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BPO and Cloud Computing (Due Week 3)
Bob Smith, CEO of Smith’s Information Services, Inc., was studying the replacement of the company’s data center by an outside service. Smith’s Information Services, located in Lexington, Massachusetts, was in the midst of a corporate overhead reduction program. As part of this program, Bob had been assigned the task of reviewing opportunities in outside sourcing for data center services. He was expecting a report on this issue at the next executive meeting in three days.
Smith’s Information Services Cost Reduction Program
Smith’s Information Services is a $2 billion firm with sales in consumer information. It enjoyed high overall growth until fierce competition flattened sales and decreased profits sharply two years ago. Since then, corporate cost and overhead reduction efforts were widespread. The CIO was in charge of the data center and has been investigating the possibility of a business process outsourcing project that would move the data center to the cloud.
Data Center
The data center at Smith’s Information Services was created in the mid-1980s and has grown very rapidly. Mainframes were installed first, followed by AS400s, and then servers that were rack mounted. Disk storage, at one time, was at a premium, but has since gone down in price. Cooling for the data center has gone up as more and more servers and disks were installed. This cost, along with the electricity cost to run all of the devices in the data center, has Bob Smith worried that the cost of doing business is getting out of control.
Along with the rising hardware and software costs, the number of employees needed to run this data center has grown considerably. The cost of running a data center 24/7 is becoming rather large, and this is another issue that Bob Smith is concerned about at the moment. The growth potential for the organization is very positive, which means that more data will be stored, which will result in higher costs in all areas of the data center unless cost savings are found.
Outside Services
The CIO has felt that this was coming sooner or later, and has already been quietly investigating the idea already. There are many options from which to choose, including: a local data center, a well-known data center, and a data center that is located overseas. Each of these solutions has pros and cons, and one big issue is the security of the data. Some of the other issues include service-level agreements that have to be hammered out, HR issues that will deal with the local and remote staff members, and other issues, such as informing or not informing the customer that Smith’s Information Services will be outsourcing the data somewhere.
Deadline
The CIO’s job is to gather as much data as possible from outside sources, analyze the data, and then come up with the best choice. The deadline will be the next executive monthly meeting, which meets in two weeks.
Your Assignment:
Assume that you are CIO. Prepare the analysis requested from Bob and be prepared to present it at the next executive monthly meeting.
Grading Rubric:
PointsCriteria5Correlation of the assessment with the TCOs outlined above and material covered through Week 3.5Compliance with format requirements outlined above.20Assessment of how each of the three (3) outsourcing alternatives impact your business decision and also whether or not it might be helpful or detrimental to your core business.5Assessment of any issues that may arise (both in the short-term and long-term) for each outsourcing alternative.5Assessment of the type of contract chosen for each outsourcing alternative. Provide a rationale for your choice.5Assessment of the evaluation criteria used to rank the proposals. Again, a rationale for your choice needs to be included.5Strength of argument on the number of vendors selected to provide the services.10Assessment/identification of the difference in timeline (if any) between the three outsourcing alternatives.Total: 60
