Does the outsourcing of IT services, including software development and hardware maintenance, make strategic sense? Why or why not?
Outsourcing IT services has become a practice in many organizations and it makes strategic sense depending on the reasons for the act. It is not possible for all organisations to outsource IT services due to their variations in operations. Some organisations do not require having a well-developed IT department because their operations are not dependent on IT (Daft, 2015). Other organisations require their IT department because their operations are fully depended on IT. Outsourcing IT services is one method that is used by companies to minimize cost. The process of developing an IT department that involves both hardware and software is costly, and by outsourcing the services, the organisation spends a reasonable amount of funds. Sometimes developing the entire IT system is not necessary because some organisations use only a small portion of it. (Sparrow,2003), was keen on the issue of outsourcing IT services, and he claimed that maintaining an IT system is expensive because an organisation always has to pay a maintenance fee that is not necessary if the service is outsourced.
Modern technology is a major reason outsourcing IT services makes strategic sense. Technology is always changing, and it is not possible for an organisation to keep in phase with it (Shankar, 2012). Some organisations have chosen to outsource IT services simply because they are sure they cannot afford to meet the cost that will be associated with always adopting a new and improved technology. Most IT equipment is expensive and frequently purchasing it will drain the funds of an organisation. According to (Siepmann, 2013), by outsourcing IT services, the company always gets the best technology because most IT providers want to keep up with modern technology so as to win customers. Therefore, the decision to outsource IT services makes strategic sense in many organisations because they are careful not to spend a lot on what they can source cheaply.
Many corporations are using the virtual network approach. Describe this approach in your words. What are some advantages? What are the disadvantages?
The virtual network approach is a technology that enables the operation of remotely located computers by use of the internet (Palachuk, 2013). The computers can be controlled and operated as if they were close. This technology has been developed to aid organisations that have branches to monitor their operations. Installation of a virtual network requires a user to be conversant with the internet so that he/she can easily operate the computers. A virtual network is good when it comes to monitoring of operations (Mclvo, 2010). A company that wants to minimize the cost of monitoring its branches manually can easily do so by using a virtual network. It also makes the accessibility of branches of a company easy because it is possible to monitor even branches in a different geographical region.
A virtual network is good but because it does not involve face to face communication, it can lead to poor communication (Smit, 2007). When a user operates the virtual network system, he/she might fail to capture the correct or the intended meaning in an entry. Communication involves the use of non-verbal cues that help to relay the correct information. Therefore, sometimes it becomes hard to trust the operations of a virtual network. When the operator of a virtual network seeks to share information among other computers, he/she might find it difficult to do so because the other remotely controlled computers might include different entries. Though virtual network approach is not very dependable, it is still very useful to companies that hope to minimize costs of operations (Mukherjee, 2005).
Daft, R. (2015). Management. Cengage Learning.
Mukherjee, S. (2005). Organisation & Management And Business Communication. New Age International
Smit, P.J. (2007).Management Principles. Juta and Company Ltd
Mclvor, R. (2010). Global Services Outsourcing. Cambridge University Press.
Siepmann, F. (2013). Managing Risk and Security in Outsourcing IT Services.CRC Press.
Sparrow, E.(2003). Successful IT Outsourcing. Springer Science & Business Media.
Palachuk, K.W.(2013). Managed Services in a Month - Build a Successful It Service Business in 30 Days. Great Little Book Publishing Company
Shankar, D.S.(2012). IT Services Business Management. PHI Learning Pvt. Ltd