Sourcing Scenarios Case Questions

Julien Levesque June 17, 2010 MISM 2301 Sourcing Scenarios Case Questions Case 1: Outsourcing 1. Develop a table that captures the “pros” and “cons” of this corporate decision. Pros| Cons|

Improved quality * Operational and management activities * Accurate record of transactions| Jeopardy of quality * Poor communication between suppliers * Testability * Qualifications of outsourcing company| Cost effective * Lowers cost service to the business| Quality of service * Stakeholders are affected and there is no single view of quality| Allows them to focus on the core business * Financial services| Image of company * Public opinion regarding outsourcing * Staff turnover| Operational expertise and access to talent * Too difficult or time consuming to develop it in-house| Communication problems with transferred employees * Company knowledge could be jeopardized| Standardizing business processes, IT services, and application services * More access to services because they have more resources and time to devote into other aspects of their company| Security, legal, and compliance issues * Fraud * Liability for actions is there but only until employees transfer| 2. List the reasons why Southwest chose outsourcing? Was it the right choice? * Business growth required the need for hardware and software upgrades * This was the RIGHT choice It is important to keep clients happy and be able to satisfy their needs while remaining profitable * IT can enable business processes * This was the RIGHT choice * Easier to analyze transactions * Make more informed decisions when manipulating information * Outsourcing vendor hired many of the IT staff * This was the RIGHT choice * Knowledge of clients and necessary procedures * Hardware and software updates meet client needs * This was the RIGHT choice * There was a fee-based arrangement so they only pay for what they need and use Case 2: Partnering 1. Develop a table that captures the “pros” and “cons” of this corporate decision. Pros| Cons|

Better customer service (focusing on their expertise)| Unregulated subsidiaries may have problems incorporating IT if they don’t have their own personnel| Increased efficiency and cost management| Should discuss decision with investors since they are affected| Wide range of technical personnel who are only employed when needed| Protocol for different subsidiaries may conflict with the IT that the partnering company wants to install| Flexibility of personnel| | Can serve different needs of each subsidiary| | 2. List the critical success factors (CSFs) in making this partnership work. * Meetings with the IT personnel and all groups to see if they can develop a plan together * Focused goal * Communication * Flexibility * Commitment to the project—financial and practice Case 3: Unwinding an outsourcing relationship 1. Use a table to list the major risks associated with this in-sourcing solution and how SRS mitigated each risks. Major Risks| SRS Mitigation|

Data integrity| Converted to run on new software and testing| Controlled environment for data center| Located within building so it is accessible to staff and IT| No thorough understanding or knowledge of hardware and software being ordered| Clause to have vendors explain in detail all of the hardware they would employ and how it would be configured to work with their product offering system| Staff’s adoption and integration of new system| Staff training and testing| 2. List the critical success factors (CSFs) in making this arrangement work. * Understanding of needs and what hardware can be configured to best suit needs * Thorough training for employees so they know how to use hardware * Data integrity and testing * Standardizing system so it is easy to get any additional IT help and to reduce costs

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