Question for mincase 2
1. What were the major drivers of the outsourcing at Kone?
- Internal IT processes were insufficient to support the globalization expansion
- IT costs were growing rapidly, but the company’s contribution to reduce the administrative cost of global sales is minimal
- None of the regional IT infrastructures was integrated, nor were they connected and compatible.
- Kone was managing different IT platforms around the world with a variety of home-grown and nonstandard applications.
2. Why did Kone elect to work with several vendors?
- By using 2 vendors, it promised the best-of-breed approach
- To ensure they have high availability environment
- Assist in managing with real-time data on the product sales,
profitability and backlogs
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3. What are some of the risks of this outsourcing?
- Increase cost for training and support.
- Complex interfaces with other systems.
- Duplicate data entry.
- Data storage redundancy.
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4. How can Kone control its vendors?
- The outsourcing arrangement allows Kone to concentrate on its core competencies. The cost is only 0.02 percent of sales. Large fixed costs in infrastructure and people have been eliminated. The company has better cost control, as well as flexible opportunity for business process redesign, thus speeding up restructuring.
