Table Of Content

Outsourcing: Directions and Opportunities Paper1 INPUT SanFrancisco•NewYork•Washington,D.C.•London•Paris•Frankfurt•Tokyo Theinformationsystems(IS)outsourcingrevolutionisspreading. ISexpendituresare alreadyover$12billionandmayexceed$40billioninfiveyears: Someoftheworld's largestcompaniesareparticipating. Thispaperisoneofaseriesthatprovidea strategicassessmentoftheISRevolution: •Outsourcing: DirectionsandOpportimities •Outsourcing: Buyers'Perspectives •Outsourcing: ContractingandImplementation •Outsourcing: VendorCharacteristics ThisseriesexaminestherationaleforISoutsourcing;thedifferentt3T)esofIS outsourcing(itdoesnotjustapplytocomputercenters!);andthenewopportunitiesin transitionmanagement,desktopservices,andbusinessoperationsoutsourcing. PublishedbyINPUT1881LandingsDrive,MountainView,CA94043-0848U.S.A. Copyright©1994byINPUT. Allrightsreserved. PrintedintheUnitedStatesofAmerica. Foradditionalinformation,pleasecontactINPUTattel.(415)961-3300,fax(415)961-3966 OUTSOURCING:DIRECTIONSANDOPPPORTUNITIES INPUT Outsourcing: Directions and Opportunities Definitions ISoutsourcingisthecontractingofaninformationsystemfunc- tionorprocesstoavendoronalong-term(atleastoneyear) basis(seeExhibit1). EXHIBIT1 ISOutsourcingDefinition Informationsystems(IS)outsourcingisthe contractingofanISprocessorfunctiontoan externalvendoronalong-term(1+years)basis. SOAS2-a-p1 01994byINPUT.ReproductionProhibited. 1 OUTSOURCING:DIRECTIONSANDOPPPORTUNITIES INPUT ThevariousISoutsoxircingsegmentsare,asshowninExhibit2. EXHIBIT2 ISOutsourcingComponents Outsourcing Systems Network Desktop Applications Operations Management Services Management Platform Applications Applications Applications Operations Operations Maintenance Development 1. SystemsOperations-Contractingtoavendortheinforma- tionsystemsoperationsineitheroftwoways: •PlatformSystemsOperations-Thevendorisresponsiblefor managingthecomputersystemsandtheirassociatednet- works. •ApplicationsSystemsOperations-Thevendorisresponsible fordevelopingand/ormaintainingaclient'sapplicationssoft- wareaswellasoperatingandmanagingthecomputersystems andtheirassociatednetworks. 2. NetworkManagement-Contractingtoavendorforthe operationsandmanagementofthecomputer-relatedtelecommu- nicationsnetwork,transmittingdataandtext,voice,image,and videoasrequired. Voice-onlynetworkoperationsarenotpartof informationsystemsoutsourcing. 2 ©1994byINPUT.ReproductionProhibited. SOAS2-a-p1 OUTSOURCING:DIRECTIONSANDOPPPORTUNITIES INPUT 3. DesktopServices-Contractingtoavendorforthedeploy- ment,maintenance,support,andconnectivityofthe organization'sPC/workstationinventory. Theservicemayalso includeperformingthe"helpdesk"function. 4. ApplicationsManagement-Thevendorisresponsiblefor thedevelopmentandmaintenanceofalltheapplicationssys- temsaclientusestosupportabusinessoperation. •ApplicationsDevelopment-Contractingforthedesign,development,maintenanceandenhancementofnewapplications softwareassociatedwithabusinessoperation. •ApplicationsMaintenance-Contractingonlyforthemainte- nanceoftheexistingapplicationssoftwareassociatedwitha businessoperation. Informationsystemsoutsourcingisdistinguishedfromsystems integrationinthefollowingway: Systemsintegrationisproject- oriented,i.e.,thereisadefinablestartandendpointtothe relationshipotherthanthecontractperiod. Systemsoperations andotherformsofoutsourcingareprocess-oriented,i.e.,thereis acontinuingrelationship. (SeeExhibit3.) EXHIBITS SystemsOutsourcingvs. SystemsIntegration Systemsoutsourcingisfunction-or process-oriented Systemsintegrationispro/ecf-oriented SOAS2-a-p1 ©1994byINPUT.ReprodudionProhibited. 3