BPO and Cloud Computing Case Study 1
PROJ 410 Contracts and Procurement
Purpose
Smith’s Information Services is in the process of implementing a corporate overhead reduction program. This is due in part to the increasing costs of operating and maintaining an in-house data center, as well as flattened sales and reduced profits. For these reasons Smith’s Information Services is looking to outsource the company’s data center to an outside vendor. The increasing overhead costs include personnel costs to operate and maintain the data center’s servers, data center cooling costs, and electrical utility costs required to run the data center. Reducing these overhead costs, by outsourcing the data center, will help Smith’s Information
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There should be no compromise to the company’s business practices or access to the company’s data. Besides personnel costs and utility overhead costs, Smith’s Information Services would be able to reduce the company’s infrastructure which will also help to maximize profits.
Vendor Considerations
Since Smith’s Information Services Company is in the business of processing and analyzing consumer data, the minimum number of vendors to solicit for outsourcing the data center would be three, with a maximum of ten. This would provide not only a fair solicitation process, but also would ensure the company receives the best value for the services provided by the selected vendor. While the goal of the outsourcing is to reduce the company’s soaring overhead costs, simply selecting any cloud computing company based on cost alone would be foolish. Ensuring there are multiple vendors solicited for this service would ensure the company’s costs are reduced while still maximizing profits. Given that personnel costs account for the majority of a company’s overhead costs, followed closely by utilities costs, any vendor solicited should cost less than Smith’s Information Services is currently spending on its employees and utilities. Limiting the number of vendors solicited to ten or less would also ensure a quick evaluation period without the chance of getting mired in minute details between the
List and describe at least three factors that a firm should consider when making an outsourcing decision.
Smith Systems Consulting has been at the forefront of the Information Technology Services and Consulting industry since it was founded in 1984. Their driving vision has been to provide the absolute best to their customers in all aspects of services and prices at rates that are affordable. They believe they can do this because they employ the best in the industry. Their simple approach to customer service has been that if they take care of their customers and employees, then everything else will take care of itself. This straight forward approach, while packed full of energy and meaning, has proven to not be sufficient in delivering the absolute best to
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Therefore, manufacturers face a trade-off between gain from the efficient technology and loss from paying the information rent. When a firm decides on in-house production instead of outsourcing, although a manufacturer can obtain the entire profit, it loses the gain from the cost efficiency of outsourcing. When outsourcing is selected, although a manufacturer can acquire the gain from cost efficiency, it is required to share the gain with the outsourcer.
Because of the important relationship between insourcing/outsourcing and competitiveness, organizations must consider many variables when considering an insourcing/outsourcing decision. This may include a detailed examination of a firm’s competency and costs, along with quality, delivery, technology, responsiveness, and continuous improvement requirements. Because of
Md B. Sarderl K.J. Rogersi, Edmund Prater2 'Department of Industrial and Manufacturing Systems Engineering, University of Texas at Arlington, Texas - 76019, USA 2Department of Information Systems & Management Science, University of Texas at Arlington, Texas - 76019, USA Abstract--Outsourcing is proven as a good idea for many firms that need to reduce operating costs and improve information technology operations. But it remains important for them to select the appropriate outsourcing activities. Many companies will be hurt by hastily following the herd down the outsourcing path without thoroughly evaluating the benefits
c) How much should the fixed cost of outsourcing alternative be at least reduced in order for
While it lessens the burden on organizations, reducing and shifting the cost and risk of its IT operation, security and management issues to an external service provider or vendor, outsourcing any portions of an organization's Information System has significant risks that can sometimes become detrimental to the outsourced organization. According to the Commission on Government Outsourcing, "when outsourcing an organization exposes itself to significant risks in terms of security, accuracy, and completeness of information (Holroyd City Council, 2008)". Comprised in the rest of this document is an
This research paper tackles the issues that faces Cloud Computing today and gives the experts and industry’s point of view on the matter. The aspects explored are the significant industry questions that have risen about the use of Cloud Computing, business value, organization impact, adaptability, limitations, initial cost of implementation, and the severe business security risks
Jeff Styles started a small growing business called Data Tech, Inc. out of his two-car garage. Data Tech, Inc. is a company that specializes in transferring hard copies of various business documents onto CDs . The company started out with anywhere from 10,000-30,000 pieces of mail daily, which proposed a challenge as business continued to flourish. Since he has accumulated an increasing number of corporate customers with long-term contracts, Styles has realized that his two-car garage is now an insufficient space to accommodate the newly acquired business. It has become essential for Styles to expand his facility in order to meet demands. The issue for Styles to decide between three different factory locations each with different pros and cons. Furthermore, he must decide on whether to invest in a large facility or a small facility with the possibility of expansion in the future.
Your government run company would like to implement a conversion of your legacy system over to a cloud computing system. This would include a system that has all precious data such as automatic payroll and expense report process capabilities that can simultaneously enhance the work life of its employees through a more transparent hiring process, advanced recruiting methods, a centralized database with self-serve accommodations, improved performance review analytics and much more. The resources within the organization are limited in number, knowledge, and availability. This project will require outsourcing of skilled resources and expertise to move forward with the initiative. The organization is characterized by working in silos and having redundant functional resources available within many of its divisions
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One of the main things that we need to understand in the process of selecting the appropriate cloud development model for BPI is to understand what cloud deployment is all about. Cloud has been used for a while now and as business and security comes, it is predicted to be rising faster as years come by. The ubiquitous term cloud refers to anything that is being delivered today through the internet and in simple terms, cloud is where one can rent technology and information services on the internet through the providers. Most companies are today turning their focus on
Most of the prior studies support that the firm size is positively correlated with the probability of outsourcing, and the direct reason is product diversity. One study shows that the relationship is reversed for very large companies. In the study, very large companies are defined as companies with $50 million or more of revenue in a fiscal year. The study shows that there seems to be a positive relationship between the number of products and in-house data processing within very large companies. One of explanation for this is that large companies consider their data processing a strategic issue, which they are not willing to be outsourced. They also have the capability of performing it themselves because they have sufficient scale.
Voxpro is operating in the business process outsourcing (BPO) industry. The BPO sector has several key market drivers the first one being the rising awareness among firms about the advantages of outpouring some of which include cost saving, improved service provision, it allow the company to focus on their main production areas, and it enables the company to partner with skilled manpower (Mello 2014, p. 268). Hence, BPO is a popular sector and very marketable among firms that are looking for specialized services. The other market driver that makes BPO sector marketable is the need for global firms to reduce their cost and de-risk business operations in a fluctuating global economy. The rise and fall of gas and oil prices, the surge in terrorism and instability in some Arab countries, and the increase of immigration are among some of the factors that are causing global economic instability. The growing demand of BPO services in technology, financial, retail, and manufacturing industries makes BPO very lucrative among global brands whose main goal in growth and penetrating new markets. Another key driver is the convergence of social media platforms, web and mobile applications, which have become the main way by which customers to access information and purchase products and services. Lastly, the current trend of multi-source approach whereby IT operations and architecture are contracted to multiple vendors. Voxpro is helps firms achieve all the