Outsourcing Alternatives Essay

Outsourcing
Alternatives
There are three alternatives in this situation. There is a re-org that has been proposed for the IT department. There is the view of the CIO, which is that no re-org is necessary, so essentially the status quo option. The third option is to outsource the IT department.
Compare Outsourcing with Internal Solutions
There are advantages and disadvantages to outsourcing the IT department to a third party vendor. The biggest advantage is that the vendor can handle the size and complexity fairly easily, since most vendors work with customers much larger and more complex than us. Having such a vendor also means that our company does not need to have as large an IT department. This may or may not result in cost savings. The company can also avoid a re-org, but the CIO recommends against that option. A vendor will also allow Triad to work with the latest software, and the vendor will be responsible for updating the software. . Having a vendor also gives Triad a partner in IT, whereas without a vendor, the company must handle its IT in-house, with no support.
There are a couple of downsides to having a vendor. The first is that the vendor sometimes does cost more. Naturally Triad would not take on a vendor that cost more in the contract, but any work not specified in the contract could result in an increase in total IT cost. Furthermore, even when the vendor’s cost basis is lower, it will take a profit margin. There is also risk in bringing a third part in to such a vital function. If there are any problems at the vendor level, this could affect Triad negatively. This includes failure to perform, or if the vendor gets hacked, or any other negative outcome. So having a third party vendor increases risk.
The other alternative is to maintain the status quo. Even if a third-party vendor solution is a better option than the re-organization, it is unlikely to be a cheaper, more effective option than simply adding resources to the existing IT department. If the in-house team is capable of performing the needed tasks, it might be more cost effective to build onto that existing organizational infrastructure. There may also be a role for vendors for some things, like having a security contractor or a third party cloud vendor.
Impact on Organizational Culture
The organizational culture will not be strongly influenced by what decision is made. The organization’s function will be impacted, but the culture is not something that flows from the IT department. Thus, any changes made to IT will have operational implications, but not necessarily cultural ones. Having an organizational culture that fosters a high level of communication is important, and information needs to be more of a key element in the operations in general. The company needs to get to a place where the culture encourages information flow and communications as a means of establishing competitive advantage (Watkins, 2013).
Customer Satisfaction
The other thing that has to be considered in this decision is customer satisfaction. It has been identified that the initial issue is related to accounting, which has nothing to do with the customer. But there are issues with respect to the company’s ability to quickly and easily access the different documents that are needed for efficient and effective customer service. Being able to do this remotely in particular will be a major asset. Thus, there are opportunities for operational improvement with whatever decision is made, and those improvements will impact the customer.
Flatword (2016). The pros and cons of outsourcing. Flatworld Solutions. Retrieved April 27, 2016 from https://www.flatworldsolutions.com/articles/pros-cons-outsourcing.php
Watkins, M. (2013). What is organizational culture? And why should we care? Harvard Business Review. Retrieved April 27, 2015 from https://hbr.org/2013/05/what-is-organizational-culture