Case Study IV-3 IT Infrastructure Outsourcing at Schaeffer (A)
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Teaching Note on Case Study IV-3
IT Infrastructure Outsourcing at Schaeffer (A):
The Outsourcing Decision
Objectives
The purpose of both Schaeffer Case A and Schaeffer Case B are to illustrate some of the potential
advantages and disadvantages of IS outsourcing in general and outsourcing IT infrastructure
activities (data center, network operations, help desk and desktop support) in particular. Case A
Overview
Schaeffer Corporation is a diversified manufacturer with three autonomous business divisions and
annual sales of around $2 billion. Headquartered in a small Midwestern town, Schaeffer as a
whole has had slow but steady growth over the years. However, in 2001 its board of directors set
very ambitious growth goals.
has the best potential for significant growth, and corporate executive management has set
Previously each division had its own IT organization, but a few years ago IT was centralized into
key liaison positions, but now reported to the corporate CIO as well as their business managers.
uman resources, has proposed that Schaeffer outsource
its IT resources, with the exception of systems development. A. Harding, the vice president of IT,
established an internal task force that included Moreno to investigate the feasibility of the
proposal. Consultants from Gartner Consulting Group were brought in to help the firm with the
decision process.
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The task force spent 12 months determining in detail what IT assets the company had, the
services being provided, and the unit costs to provide those services. This documentation was
then used to prepare a 200-page request for proposal (RFP) to solicit proposals from two Tier 1
Questions for Discussion
1. What benefits does Schaeffer hope to achieve from outsourcing its IT infrastructure?
The major perceived benefits were vastly improved flexibility, improved management, and
2. Describe the steps taken to develop the RFP and the role that an outside consultant
played in this process.
It is difficult to prepare an RFP for infrastructure services because it requires knowing in detail
what your IS organization does for different units and describing these specific activities clearly
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3. What were the perceived disadvantages to outsourcing raised by its managers?
There were a number of concerns that were expressed:
2) current IT people and the impact that this
might have on morale throughout the company.
4) Concerns that all the benefits from outsourcing would go to the Reitzel division, which was
4. Some managers have suggested a third alternative: outsource the IT infrastructure for
the Reitzel division only. Which alternative do you think Schaeffer should choose, and
why?
It is pretty clear that the flexibility, management and technical expertise, and worldwide scope of
-house IT
5. Why do you think so many disadvantages were raised after the task force
recommendation had been developed? How could this controversy have been avoided?
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Those who favored outsourcing were corporate managers or Reitzel managers. They believed that
the ambitious growth goals could not be achieved without drastically improved IT capabilities