Matthew Gordon
PROJ410
7/24/13
Week Three Case Study 1
Smith’s Information Services, Inc. A. PURPOSE/OBJECTIVES: Due to the fierce competition flattening sales and decreasing profits sharply for the last two years, adjustment may need to be made to increase our profit margins. A consideration of outsourcing our current data center might be in the company’s best interest.

B. RELEVANT FACTS: In order to determine whether or not we need to outsource our data center we need to first look at what it is costing us to keep it in-house. Hardware and software expenses are on the rise. It is becoming quite expensive to keep our mainframes and servers cooled. As our data grows we are looking at expenses of adding new servers which will in turn cost us more money in cooling the rooms. It takes us a considerable amount of electricity just to run all of our hardware, servers, mainframes, and all other devices inside out data center. We have an extensive number of employees needed to run and maintain the data center. The overall cost of running a 24/7 data center is simply just getting out of control. The key questions here is do we have enough critical mass and are we planning on continuing a 24/7 operation in our data center. We need to look at several pros and cons to outsourcing; Access to state-of-the-art technology, cost saving and quality, flexibility, job security for or employees, media effects on us outsourcing, how easy is it actually going to be to outsource our work, security and safety of our data, how expensive is it going to be to switch over, are we losing control of our data center, will it save us money in the long run, and if we outsource could we be held hostage of the vendor (once we hand over our data and let them control it are they going to remain loyal to the contract or decide, that now that the ball is in their court, to play ball.

C. VENDOR CONSIDERATIONS: Selecting a vendor is very important, if the wrong or incompatible vendor is chosen it could impact Smith’s Information Services, Inc. in a way that could possibly be irreversible. The vendor will need to offer all of the needs of our company and it needs to be at an affordable rate, without a lower standard of quality. The whole point of outsourcing is to save the company money and be able to redistribute the personel accordingly. The vendors that we will be considering needs to meet our evaluation criteria. We will need to set performance targets in place for the data center in order to ensure a high quality and service is measured. We will need to discuss the type of contract we will be considering, whether it be a fixed price or a cost reimbursement contract.

D. TIMELINE: A timeline is needed to enforce and make sure that key milestones are going to be met if we decide to outsource. If the milestones are met in a timely manner, it will allow us to still show a positive impact of the out sourcing of our data center. Step | Details | Requirements | - Estimate the cost- Estimate investment needs if any- Compare our cost to budget- Secure a need | Requisition | - Create RFP- Create a weighing system to compare each vendor- Establish evaluation criteria- Create a change request plan- Create payment plan- Verify that all specifications have been provided | Selection | - Issuing RFP- Receive proposal from vendors- Negotiate with the vendors- Evaluation of proposal- Award of contract- Prepare payment plan | Contract Administration | * Contract management * Make sure all requirements are met * Resolve all or any issues contract related. | Closeout | - Verify services were met and satisfied- Update paperwork (budget, accounts, contract files.) |

It is in my honest opinion that there are three key factors to outsourcing our data center that should be our deciding factors: do we have enough critical mass, are we planning on continuing a 24/7 operation, and is this going to be profitable in the long run. If we have the critical mass, do not plan on running the data center 24/7 and can remain profitable then there is no reason to outsource our data center. However, if we do not have the critical mass, are going to continue to run our data center 24/7, and can’t remain profitable, then we most definitely should outsource our data center.