Managing and Using Information System

9

INFORMATION SYSTEMS SOURCING

This chapter is organized around decisions in the Sourcing Decision Cycle. The first question in the cycle starts with the decision to Make (insource) or Buy (outsource). This chapter's focus is on issues related to outsourcing, whereas issues related to insourcing are discussed in the other chapters of this book. Discussed are the critical decisions in the Sourcing Decision Cycle: How? and Where? (cloud computing, onshoring, offshoring). When the choice is offshoring and the next decision is: Where abroad? (farshoring, nearshoring, captive centers). Explored next in this chapter is the final decision in the cycle, Status Quo or Change?, in which case the current arrangements are assessed and modifications are made to the outsourcing arrangement, a new outsourcing provider is selected, or the operations and services are backsourced, or brought back in-house. Risks and strategies to mitigate risks are discussed at each stage of the cycle.

After 13 years, Kellwood, an American apparel maker, ended its soups-to-nuts IS outsourcing arrangement with EDS. The primary focus of the original outsourcing contract was to integrate 12 individual acquired units with different systems into one system. Kellwood had been satisfied enough with EDS' performance to renegotiate the contract in 2002 and 2008, even though at each renegotiation point it had considered ...