Application Outsourcing the Most Efficient and Cost Effective Method of Software Implementation, IDC System Dynamic Models Prove
FRAMINGHAM, Mass., Sept. 26, 2002 -- Application outsourcing (AO) can offer organizations efficient, cost-effective and speedy software implementation, according to the results of system dynamics models developed by IDC. These models simulate the dynamics of applications outsourcing and demonstrate the time, cost, and risk benefits of outsourced application deployment and operation.
"While IDC research has already shown that application outsourcing can yield a positive return on investment (ROI), the models in this new study help demonstrate that productivity improvements and risk reduction are also key benefits," said Amy Mizoras, program manager for IDC's software business model research. "According to this study, most of the advantages of application outsourcing come from the service provider's superior experience with the application."
According to IDC's models of the dynamics of application outsourcing, workforce dynamics and rework dynamics can easily drive in-house deployment projects off schedule and over budget. Although processes such as hiring and training add to the capability of an organization over time, experienced workers must divert their time from their work, reducing productivity. In application outsourcing, the outsourcer takes on the risk and cost of bringing people onto the project, buffering customers from this risk.
It is important that the application outsourcer be an application expert for an outsourcing initiative to be successful. Company size, implementation approach, and generic application type (i.e., mission-critical versus non- mission critical) are also factors that have a major impact on the success of an outsourcing initiative.
IDC's recently released document, In-House Versus Outsourced: A System Dynamics Comparison (IDC #27743) provides technology decision-makers insight into what impact outsourcing will have on their particular organization. System dynamic models are used to compare the time, cost, and risk of implementing and supporting a packaged software application in-house versus outsourcing these activities.
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