Deck 4: Business Processing and IT Outsourcing

Question 1

The ownership of assets and facilities is an important factor in determining the cost of the outsourcing contract.

Answer 1

True

Question 2

Many outsourcing contracts are multiyear,multimillion-dollar deals that require approval by an organization's board of directors.

Answer 2

True

Question 3

Organizations that move to smart sourcing recognize that outsourcing is not just about lowering labor costs.

Answer 3

True

Question 4

The fundamental costs of doing business in a developed country are much lower than those in a developing country.

Question 5

Firms that consider establishing offshore outsourcing agreements should follow their normal outsourcing protocols.

Question 6

The stakes in outsourcing are low and the potential for a major business setback is minor.

Question 7

Instead of entering into all-encompassing outsourcing contracts with a single firm,organizations are opting for simpler,more business-specific arrangements that employ multiple service providers.

Question 8

The probability of having a successful outsourcing project can be increased greatly if the business managers who lead the effort are forewarned about potential problems.

Question 9

According to a 2006 Brown-Wilson Group survey,Infosys was the highest rated outsourcing firm.

Question 10

Outsourcing can involve the sale of hardware,software,facilities,and equipment used in current operations to the outsourcing service provider.

Question 11

Organizations that do not outsource probably have greater recruiting,training,research,development,marketing,and deployment expenses.

Question 12

Often,an outsourcing service provider can perform a business process better than its clients ever could.

Question 13

The current trend is to increase the size of outsourcing contracts.

Question 14

Outsourcing is not feasible for small projects because of prohibitive costs.

Question 15

Allocating pieces of a major outsourcing contract among several firms is a foolproof approach to containing project costs.

Question 16

Many outsourcing projects have failed to meet expectations,especially when work was relocated simply to cut labor costs or to clean up a poorly performing operation.

Question 17

Small and medium-sized organizations have turned to outsourcing to meet their needs.

Question 18

How frequently measures are taken and how quickly changes are implemented depends on the importance of the business process in meeting true business goals.

Question 19

There are currently fewer than 1000 outsourcing firms.

Question 20

About three-fourths of all outsourcing efforts are considered successful.

Question 21

According to the Diamond Management and Technology Consultants 2006 outsourcing study,____ percent of outsourcing "buyers experienced an abnormal contract termination in the past year."

A) 2
B) 12
C) 27
D) 47

Question 22

Three of the most frequently cited reasons for outsourcing are to ____.

A) cut or stabilize costs,improve the firm's focus on external operations,and upgrade the firm's capabilities and services
B) cut or stabilize costs,improve the firm's focus on core operations,and upgrade the firm's customer service
C) cut or stabilize costs,improve the firm's focus on customer operations,and upgrade the firm's capabilities and services
D) cut or stabilize costs,improve the firm's focus on core operations,and upgrade the firm's capabilities and services

Question 23

The top reason to outsource is to ____.

A) improve the firm's focus on core operations
B) upgrade the firm's capabilities and services
C) cut or stabilize costs
D) improve the firm's focus on external operations

Question 24

____ requires dedicated,trained vendor relationship professionals to manage the working relationship between the organization and outsourcing service provider.

A) Authority
B) Governance
C) Relationship management
D) Relationship control

Question 25

____ is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees.

A) Outsourcing
B) Offshoring
C) Outshoring
D) Service Level Agreement

Question 26

____ of an outsourcing contract involves formal and informal processes and rules to manage the relationship between the two organizations.

A) Governance
B) Management
C) Control
D) Consensus

Question 27

____ "frees up" a large amount of resources and management effort that can be redirected to other more strategic issues within the company.

A) Streamlining
B) Outsourcing
C) Restructuring
D) Resourcing

Question 28

When the people doing the work are located in another country,the arrangement is called ____ outsourcing.

A) foreign
B) long distance
C) offshore
D) distant

Question 29

____ processes typically have a direct impact on the organization's customers,are major cost drivers,or are essential for providing services.

