EA872 - Weekly Blog Entry 7

This week’s reading is about harnessing the mighty EA to guide outsourcing – that is, outsourcing of IT practices to other companies and industries.  The three types of outsourcing relationships include strategic partnerships, co-sourcing partnerships, and transaction relationships.  Each, according to Ross, has its own benefit-risk profile (Ross 144).

Strategic partnerships are when a vendor provides an integrated service.  This can include applications, infrastructure, personnel management, etc.  But the point is that it allows companies to focus on their core objectives while an outside vendor handles the day-to-day operations (Ross 147 - 148).  I would think start-up companies or those with limited resources would find this partnership more attractive, both because of limited cash flow, personnel, and a very real jump towards standardization.

A co-sourcing partnership, much the opposite of the strategic partnership, develops responsibilities for both parties involved.  It’s a more symbiotic approach to achieving success when both companies have skin in the game (Ross 153).  I’ve seen this before in the oil field on joint venture projects.  Because pipelining is so expensive ($2MM per mile in some areas), often times two or more companies will come together to split responsibilities and resources.  This is especially true when such infrastructure spans multiple states (as it most often does).  One company may supply more capital and personnel (project manager, welders, pipeliners), while another supplies right-of-way specialists to negotiate with local, state, and federal agencies, as well as private landowners.  Although not directly relateable to IT, the principle is the same.

Transaction relationships are more straightforward.  Through outsourcing specific functions, there is a definite corollary between transaction relationships and strategic partnerships.  The difference is that transaction relationships also outsourcing ownership of the processes.  Maybe this is why transaction relationships are deemed much more successful than strategic partnerships (Ross 157).  As processes are isolated from the other company, clientele are enabled with a bit more autonomy tan the other processes.