To Outsource or Not to Outsource linked in Resources for this week. Assume that you are the Chief
Information Officer (CIO) of Triad Insurance Company. Write and submit a 1,500 word (minimum) to
2,000 word (maximum) memo to the Chief Executive Officer (CEO)
1.
outlining the pros and cons of outsourcing the corporation’s IT processes to a third party
vendor, and
2.
make a recommendation based on the best interests of the shareholders.
Use APA format for the memo, as indicated in this sample. Use Times 12 or Arial 11 font size.
Informational File:
To Outsource or Not to Outsource
Triad Insurance Company
The Triad Insurance Company of Indianapolis, Indiana experienced a meteoric
rise since its inception in 2005. It has grown from a mom-and-pop operation to a
sizeable enterprise: the number of employees has grown from two to 584 in
under five years. But the biggest problems are not revenue generation or human
resources management. Instead, they are associated with the management of
information systems.
Insurance policies used to be generated using desktop software; Triad’s owners
used to keep their own financial books; and customer claims would be handled
over the phone. Now, policies are so varied that various versions of forms are
warehoused in databanks and selected automatically based upon variables such
as the type of claim being generated, the geographical area of the United States
that the customer live in, et cetera.
There is a huge accounting division which gathers information for management,
makes recommendations to enhance revenue allocation, and so forth. Customer
claims are now automated and processed through a labyrinthine network of field
agents, regional offices, and transaction processing software. Each of four
regional offices has its own staff of information managers and the headquarters
until recently had an information technology division chief at the same
organizational level as the chief of human resources and the customer
relationship management division.
Last month, the accounting division chief complained that not enough reliable
and consistent information is being fed to the headquarters from regional
offices. Moreover, both he and the information management division chief
believed that the organization had grown so complex that it now needed a Chief
Information Officer (CIO) at the same level of organization as the Chief of
Operations (COO).
Based on this situation, Triad has hired a new CIO from a competing insurance
company. But this CIO is not sure that a company-wide reorganization is in order.
Another option is to outsource the information systems function entirely to a
third-party provider. Cost-analysis reports suggest that vendor costs would be at
least as inexpensive as instituting a reorganization of the company’s entire
management information system (MIS). Moreover, the company would not have
to update its technology because the information systems vendor could take the
responsibility for all of that. In fact, the company may be able to downsize its inhouse MIS staff as well and save payroll and benefits costs.
Assume that you are the Chief Information Officer (CIO) of Triad Insurance
Company. Write and submit a 1,500 word (minimum) to 2,000 word (maximum)
memo to the Chief Executive Officer (CEO) (1) outlining the pros and cons of
outsourcing the corporation’s IT processes to a third party vendor, and (2) make
arecommendation based on the best interests of the shareholders. Use APA
format for the memo, as indicated in this sample.
Use Times 12 or Arial 11 font size.
NOTES:
1. This case is entirely fictional. Any similarity between the fictitious Triad
Insurance Company of this case and any actual insurance company of a similar
name is entirely coincidental.
2. There is not enough information provided in this case to make
recommendations based on data alone; you may make appropriate assumptions
as long as you state your assumptions in the paper.
Page Revised: 30-Jul-2014 © Copyright Norwich University
Other sources:
Lientz, B., Breakthrough Strategic IT and Process Planning
o
Parts III and IV –- Chapters 8-17
Ross, Jeanne W., Weill, Peter, (2002). Six IT Decisions Your IT People
Shouldn’t Make. Harvard Business Review, 80(11). (Library link)
