MPIII

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MPIII

• Outsourcing

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Outsourcing the Strategic Relevance Impact
Grid
high
Strat. impact of existing systems
Factory
Strategic
Support
Turn-Around
low
low
high
Strat. impact of applications development
portfolio
Outsourcing Candidates
Caveat its best to consider outsourcing
according to function or project vs. entire IS
dept.
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When Outsourcing is Attractive

• IS Function
• commodity services are more easily outsourced
  (networking, operations, PC maintenance,
  training)
• Project Structure
• structured projects are most appropriate
• Profit / MA Concerns
• outsourcing generates cash, liquefies assets, and
  may make some firms (e.g. banks) more attractive
  to suitors (no IS org. to integrate)

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MPIIIGoing Global with IS
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Key Issues/Difficulties

• Language
• Culture
• Laws
• Currency
• Time Holidays
• Political issues
• Infrastructure
• Staffing Support

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European Data Protection Directive

• the right to access ones own data
• the right to know where the data originated from
• the right to have inaccurate data rectified
• the right of recourse in the event of unlawful
  processing
• the right to withhold permission to use ones
  data for direct marketing

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Necessity is the Mother of Invention

• Smart Cards
• W. Europe and Russia lead the US, motivated by
  high cost telecom
• Cervecerìa y Malteria Quilmes
• Beer manufacturer deployed first Argentinean
  Extranet, reducing communications costs
  w/distributors from 2,600 to 140/month
• LEO - Low Earth Orbit Satellites
• reliable, low-latency, wireless global
  infrastructure

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Satellite Schemes

• Major Players
• Teledesic (2002, 2 to 64 Mbps)
• Iridium (1998, 2400 baud)

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Global Outsourcing

• Drivers
• staffing limitations (shortages, turnover,
  skills)
• cost reduction
• time (round the clock development/testing)
• Leaders
• India
• Ireland
• Canada
• China, Russia, Brazil, Philippines

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Talent Shortage
source InformationWeek 1997
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Project Characteristics

• Ideal projects - high structure, little change,
  well defined, minimal interaction with end-users
• Y2K year 2000 problems
• porting existing systems to new environments
  (e.g. a point-of-sale system from mainframe to
  UNIX)
• systems testing
• gt 50,000 (overhead threshold)
• avg. 200K/proj.

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Selecting a Partner

• Quality reliability
• ISO 9000 certification or Software Engineering
  Institute scale
• experience, financial stability
• Infrastructure
• communication, equipment, software, conferencing
• Technical expertise
• familiarity with systems being used, staff size
• Language skills
• between both parties

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Some Global Outsourcing Examples

• SAP
• Bangalore dev. ctr. will be firms largest by
  2005
• IBM
• Java Beans for VisualAge in Beijing, Belarus,
  India, and Latvia
• Sun
• Elvis developed strong encryption for Intl.
  export
• Liberty Mutual
• Opened a 5 million, 125 person dev. ctr. near
  Belfast
• ATT, Chase, Citicorp, GE, Reebok, Sabre

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Localization

• to modify an application so that it can be used
  in a different market.

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Cultural Variance

• Language
• text, font, object coordinates, orientation
• single byte vs. double byte format (entry,
  filters)
• Numbers
• currency symbol location, separators
• measurement system
• date time format and calendar
• phone formats postal codes
• Images