CIO Wisdom II: More Best Practices

Where?

Where in the enterprise should outsourcing be used? A commonly held view on where to use outsourcing is one that is similar to the economic notion that the market does not pay a company for diversifying risk. Analogously, the market does not pay a company for doing things outside its core business. A straightforward interpretation of this statement is that any IT function of a business that is not part of its core is a candidate for outsourcing.

For example, ERP systems may not be a company's specialty and therefore can likely be outsourced. On the other hand, a company such as Wal-Mart may require an ERP that can predict consumer behavior, which is therefore within its core business and hence not suitable for outsourcing (Figure 14.1 ...