By Ian Tho

This booklet indicates IT managers the right way to establish, mitigate and deal with hazards in an IT outsourcing workout. The ebook explores present developments and highlights key concerns and adjustments which are occurring inside outsourcing. consciousness is given to making a choice on the drivers and comparable hazards of outsourcing by means of interpreting lately released and present innovations of IT outsourcing.

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Managing the Risks of IT Outsourcing

This e-book indicates IT managers easy methods to determine, mitigate and deal with dangers in an IT outsourcing workout. The booklet explores present developments and highlights key matters and alterations which are happening inside outsourcing. realization is given to choosing the drivers and comparable dangers of outsourcing via interpreting lately released and current innovations of IT outsourcing.

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Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Dai-Ichi Kangyo Bank groups. qxd 3/1/05 12:29 PM Page 30 Managing the Risks of IT Outsourcing most often described are the vertical and horizontal keiretsu. The vertical keiretsu are industrial groups connecting manufacturers and parts suppliers or manufacturers, wholesalers and retailers. Examples of the vertical keiretsu include Toyota, Nissan, Honda–Matsushita, Hitachi, Toshiba and Sony. Distribution keiretsu, a subgroup of vertical keiretsu, control much of Japanese retailing, determining what products will appear in stores and showrooms and at what price.

The business functions, in turn, drive the design of the IT function. This continuous loop identifies the changes that constantly occur in an organization’s IT support function. On the right, the IT function is outsourced. The outsourced provider controls the systems integration (SI) process. It is both changing and complex because of the need to satisfy the business function requirements of the buyer organization as well as the profit motives of the supplier organization. On the far right of the diagram, the business objectives have now become the outcome that is required when the IT function is outsourced.

Although keiretsu is not, strictly speaking, an outsourcing model, it is discussed here for the sake of completeness. A grouping or family of affiliated organizations that form a tightknit alliance to work toward each other’s mutual success, forms a keiretsu. The keiretsu system is also based on an intimate partnership between government and businesses. A keiretsu represents an intricate web of relationships that links banks, manufacturers, suppliers and distributors with the Japanese government.

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