Outsourcing is generally defined as the transfer of the management and/or day-to-day execution of an entire business function by an outsourcing organization to an outsourcing provider. In the IT world, outsourcing refers to transferring the management of the IT function, including infrastructure and people to a third party. Also in the IT world, BPO, or business process outsourcing refers to the transfer of the management and/or day-to-day execution of an entire business function supported by an IT infrastructure to an outsourcing provider. There are other layers of business functions that can be outsourced however. A business process supported by IT consists of the following layers that depend on each other. They are, from top to bottom:
People, for instance software developers, systems analysts, project managers and IT administrators.
Processes that ITIL defines in the operational and tactical layer, such as configuration management or service level management. But also more project like processes such as installation and integration.
Infrastructure, such as data centers, physical computing, virtual computing, platforms and software. In a previous post on computing deployment models we discussed a number of shared infrastructure models that are also relevant in this context.
Services that are defined in an IT service catalogue such as business services, personal computing services and central IT services.
Business processes, such as HR, marketing, finance, production, and sales.
There are several key reasons why an outsourcing organization would want to outsource parts of or an entire business process. These include:
• Gain access to specialist skills and resources
• Focus on core business
• Realize cost benefits
• Reduce time-to-market
What then are the parts that can be outsourced and how do we refer to models that transfer a dedicated operational or tactical resource into a shared resource? The table below defines six models based on mapping dedicated and shared operational and tactical resources to the business process layers defined above.
If the entire business process stack is managed with dedicated resources we call this In House. In this model responsibility and ownership of the stack is internal to the organization.
Body shopping refers to the practice of hiring IT specialists for a short period. This is generally done to get access to skills and resources that are only needed on a temporary basis. These IT specialists still need to be managed by an internal dedicated resource.
Outtasking is the outsourcing of a task such as installation or integration or a process such as configuration management. When outtasking a task or process, agreements can be made on the quality and completeness of the task and the completion of milestones within the task or process. Both people and process are outsourced in an outtasking effort.
Managed services refer to a third party monitoring and maintaining dedicated IT infrastructure. Infrastructure refresh is done in cooperation with the managed service provider. Service level agreements can be made on the end-to-end performance of the infrastructure. People, process, and infrastructure management are outtasked in a managed services deal.
IT Outsourcing is the transfer of the management and/or day-to-day execution of an entire IT function inclusive of IT infrastructure ownership, process and employees. Infrastructure refresh is done in cooperation with the outsourcing provider. Service level agreements can be made on the end-to-end performance of the IT function.
Business process outsourcing refers to the transfer of the management and/or day-to-day execution of an entire business function supported by an IT infrastructure to an outsourcing provider. In contrast to BPaaS, BPO contracts are usually longer and involve a dedicated IT infrastructure.
The level of control, responsibility, and ownership is transferred further from an outsourcing organization to an outsourcing provider when moving from the In House to the BPO model.
Elastic Enterprise
The METISfiles operational and computing deployment models, together with our cloud model will serve as definitional cornerstones in our future Elastic Enterprise analysis. Just like elastic enterprises cannot afford to wait for IT infrastructure to be delivered, installed and tested, business process resources can be outsourced to decrease time-to-market, get cost benefits, get access to skills, or focus on core competencies.
If you have any questions on queries on our infrastructure, operations, or cloud definitions, let us know!
