The quality assurance surveillance plan addresses the methods for monitoring performance against the contract. This section should address service provider oversight field inspections, monthly assessment of project status, contract administration, deliverable reports, budgetary data, physical inspections, etc. Also, identify the roles and responsibilities of the individuals involved in monitoring and evaluating the performance-based objectives.
Inspection and Acceptance Process — Discuss the strategy for ensuring that contract requirements conform to quality assurance provisions and address roles and responsibilities of individuals involved in this process. Also, reference contract sections that address inspection and acceptance. Invoice Review — Discuss the plan or process instructions, certifications, documentation, etc. Also, discuss the roles and responsibilities of individuals directly involved in the process.
This section should also identify the parties responsible for fostering these agreements, and include full disclosure of any sub-contracts that will also need to transition under the new agreement. Communication with them as to the expectations of the clients will be imperative and is the responsibility of the lead project manager of the main contract.
While the government can have very specific requirements, its basic approach is very solid. Other items to be sure to include are: sample of deliverable matrix, detailed transition plan, and a risk mitigation plan. It is important to discuss the ownership of data, data standards, system configuration to enable data analytics and KPI dashboards, and access to either owner-provided or service-provider-provided systems.
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Management Information System Question Paper. Predictability: An outsourcing contract with a fixed price for a specified level of service reduces uncertainty of costs. As information technology permeates the entire value chain of a business, outsourcing may provide superior control of the business because its costs and capabilities can be adjusted to meet changing needs.
Making Fixed Costs Variable: Some outsourcing agreements, such as running payroll, are based on the price per unit of work done such as the cost to process each cheque.
Many outsources will take into account variations in transaction processing volumes likely to occur during the year or over the course of the outsourcing agreement. Clients only need to pay for the amount of services they consume , as opposed to paying a fixed cost to maintain internal systems that are not fully utilized.
Freeing up Human Resources for other Projects and Financial Capital: Scarce and costly talent within an organization can refocus on activities with higher value and payback than they would find in running a technology factory. Disadvantages of Outsourcing : Not all organizations obtain these benefits from outsourcing. There are dangers in placing the information systems functions outside the organization.
Outsourcing can create serious problems such as loss of control, vulnerability of strategic information, and dependence on the fortunes of an external firm. Loss of Control: When a firm farms out the responsibility for developing and operating its information systems to another organization, it can lose control over its information systems function.
Outsourcing places the vendor in an advantageous position where the client has to accept whatever the vendor does and whatever fees the vendor charges. This dependency could eventually result in higher costs or loss of control over technological direction.
This could be especially harmful if a firm allows an outsourcer to develop or to operate applications that give it some type of competitive advantage. Dependency: The firm becomes dependent on the viability of the vendor. A vendor with financial problems or deteriorating services may create severe problems for its clients. Since outsourcing has both benefits and liabilities and is not meant for all organizations or all situations, managers should assess the role of information systems in their organization before making an outsourcing decision.
There are a number of circumstances under which outsourcing makes a great deal of sense: - When there is limited opportunity for the firm to distinguish itself competitively through a particular information systems application or series of applications. For instance, both the development and operation of payroll systems are frequently outsourced to free the information systems staff to concentrate on activities with a higher potential payoff, such as customer service or manufacturing systems.
Applications such as payroll or cafeteria accounting, for which the firm obtains little competitive advantage from excellence, are strong candidates for outsourcing. If carefully developed, applications such as airline reservations or plant scheduling could provide a firm with a distinct advantage over competitors.
The firm could lose profits, customers, or market share if such systems have problems. Applications where the rewards for excellence are high and where the penalties for failure are high should probably be developed and operated internally. If these systems failed to operate for a few days or even a few hours, they could close down the business. On the other hand, a system to process employee insurance claims could be more easily outsourced because uninterrupted processing of claims is not critical to the survival of the firm.
If a firm outsource some of its system but maintains its own internal information systems staff, it should ensure that its staff remains technically up to date and has the expertise to develop future applications.
Some organizations use outsourcers as an easy way to revamp their information systems technology. For instance, they might use an outsourcer to help them make the transition from traditional mainframe-based computing to a new information architecture-distributed computing environment. Despite the conventional wisdom on when to outsource, companies sometimes do outsource strategic functions. In any case, if systems development and the information systems function are well managed and productive, there may not be much immediate benefit that can be provided by an external vendor.
Noncritical applications are usually the most appropriate candidates for outsourcing. Firms should identify mission-critical applications and mission-critical human resources required to develop and manage these applications.
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