Background:

On pages 12-14 of their article ÒHow to Manage an IT Outsourcing Alliance,Ó McFarlan and Nolan list out several classes of factors that put IT outsourcing on the table among the companies they studied:

1. General managersÕ concerns about costs and quality

2. Breakdown in IT performance

3. Intense supplier pressures

4. Simplified management agenda

5. Financial factors

6. Corporate culture

7. Elimination of internal irritant

A common theme behind several of these factors is that IT has indeed had a long history of being poorly managed in many companies: costs are out of line, service is poor, IT skills and platforms are out of date, and top management is not clear on just what benefits, strategic or otherwise, the firm is getting from escalating IT costs.

Assignment:

How prominently do you think a history of poorly managed IT should figure in the decision to enter into a major outsourcing relationship? What are the potential dangers of entering into a significant outsourcing relationship primarily because IT has a history being poorly managed? What are some ways to address long standing IT performance problems short of wholesale IT outsourcing?

Please write a one page, single spaced memo (300-500 words) answering the above questions and explaining your reasoning. Although you are at liberty to devote most of your space to answering any one of the three questions, your memo should at least briefly address all three.