Problem :

The IT department of a local authority has been operating as an internal agency for three years when the move was to be made to outsourcing. This required a lot of work, as the Chief Information Officer explained:

"There was a lot of information available to the outsourcing companies about current equipment, current costs of running equipment, staffing costs. A lot of information from us to them. But although we had been operating as a trading organisation, there were not any service level agreements in place....It was a problem to redefine measurements from scratch. We worked with a preferred supplier to achieve this. The client evaluation team designed the basic service level agreement and then said to the (contractor) does this meet your criteria or is there anything you want to add to this. We had our own staff on the operational side to complete the main part of this document, went to the user departments as receivers of that service to complete their part and then put the documents together to form a single document in initial draft."

(i) Discuss the reasons why an organisation can choose to outsource some of its Information Systems (IS) functions.

(ii) Identify the preconditions of outsourcing which, if absent, represent constraints to outsourcing; and explain how these can be overcome.