A) Core
B) Leading
C) High stake
D) Direct

Question 30

A(n)____ business process is one that provides valuable customer benefits,is hard for competitors to imitate,and can be leveraged widely across many products and markets.

A) leading
B) enhanced
C) standard
D) core

Question 31

Good ____ managers should have excellent communication,problem solving,and negotiation skills.

A) project
B) liaison
C) governance
D) relationship

Question 32

The ongoing tracking and measurement of important ____ enables the organization to use the data as feedback,so that each step in the outsourcing process can be improved based on the result of the project.

A) contacts
B) standards
C) metrics
D) benchmarks

Question 33

In a typical contract,if the service provider's performance and costs do not meet the ____ standards,financial penalties can be assessed and the contract can even be terminated.

A) SLA
B) organization's
C) outsourcing
D) accepted

Question 34

Firms considering outsourcing need to spend considerable time and effort to thoroughly review the outsourcing firm's ____ audit and ensure that they understand the firm's control goals and implementations.

A) ISO 17799
B) ISO 70
C) SAS 17799
D) SAS 70

Question 35

At least ____ months are required to gain experience with the service provider and work through various start-up issues so that a fair assessment can be made.

A) three
B) six
C) nine
D) twelve

Question 36

The most significant outsourcing risk is ____.

A) dealing with increased management complexity
B) legal risk management
C) dealing with increased production complexity
D) increased risk management

Question 37

According to the Diamond Management and Technology Consultants 2006 outsourcing study,____ percent stated that their outsourcing expectations were exceeded.

A) 2
B) 12
C) 27
D) 47

Question 38

____ has become a frequent management strategy to achieve lower costs,improve organizational focus,and upgrade capability.

A) Down sizing
B) Outsourcing
C) Offshoring
D) Outshoring

Question 39

Before signing an outsourcing contract,an organization should ____ its existing service levels so that it knows how well the services are being delivered and it knows the associated costs.

A) investigate
B) record
C) benchmark
D) chart

Question 40

The details of an outsourcing arrangement are documented in a formal ____.

A) convention
B) agreement
C) contract
D) accord

Question 41

Many organizations have outsourced their ____________________ operations to third-party providers to manage complex global supply chains.

Question 42

____________________ service providers fill a higher-level need than outsourcing firms that simply provide low-cost staff augmentation services.

Question 43

When outsourcing a major business process or project,an organization should think in terms of hiring a(n)____________________,not just a provider.

Question 44

ISO ____________________ identifies "best practice" information security controls and their objectives.

Question 45

____________________ a function can provide a considerable upgrade in capabilities and service.

Question 46

A key to effective ____________________ is choosing the right measures to evaluate the performance of the process.

Question 47

Many organizations contract with service providers to handle complete business processes such as accounting and finance,customer services,human resources,and even research and development,in what is called ____________________ outsourcing.

Question 48

What are outsourcing and offshore outsourcing?

Question 49

____________________ sourcing is based on analyzing the work to be done,its associated current processes,and level of effectiveness and resources required.

Question 50

Many organizations hesitate to outsource processes that are considered ____________________ critical,that are tightly linked to other key processes,that clearly differentiate them from the competition,or that strongly influence sales.

Question 51

____________________ service providers typically have a lower cost structure due to greater economy of scale,specialization,or expertise.

Question 52

What questions should an organization ask to separate core business processes from less critical processes?

Question 53

Discuss measuring and evaluating results.

Question 54

It takes the unique knowledge and skills of the organization's workers to operate ____________________ processes effectively.

Question 55

Explain how to establish an outsourcing governance process.

Question 56

When entering into a(n)____________________ outsourcing agreement,it is critical to determine what legal system and which country will have jurisdiction over any contract disputes.

Question 57

The development of an outsourcing contract is a job for experienced procurement and ___________________ professionals.

Question 58

____________________ defines procedures such as periodic formal reviews between the outsourcing company and its service provider,and explicit escalation procedures in the event of a disagreement.

Question 59

Discuss developing an outsourcing contract.

Question 60

A key component of governance is to implement ongoing monitoring and analysis of outsourced business processes using an appropriate set of ____________________.