Chapter 13 - Minicase 2

Outsourcing its IT; Kone is Focusing on its Core Competencies

In preparation for answering the questions, review the Kone Inc. web site.

1. What were the major drivers for IT outsourcing at Kone?

   Kone Inc. had employed outsourcing before and was comfortable to continue using outsourcing as an answer to their IT work.

   Kone recongnized that its internal systems were insufficient to support the proposed expansion and their value-added private communications systems.

   Kone faced expanding costs and a system with only nominal effect on administrative costs.

   Kone was operating with varied platforms and a difficult to integrate suite of application software packages from multiple vendors.

2. Why did Kone elect to work with several vendors?

   Kone decided to outsource to both HP and SAP AG because it would promote the best-of-the-breed approach.

   HP was hired to provide and manage the computing infrastructure on which the SAP system will run.

3. What are some of the risks of this outsourcing?

   There was a potential for a lack of coordination betwixt the hardware and software systems, and betwixt the different software platforms (SAP and HP’s OpenView).

4. How can Kone controls its vendors?

   Kone is overseeing all the actions that are to be taken by both of the contracted firms with its own IT staff

   This approach ensures that Kone maintains some IT competencies and does not become wholly dependent on its outsourcing vendors.