john g.h. schell november 2002 managing outsourced it using business technology management

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John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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Page 1: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

John G.H. Schell November 2002

Managing Outsourced IT Using

Business Technology Management

Page 2: 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

Page 3: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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…

Page 4: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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

Page 5: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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

Page 6: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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

Page 7: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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)”

Page 8: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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..

Page 9: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 10: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 11: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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

Page 12: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 13: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 14: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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

Page 15: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 16: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology Management

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.

Page 17: John G.H. Schell November 2002 Managing Outsourced IT Using Business Technology 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.