include looking into the sector market to ensure its period of growth, decline, or stagnation (Metcalfe, 2016). Second is the spend analysis. It is process of analysis the organizations non-pay historic spend. This analysis helps in disclosing the issues concerning the spend visibility, contract compliance and control. Without the visibility to spend data, it becomes relatively difficult to analyse the goods and services that have been procured and hence, it becomes more difficult to forecast accurately purchase for the future endeavours. Third and final is the need analysis. It is essentially important to identify the need in the organization and not the want. All the members of the organization need to be on the same page with regard to the stimulation behind the sourcing plan to ensure all relevant parties are properly engaged with the project (Metcalfe, 2016). Overall , it can be concluded that the trend that has settled in the industry is not a major trend reversal but instead it is a rather rebalancing of sourcing modes focused on factors that are not primarily dependent on cost. If we consider the case of offshoring, the factors provide access to a global pool of talent, increased flexibility, and the gives an opportunity to develop and

INFORMATION TECHNOLOGY SOURCING

establish a global network, which naturally safeguard against multiple operational risks such as regulatory changes, currency fluctuations, and in some unfortunate cases of natural disasters. Sourcing decision can be categorised into three primary categories namely long range IT plan, medium range IT plan, and tactical plan. A long term IT plan has a general time frame of three to five years whereas a medium range IT plan varies from one to two years of strategic planning. On the other hand, tactical planning refers to the detail budgets and schedules for the current year of the organization. The key to a well laid and developed tactical plan is to have a specifically stated action assigned to a set of particular employees with certain deadlines to adhere to. The objectives and strategies provide visions and the actions make the organizations plan real (Kokemuller, n.d.). For an organization that is looking to expand their horizons in different sectors of the industry, it is a good idea to have a long range IT strategic plan in mind to not only avoid confusion in the future but also to keep a group of people focused on their goals and objectives so that they are not distracted from their path. On the other hand for an company that has entered the industry in the recent past and is looking to establish some solid ground base, it is advised to have short term goals and objectives. Having tactical IT plan is not only a cost efficient plan but also a plan that allows people within the organization to get a hold of the working nature of the company and get to know the work structure of the company better.

References

INFORMATION TECHNOLOGY SOURCING

M. Heric, B. Singh (June 15, 2010) Outsourcing Can Do Much More Than Just Cut Costs. Retrieved from: https://www.forbes.com/2010/06/15/outsourcing-capability-sourcingleadership-managing-bain.html#32e28c6f718b A.B.Metcalfe (June 21, 2016) 3 factors affecting procurement planning. Retrieved from: http://www.achilles.com/en/about-achilles/industry-insights/4276-3-factors-affectingprocurement-planning C. Merk, J. Silver, F.D.Torrisi (July, 2014) Rebalancing your sourcing strategy. Retrieved from: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/rebalancingyour-sourcing-strategy N. Kokemuller (N.D.) Definition of tactical planning in Business. Retrieved from: http://smallbusiness.chron.com/definition-tactical-planning-business-14401.html...