IS

EXTERNALISATION
Why an how do we externalise the IS ?

186
 THE INFORMATION SYSTEM DEPARTMENT

Feeback from episod 4 :

• What are the features outsourced ?

• And why ?

AUTHENTIC CASE STUDY

187
 SESSION OBJECTIVE

• Understand what part of Information system can be

outsourced

• Analyse the risk and advantage to outsource the IS

189
 SESSION AGENDA

• External IS

• Application

Pied de page 190

 EXTERNAL IS

What is IT outsourcing?

“Outsourcing has become a popular governance mechanism

whereby IS services are provided by the external vendor either
instead of or in addition to the services provided by the internal IT
department.

IT outsourcing has witnessed continued popularity, and the IT

outsourcing market accounts for 67% of all global outsourcing
deals” .

Gorla N. and Somers M. (2014) The impact of IT outsourcing on information system sucess, Information & Management, vol.1, issue 3,
p. 320-335
 EXTERNAL IS

What happen when the IS department cannot answer the organization

need because it does not have :

- The skills
- The resources
- The time
- The money
???

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EXTERNAL IS Cost saving

Transfer of Access to
risk expertise

Outsourcing
Saving of
reasons Focus on
core
valuable time
processes

Technology Capacity
know-how management
 EXTERNAL IS

When would activities occur within the market and when they would
occur within the firm ?

 Answer with the Transaction Cost Theory (TCT)

Source : Williamson, Oliver E. (1979). "Transaction-Cost Economics: The Governance of Contractual

Relations". The Journal of Law and Economics. 22 (2): 233–261.

194
 EXTERNAL IS

Transaction cost
Externalise
(Market) Internal coordination
cost
Information system /
technologies / teams

Production cost
Integrate
(Hierarchy) Internal coordination
cost

195
 EXTERNAL IS
 What are transaction costs ?

SEARCH AND BARGAINING POLICING AND

INFORMATION COSTS AND DECISION COSTS ENFORCEMENT COSTS

• Costs incurred in • All costs that are • Costs involved in making

identifying possibilities for associated with sure all parties stick to
mutual gains negotiating an agreement the agreement
• Identification of •Time spent at meeting • Employment of an
funding source •Time expended in external monitor
• Identification of written and verbal • Time and effort spent
relevant communications monitoring informally
stakeholders
• Cost of gathering
information

196
 EXTERNAL IS
The subsidiary of IS management

 Via an Group (Groupement d’intérêt économique)

198
 EXTERNAL IS

Outsourcing (L’infogérance)

= the outsourcing of support functions related

to computing.

a service defined as the result of an integration of a set of basic services,

which involves entrusting a customer or a part of a customer's information
system (IS) with a computer service provider under a multi- based, with a
level of services and a defined duration

Source AFNOR

199
 EXTERNAL IS
Outsourcing (management of operations)

The subsidiary of the Areva group will take care of 3000

workstations but also the supercomputer of the French center for
aeronautics and space research.

Euriware, a subsidiary of the Areva Group, was selected by Onera, a

French aeronautical and space research center, to manage its
scientific and technical applications, as well as its server and
workstation infrastructures on its two sites. The contract also covers
user assistance, tool maintenance and monthly indicator production.

Onera has 1,500 researchers who rely on a complex information

system which, apart from some 3,000 workstations and 120 servers,
includes a supercomputer and numerous computing stations.

Source : JournalduNet, 12/12/11

200
 EXTERNAL IS

BPO (Business Process Outsourcing)

Big Blue will support the outsourcing of the airline's pay and
business travel services for $ 80 million.

IBM's services division has signed an agreement with Air Canada

over a five-year period to support the outsourcing of a portion of its
HR processes, including payroll and business travel management.
The contract, worth $ 80 million, completes a more comprehensive
outsourcing contract signed 10 years ago with Air Canada.

Source : JournalduNet, 06/10/11

201
EXTERNAL IS
 EXTERNAL IS

Example :

203
EXTERNAL IS

204
 5
EXTERNAL IS - APPLICATION min

Health Data Hub Microsoft Cloud

Please read the article « French decision to have Microsoft host Health Data
Hub still attracts criticism » and give the pros and cons for Microsoft choice by
the government :

PROS CONS

205
 EXTERNAL IS
RISKS :
IS can be totally or partialy externalized but risks should be indentified :

• Inexperienced staff

• Loss of control

• Hidden costs

• Vulnerability of strategic information

• Dependency on the business of vendor

• Must manage reversibility in the event of change of vendor (vendor “lock in”)

208
 WRAP UP
IS management missions:

• Development of IT strategy and policy

• Implementation of IS policy and governance

• Definition and follow-up of IS budgets

• Definition of outsourcing policy

• Organization and management of IS department

• Management of the organization 209

 WRAP UP

The information system management competencies

• Technological skills (no need to be a technical expert)

• Communication and management skills (as other managers)

210
 SESSION CONCLUSION

You know that parts of Information system can be

outsourced

You understand the risks and advantages to

outsource the IS or part of it.

211
 HOMEWORK
Answer the mini-quizz on Moodle.

212
 HOMEWORK

If your appointment took place, start the transcription !

Writing the interview can take five time the duration of the
interview. Ie 10 min interview = 50 min writing

IS INTERVIEW
213
 ONE STEP FURTHER…

Source: Translated in English (document on Moodle)

Fallery (2020), Health data: the StopCovid tree that hides the Health Data Hub forest, The Conversation

214