Information Technology Sourcing and Cloud Strategy

The wave of globalization has made the world a small community. Many companies have embraced the power of outsourcing to streamline their operations and complete tasks that cannot be handled by its employees. Information technology (IT) sourcing is a process whereby various activities or computerized functions are performed by third party suppliers. This paper gives a summary of two articles that describe different IT sourcing approaches. The strategies are then compared, contrasted, and analyzed. The important factors for each sourcing strategy are also described in the paper. The discussion concludes by identifying and supporting the best IT sourcing model.

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Summary of Articles

Article 1

The article “Cloud Sourcing – Next Generation Outsourcing?” focuses on the issues surrounding the process of cloud sourcing. The authors acknowledge that this form of sourcing is appropriate for reducing costs while at the same time maximizing productivity. This approach is embraced by many companies and is believed to be “the next generation of outsourcing” (Muhic & Johansson, 2014, p. 553). Whenever choosing this method, the article encourages companies and individuals to consider critical issues such as compliance, data privacy, security regulations, and standards. After conducting the study, the authors conclude that cloud sourcing might become the future of IT sourcing because of its potential (Muhic & Johansson, 2014).

Article 2

The article “Home or Overseas? An Analysis of Sourcing Strategies Under Competition” describes two unique sourcing strategies that have become common. These include efficient and responsive sourcing. The first one refers to every sourcing practice associated overseas IT services providers. Responsive sourcing focuses on a company’s home country. Efficient sourcing is known to provide adequate cost advantage. Responsive sourcing, on the other hand, makes it easier for firms to gather accurate and timely information to develop the best procurement goals or decisions. Additionally, corporations can shift from efficient to responsive IT sourcing when market sizes shrink (Wu & Zhang, 2014). This process is known as backshoring and has the potential to minimize competition based on the existing cost dimension.

Comparing and Contrasting the Sourcing Approaches

The first article discusses cloud sourcing while the second one describes efficient and responsive techniques. Cloud sourcing is a unique arrangement whereby firms pay different providers to execute various services. One unique aspect of this IT sourcing method is that a company subscribes based on the per-use utility approach (Potancok & Vorisek, 2016). On the other hand, both efficient and responsive sourcing techniques (as described in the second article) are based on monthly or annual contracts. Corporations should examine these differences carefully in order to make desirable decisions.

Cloud sourcing is an approach that reduces costs and complexities. Similarly, both responsive and efficient sourcing methods make it easier for companies to minimize operational costs. In cloud computing, subscribers might not dictate the supplier’s competence. Efficient sourcing is guided by terms and conditions whereby the subscriber expects superior services. These three sourcing methods also present similar issues (Muhic & Johansson, 2014). For instance, the partners should address specific concerns such as compliance, service level agreements, security, data privacy, and standards (Antero, Hedman, & Henningsson, 2014). Such concerns are taken seriously to ensure confidential information is safeguarded.

The second article analyzes two sourcing techniques that have unique differences. For instance, efficient sourcing is an agreement between a local firm and foreign IT services providers. Responsive sourcing, on the other hand, occurs between companies operating in the same country. Efficient sourcing can provide cost advantage while responsive sourcing delivers accurate information (Wu & Zhang, 2014). The two techniques also guide companies to reduce the level of competition. Due to the changes experienced in many nations, different firms will embrace the concept of backshoring. Despite these similarities and differences, the goals of each technique include maintaining the level of performance, reducing costs, and streamlining operations.

Important Factors: Long-Term or Short-Term

The selected articles offer various factors that must be considered whenever planning to select the best IT sourcing strategy. Companies using efficient sourcing should identify factors such as the level of competition, costs of services, and efficiency of potential suppliers. The issue of cost advantage is also critical when choosing this method. Availability of information is also critical since it ensures that desirable decisions are made (Lindh & Nordman, 2017). For instance, efficient sourcing can be considered to deal with competition rather than taking advantage of reduced operational costs.

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With responsive sourcing, companies should begin by examining the capability of the identified supplier. The second factor is the supplier’s ability to offer confidential and secure services (Harhoff, Mueller, & Reenen, 2014). The service provider’s ability to communicate with the company is also critical. Before selecting the best option, companies can examine the rising logistics and labor costs in their home countries or foreign regions (Wu & Zhang, 2014). The important objective is to ensure the selected option supports business performance.

Cloud sourcing is a powerful model that can be considered for a wide range of information technology services. Some of the factors to consider include the supplier’s ability to maintain privacy, compliance, and security regulations. The dealer should also be able to provide timely decisions. The payments methods should be considered since cloud sourcing is based on a per-use model (Muhic & Johansson, 2014). The nature of the targeted services and the length of contract should also be analyzed before selecting this method.

From these factors, it is evident that cloud sourcing appears to be strategic for the long-term. The effectiveness of the method empowers companies to achieve their IT needs, support their clients’ demands, and emerge successful. The model can also be secure and confidential. Both efficient and responsive sourcing techniques appear to be tactical for the short-term. This is true because the global marketplace is changing fast. A company associated with an efficient IT sourcing approach can cancel the contract whenever operational costs increase. This is the reason why backshoring is becoming common (Wu & Zhang, 2014). Responsive sourcing is appropriate for companies that want to meet their short-term goals.

Effective Strategy

The three IT sourcing methods discussed above are appropriate for different companies depending on their business models. However, efficient sourcing for IT solutions appears to be the most effective. The first reason why this method is appropriate is because firms can identify foreign countries whereby IT services are affordable. The second one is that the approach makes it easier for companies to minimize business costs (Wu & Zhang, 2014). Additionally, the approach empowers companies to remain competitive. Finally, the option of backshoring is available to firms using this strategy.

Conclusion

As the demand for superior IT services continue to rise, companies should make appropriate decisions in order to identify the right suppliers and sourcing strategies. The presented approaches can empower companies to offshore various IT services. Each strategy should also be analyzed carefully to ensure the best option is selected. Issues such as security, privacy, and standards, and competition should be taken into consideration whenever selecting a given IT sourcing strategy.

References

Antero, M., Hedman, J., & Henningsson, S. (2014). Sourcing strategies to keep up with competition: The case of SAP. International Journal of Information Systems and Project Management, 2(4), 61-74. Web.

Harhoff, D., Mueller, E., & Reenen, J. V. (2014). What are the channels for technology sourcing? Panel data evidence from German companies. Journal of Economics & Management Strategy, 23(1), 204-224. Web.

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Lindh, C., & Nordman, E. R. (2017). Information technology and performance in industrial business relationships: The mediating effect of business development. Journal of Business & Industrial Marketing, 32 (7), 998-1008. Web.

Muhic, M., & Johansson, B. (2014). Cloud sourcing – Next generation outsourcing? Procedia Technology, 16, 553-561. Web.

Potancok, M., & Vorisek, J. (2016). Specific factors influencing information system/information and communication technology sourcing strategies in healthcare facilities. Health Informatics Journal, 22(3), 536-547. Web.

Wu, X., & Zhang, F. (2014). Home of overseas? An analysis of sourcing strategies under competition. Management Science, 60(5), 1223-1240. Web.

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StudyCorgi. 2020. "Information Technology Sourcing and Cloud Strategy." November 4, 2020. https://studycorgi.com/information-technology-sourcing-and-cloud-strategy/.

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