For each of the three organizations below address the following two points:

• Recommend whether the organization should build or buy/outsource the system in question. Explain your answer.
• What additional information would be useful in making your recommendation?

Organizations:

1. A medium-sized company that sells roofing materials to contractors needs a system that will allow customers to check product inventory through a website.
2. A large (Fortune 500) retailer with a large, well-skilled IT department needs a system that will track the purchasing habits of its frequent customers.
3. A large (Fortune 500) defense contractor needs a system that will track payments to vendors.

Transcribed Image Text:

INFORMATION SYSTEMS SOURCING Make or Buy Questions Does it involve a core competency? Does it involve confidential or sensitive IS services or software development? Is there enough time available to complete software development projects in-house? Do the in-house IS professionals have adequate training, experience, or skills to provide the service or develop the software? Suggests Insourcing Yes Does the provider have economies of scale that make it cheaper to provide the service or develop the software than in-house? Yes Yes Yes Are there reliable outsourcing providers who are No likely to stay in business for the duration of the contract? Is there an outsourcing provider that has a culture No and practices that are compatible with the client? Most likely no Does it offer a better ability to handle peaks? Does it involve consolidating data centers? nolais FIGURE 10.2 Make or buy? Questions and risks. Most likely no Most likely no yua Suggests Outsourcing No No No No Yes Yes Most likely yes Most likely yes Most likely yes Examples of Associated Risk in Worst-case Scenarios If outsourced: Loss of control over strategic initiatives; loss of strategic focus If outsourced: Competitive secrets may be leaked If insourced: Project not completed on time If outsourced: Technological innovations limited to what provider offers; overreliance on provider's skills If outsourced: Project not completed or, if completed, is over budget and late when another provider takes it over If outsourced: Conflict between client and provider personnel If outsourced: Excessive costs of project or operations because of the way the contract is written If insourced: Loss of business If insourced: Inefficient operations perso Cont K ties pro serv bro out and F U li d d INFORMATION SYSTEMS SOURCING Make or Buy Questions Does it involve a core competency? Does it involve confidential or sensitive IS services or software development? Is there enough time available to complete software development projects in-house? Do the in-house IS professionals have adequate training, experience, or skills to provide the service or develop the software? Suggests Insourcing Yes Does the provider have economies of scale that make it cheaper to provide the service or develop the software than in-house? Yes Yes Yes Are there reliable outsourcing providers who are No likely to stay in business for the duration of the contract? Is there an outsourcing provider that has a culture No and practices that are compatible with the client? Most likely no Does it offer a better ability to handle peaks? Does it involve consolidating data centers? nolais FIGURE 10.2 Make or buy? Questions and risks. Most likely no Most likely no yua Suggests Outsourcing No No No No Yes Yes Most likely yes Most likely yes Most likely yes Examples of Associated Risk in Worst-case Scenarios If outsourced: Loss of control over strategic initiatives; loss of strategic focus If outsourced: Competitive secrets may be leaked If insourced: Project not completed on time If outsourced: Technological innovations limited to what provider offers; overreliance on provider's skills If outsourced: Project not completed or, if completed, is over budget and late when another provider takes it over If outsourced: Conflict between client and provider personnel If outsourced: Excessive costs of project or operations because of the way the contract is written If insourced: Loss of business If insourced: Inefficient operations perso Cont K ties pro serv bro out and F U li d d