Comparison of ITIL Sourcing and Delivery Strategy
Simple comparison between Insourcing, Outsourcing, Co-sourcing, Partnership, Merger & Acquisition
The readiness assessment provides a structured mechanism for determining an organisation’s capabilities and state of readiness for delivering a new or revised application in support of the defined key business drivers. The information obtained from such an assessment can be used in determining the delivery strategy for a particular application, IT system, or IT service. The delivery strategy is the approach taken to move an organisation from a known state, based on the readiness assessment, to a desired state, determined by the business drivers. There are many ways to prepare an organisation for deploying a new application. The method and strategy selected should be based on the solution the organisation chooses for fulfilling its key business drivers, as well as the capabilities of the IT organisation and its partners. The scale of options available is quite large and not every option need be considered in every case. However, keeping all the options available for consideration is key for building and operating innovative solutions to the most difficult business challenges. In the end, this may be the difference between a failed project – or even a failed company – and a successful one.
Although the readiness assessment determines the gap between the current and necessary capabilities, an IT organisation should not necessarily try to bridge that gap by itself. As noted earlier, there are many different delivery strategies that can be used. Each one has its own set of advantages and disadvantages, but all require some level of adaptation and customisation for the situation at hand. Below lists the main categories of delivery strategies with a short abstract for each. Delivery practices tend to fall into one of these categories or some variant of them.
ITIL Delivery Strategy Advantages and Disadvantages Matrix
| Delivery strategy | Description | Advantages | Disadvantages |
| Insourcing | This approach relies on utilising internal resources in the delivery of a new application, revised application, or data centre operations. | - Direct control - Freedom of choice - Rapid prototyping of leading edge services - Familiar policies and processes Company | - Scale limitations - Cost and time to market for services readily available outside - Dependent on internal resources and their skills and competencies |
| Outsourcing | This approach utilises external resources in a formal arrangement to deliver a well-defined portion of an application’s development, maintenance, operations, and/or support. This includes the consumption of services from Application Service Providers (ASPs). | - Economies of scale - Purchased expertise - Supports focus on company core competencies - Support for transient needs - Test drive/trial of new services | - Less direct control - Exit barriers - Solvency risk of suppliers - Unknown supplier skills and competencies - More challenging business process integration |
| Co-sourcing | A combination of insourcing and outsourcing. This generally will involve contracting with an external firm to deliver a portion of an application’s development, maintenance, operations, and/or support while acting within the premises of the company. | - Time to market - Leveraged expertise - Control | - Project complexity - Intellectual property and copyright protection |
| Partnership | A formal arrangement between two or more companies to co-develop, maintain, operate, or support an application, IT service, or business function(s). The focus here tends to be on strategic partnerships that leverage critical expertise or market opportunities. | - Time to market - Market expansion/entrance - Competitive response - Leveraged expertise - Risk sharing | - Project complexity - Intellectual property and copyright protection - Culture clash between companies - Organisational integration - Operational systems integration - Shirking |
| Merger & Acquisition | Generally speaking, this occurs when one company acquires another company for cash and/or equity swaps of the company’s stock. Again, this occurs generally in response to industry consolidations, market expansion, or in direct response to competitive pressures. | - Competitive response - Market expansion and new services - Direct control | - Financial resource requirements - Culture clash between companies |
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