OUTsourcing Outsourcing Strategy Correlation Business Decision Drivers Defending

OUTsourcing

Outsourcing & Strategy Correlation Business Decision Drivers Defending competition • Cost cutting • New product/service innovation • Better quality management Prospectors – strengthen or create competition • Core competency development • Leverage internal strengths • Close internal weaknesses Analysers – niche positioning • Best Value for Money o Efficiency o Value adding • New product/service innovation

The What, How much, Who & Where What services/infra are to be outsourced? How much of ICT to be outsourced? Who to outsource? One or more providers for which services/infra Where to outsource? In country, out of country, combination

Decision Criteria Presented 1. Cost efficiency goals 2. Protecting capacity building of core competencies (strategic service oriented products) 3. Covet Political / Power Play agendas (Pfeffer’s Political Model): • Info hoding & selective use • Formal (but steered) decision criteria • Delegate to consultants (external people) to steer & recommend • Building allies – groupthink decision making 4. Intended internal Resource Development Capacity 5. Directed orders from the top (agency theory)

Telstra Value Chain – Outsourcing Value Activities : all or part of

Case Study Blue Energy True Energy IT Unit Hosting TE’s systems CEO (Markus) Like CFO (Adel) CIO (Gordon) CFO (Maria) IT Unit CIO (Gordon) Like IT Unit Build Data Centre or Outsource ? Consultant (Pamela) Like Decision: Manuf & Financial system same as parent coy