Companies turn to outsourcing for many different reasons. Some companies want to pursue new opportunities, others seek to offload nonstrategic functions, and still others want to reduce and control costs. Yet despite these different motivating factors, there is a common thread underlying each of these decisions to outsource.

System Architecture

A willingness to invest in cross-family architectures will distinguish successful from unsuccessful IT user organizations.

In the past few years, we have been exposed to several dozen definitions of knowledge, usually as a first step in presenting yet another definition of knowledge management. Our intention here is (alas) exactly the same, although in this Executive Report we focus on the human cognition end of the spectrum of definitions.

The vision of distributed computing has been an attractive one for the computing industry for many years. The original goal was to build computer systems that reflected the distributed nature of real organizations. This was made possible by the advent of relatively low-cost minicomputers that could be located in field offices and warehouses alongside their users.

In a 1999 article in a computer industry periodical that focused on the backlog of work and the shortage of qualified software professionals, a CIO of a Fortune 1000 company was asked if outsourcing offshore had been considered as a possible alternative. His reply was something like: "Well, we tried outsourcing to an Indian company back in 1992, and it just didn't work out.

Software Development

As the Internet reshapes the business landscape, companies are racing to deploy customer-and-supplier-driven solutions at every level of the enterprise. As the pace of change quickens, information technology is finding its way into every corner of the enterprise. The IT organization, based on industrial era management structures, is at the center of this dynamic shift.

In the past, large-scale commerce systems were monolithic applications that were tough to build and difficult to maintain. Today, the global economy created by the Internet has created a great need for technology that allows commerce sites to be developed quickly, yet exhibit the scalability and reliability features of traditional enterprise-class deployments.

One of the most obvious effects of the Internet and e-business is the change to traditional business models. In consumer sales, for example, the traditional sales and distribution channel from original manufacturer to final consumer consists of a chain of intermediaries -- jobbers, wholesalers, and retailers -- each of which provides a logistical, communicative, or other support function to link manufacturer to consumer.

We hear almost daily about the imperative need to align our IT infrastructure and systems with the business activity. IT must not only support our business processes within a fast-changing environment, but also be responsive to new demands for managerial information.

Complexity is all around us.

Success in an outsourcing engagement is determined by the ability to set performance expectations properly and to manage the engagement to meet those expectations. Misalignment of these expectations is perhaps the most common reason why outsourcing engagements falter. In some cases, the client is disappointed with performance even though the outsourcer has exceeded its performance commitments.

As the new economy continues to redefine businesses, no IT organization will remain untouched. Converging with trends such as increasing globalization, productivity growth, and speed in business execution, the information-based economy places new demands on IT groups, and it renders obsolete the IT organizational model still prevalent in many established businesses.

The job of developing systems and IT solutions in the post-Y2000 era is a daunting proposition. Today, IT organizations manage a large portfolio of older legacy systems (patched up to survive the millennium rollover). Enterprise resource planning (ERP) and customer relationship management (CRM) solutions have been added on top of that to provide packaged solutions and retire some of the older legacy systems. Now comes the push to Web-enable the organization, create marketable components, and build new products.

This Executive Report describes the fundamentals of building a global IT sourcing organization. We, the authors, spent the last two years building such an organization (which we will refer to as IT Sourcing in this report) for a Fortune 100 pharmaceutical company.

Organizational

Telecommuting will eventually become the norm and will be a competitive advantage for those companies who embrace it proactively and intelligently.

IT Industry

Large organizations around the world are struggling to find enough IT professionals to staff key positions. In the next decade, as baby boomers and preboomers retire, and there are not enough younger people to replace them, managing this transition will become a critical problem.

In the minds of some, the debate still rages: is e-business merely another overblown trend, or is it (as many analysts claim) a monumental change on the order of the industrial revolution? If one focuses strictly on technology, the first argument has some merit. After all, how many technological "revolutions" have passed through IT organizations over the past 30 years? The Internet may be here to stay, but there will always be another new technology to capture the minds of IT professionals.

Centralizing a corporation was once considered an

The majority of this Executive Report focuses on a case study that traces the outsourcing process at Amtrak from its inception and, with the advantage of hindsight, relates the lessons the company has learned. It explores the impact of Amtrak's failure to adequately focus on the strategic benefits of outsourcing as a result of placing too much emphasis on tactical, short-term goals.

How do you manage a large organization in today's high-tech environment? More to the point, how do you manage a real-time organization working at Internet speed? These are the questions managers everywhere are faced with today.

Important technologies inspire innovation, motivating technologists and entrepreneurs to both create new roles for the technology and use it to solve old problems. The Internet is the most glamorous example of such a technology. Among the innovations inspired by the Internet are network-centric technologies such as Java and XML; however, these innovations are wrapped in a veil of hype.

We all outsource; we do it everyday. The buying and selling of goods is the basic fabric of commerce. It becomes outsourcing when we use it to fulfill our business needs -- we just don't think of it as outsourcing. It is so basic to our way of business that we hardly think about the process, the risks, or any contractual provisions. Outsourcing is truly an arms-length business-to-business transaction.

Most IT environments evolved under isolated scenarios where few systems were functionality integrated. Over time, piecemeal replacement efforts resulted in the massive proliferation of highly redundant and inconsistently defined data and system functionality. The introduction of new technology in the absence of a coherent integration strategy tended to escalate this problem.

The enterprise first saw Java in the browsers of its employees four years ago. These applets, the vanguard of the revolution, have all but vanished, and Java has moved from employee clients to corporate servers. Along the way, performance and compatibility problems have largely been solved.