Information Technology And Governance

Information Technology and Governance

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In today's competitive world, organizations are seeking to implement competent strategies that will reduce expenses and increase revenue. A strategy is a prerequisite in the modern business environ for an organization to evade foreclosures amid the stiff competition. Organizations desire to enhance performance and gain competitive advantage by using modern formulations that inculcate technological advancements. In seeking to avert the exorbitant costs that emanate from research, formulation, and development of modern solutions, sourcing is the new cheap and formidable solutions according to numerous organizations. Sourcing refers to decisions determining how components will be supplied for production and which production units will serve respective markets. In the information technology sector, sourcing is a lucrative business expanding by the day. The market for all information technology sourcing in the past decade retails at $26.5 billion in the United States and $90 billion worldwide. Currently estimates of annual growth of Information Technology outsourcing range from 15 % to 25 %. Analysts affirm that sourcing represents 5% of the total budget in 2011 and having grown to 13% of the total Information Technology budget by 2012. Today's sourcing market complicates the situation by focusing on business processes because Information Technology services and business processes share a tight link. This has made it increasingly difficult to make efficient sourcing decisions about either of the areas in distinct isolation. This has further complicated the organizational environment within which sourcing decisions are made. The central sourcing option applicable to organizations seeking to enhance their competitive advantage is the Shared Service Center (SSC), off shoring and outsourcing (Rivard & Aubert, 2008).

Shared service center (SSC).

A shared service centre resonates from a responsible unit within the internal organization, which has the task to deliver services based on specialization and a standard price. Organizations make use of SSC to reduce costs and enhance the quality of internal and external services. Some of the reasons that make SSC their service providers include organization own relevant competencies, enhance the quality of internal and external services and generation of long-term services (Tse, 2007).

Offshoring

Offshoring is in two forms; first, sourcing business activities to another country, but maintaining control is captive Offshoring. Secondly, sourcing business activities to a third party in another country constitutes to offshore sourcing. Offshoring is the allocation of Information Technology enabled processes to internal/external service providers at a remote location for management. The core reasons why organizations choose offshore services include seeking to retain or enlarge market position while focusing on core competencies (Tse, 2007).

Outsourcing

Outsourcing is a long-term, results oriented relationship with an external provider for activities traditionally performed within a company. Organizations use outsourcing services because they desire to reduce unit cost, lower, transfer or share risk intending to simplify the process.

Sourcing Strategies

Rising expectations in the Information Technology sector, high deployment, operations costs, and scarcity of both technical and financial resources are cornering modern organization to source for services. The process of making a thoughtful Information Technology decision requires articulate mindsets from the entire organizational fraternity. The first step entails understanding the potential outcomes emanating from enacting a possible decision and weighing the effects. Real or perceived costs may increase or decrease if the economics of a sourcing decision is at loggerheads with the existing organizational models. Human resource management and organizational cultural issues may arise depending on the match policy and the practice between the organization and the service provider. A successful or unsuccessful implementation of sourcing agreements can have potential political consequences. As with most other decisions, sourcing decisions are riskier when inculcated in the midst of a crisis whether administrative, operational, financial, or technical. Sourcing decisions are tougher when Information Technology services are not provided efficiently and effectively. This is because an organization lacks a benchmark on quality delivery by the sourcing agencies.

Internal factors

Operations in different organizations differ on four main variables including, volume, and variety, variation in demand. These four points are called process characteristics of an organization processes. A well understanding of this process makes an efficient operations strategy possible (Ulster Business School, 2013). Volume is a significant factor that determines the sourcing decision (Ulster Business School, 2013). Organizations differ in volume as some have a significant Information Technology deficit than others. Variety encompasses the flexibility of an organization to bear with different services. Variety is vital as it determines whether a process can be standardized. Standardization relates to service providers ability to deliver the same quality products and services consistently. Variation in demand relates to personnel and purchase planning. According to Tse (2007), a high variation in demand resonates to difficulties with both personnel and planning. Variation relates to predictability of the production process.

External Factors

When formulating operations strategies, external factors are critical as they determine a relative benchmark. Competitors are among the external environment and their actions towards improving service delivery directly affects an organization. Each action of the competitors in the same industry targeting development is a wake-up call. With the upsurge in technological advancements, there are innumerable actions availed to competitors. It is necessary for organizations to monitor the competitors within the same industry seeking. This will ensure that they are up-to-date with current information relating to the crucial Information Technology sector.

Legislation

Employment law, environmental rules, and national legislation have a dire impact on organizational decisions. Legislation relates to the framework guiding an organizational process. This framework confines the decision-making

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