Prof. Juliana Sutanto
Chair of MIS ( www.mis.ethz.ch
)

• Defining MIS
• Managing IS Portfolio
• Managing IS Outsourcing
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Source: Hammer, M. “Reengineering work: don’t automate, obliterate”, HBR , July/August 1990
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Source: http://mis.eller.arizona.edu/careers/what.asp
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• Tension around IS budgets increase
• Regulators demand more from IS
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• Defining MIS
• Managing IS Portfolio
• Managing IS Outsourcing
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• Analogous to managing financial portfolio
– the seeking of value is constantly balanced with risks and costs
– the mix is constantly monitored to assess which projects are on track , which need help , and which should be shut down
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Scope of Work
Portfolio Management
The continuous process of identifying, selecting, and managing the optimum set of
Portfolio investments to realize maximum business value.
Project management
The application of knowledge, skills, tools, and techniques to
Project activities to meet the
Project requirements
Scope of Initiatives
IS Business/IS Enterprise
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Sources:
• Chevron
• Gartner Group
• PMI Combined Standards Glossary
(2 nd ed.)
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… 60 % of respondents to a survey of 317 IS decision-makers affirming that they practice portfolio management at some level within their organizations—versus only 39.4 % providing the same answer in 2005.
(Forrester Research, 2007)
Information systems portfolio management is increasingly recognized as a management discipline used to improve return on investments .
(Gartner Research, 2007)
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Strategic applications
• Continuous innovation
• Pursue high value added solutions
• Example: CRM system
High potential applications
• Research and design
• Ensure effective cost control
• Example: Mobile concierge
Key operational applications
• Defensive innovation
• Pursue high quality solutions
• Example: Hotel booking system, front desk system
Support applications
• Divest and rationalize
• Pursue sustained quality solutions
• Example: Management reporting system,
HRM system
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Distributed
Towards user control
Location of
IS decision rights
Traditional
IS function
Centralized
Internal
Towards outsourcing
Provision of IS resources
External
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• Defining MIS
• Managing IS Portfolio
• Managing IS Outsourcing
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• Vendor Economics of Scale
– Cost Reduction
– To Increase Shareholder’s Value
• Vendor Specialization
– Improve Performance
– To Focus on Core Competence
• To Provide IS Professionals Better Career
Prospects
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• To ensure continuity
• To potentially gain a strategic partner
Source: Bogue, R.L. Three keys to selecting the right vendor for your next project, TechRepublic , 2005
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Source: NPower Network, Selecting the Right Technology Vendor
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Source: Willcocks, L., Griffiths, C., Kotlarsky, J. Beyond BRIC: Offshoring in non-
BRIC countries: Egypt – a new growth market, LSE Outsourcing Unit report, 2009
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• People Fit
• Technical Fit
– Completeness
– Ease of Use
– Documentation
– Transportability
– Expandability
• Cost
– Purchase Price
– Customization Cost
– Training Cost
– Maintenance Cost
– Consulting Charges
– Conversion Costs
• Financial Strength
• Track Record
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• Vendor company 1: has the best technical fit
• Vendor company 2: has the best people fit
• Q: If you were Harley’s CIO, which vendor will you choose?
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Vendor Search
&
Contracting
Costs Initial
Transition
Costs Cost of
Managing the
IS Outsourcing
Effort
Post IS
Outsourcing
Transition
Costs
Change of IS
Vendor or
Reintegration of IS
Time
Original Idea to Outsource
Beginning of the
IS Outsourcing
Relationship
• Reducing Hidden Costs
– Choose activities that are safe to outsource
– Spend some time researching vendors
– Contract or hire people with outsourcing experience
– Draft tight contracts
– Cultivate the vendor relationship
– Keep key IS people in-house
Source: Barthélemy, J. The Hidden Costs of IT Outsourcing,
Sloan Management Review , 2001, pp.60-69
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• Relationship with vendor must be aligned with the strategic intents underlying outsourcing initiative
– IS improvement
• Do IS better
– Business impact
• Use IS to achieve better business results
– Commercial exploitation
• Exploit IS assets externally
Source: DiRomualdo, A. & Gurbaxani, V. Strategic Intent for IT
Outsourcing, Sloan Management Review , 1998, pp.67-80
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Strategic applications High potential applications
Key operational applications
Support applications
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Domestic Insourcing
Domestic Insourcing
Captive centers
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Source: eBRC e-Business & Resilience Centre
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1. Costs
– Labor costs
– Infrastructure costs
– Corporate taxes
2. Skills availability
3. Environment
– Government support
– Business environment
– Living environment
– Accessibility
4. Infrastructure quality
– Telecoms and IT
– Real estate
– Transportation
– Power supply
5. Risk Profile
– Security
– Disruptive events
– Regulatory risks
– Macroeconomic risks
– Intellectual property risk
Source: Willcocks, L., Griffiths, C., Kotlarsky, J. Beyond BRIC: Offshoring in non-
BRIC countries: Egypt – a new growth market, LSE Outsourcing Unit report, 2009
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• Bank S operates in the Asia Pacific region with a HQ in Singapore
• Most of its IS staffs are in Singapore and HK
• To cut cost, it decides to create captive center in lower-cost country
• The shortlisted countries are China, Malaysia, and
India
• In the end, it selects Malaysia and India
• Q: Why not China?
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• Alignment of corporate culture and values across geographies and backgrounds
• Avoidance of the `them and us` syndrome
• Management of knowledge transfer, continuous training and education, and promotion of quality values
• Cross centre mentorship, Expat program, relations with local institutions
• Bottom line: HR management
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• Defining MIS
• Managing IS Portfolio
• Managing IS Outsourcing
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• To manage the IS:
– Create IS portfolio plan
– Look around! Which applications are outsourced and to whom
– Look beyond your geographical location! Seek value while balancing costs and risks
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