Costs/benefit analysis:
Cost/benefit analysis is a systematic approach that estimates the strengths and weakness of alternatives that satisfy the transactions, activities and functional requirements of an organisation. When the decision about whether or not a business should outsource or insource arises, cost/benefit analysis can be used to evaluate the decision. It is vital for the business to know how to conduct a cost/benefit analysis for the decision making.
Cost/benefit analysis involves a series of steps or stages, these stages are sequential and include defining the problem, identifying costs and benefits, choosing a criterion, comparing alternatives, and performing sensitivity analysis.
In the first step of cost/benefit analysis a business defines the problem and generates alternatives. After defining the problem the business identifies and quantifies the cost and benefits of each alternative. It is a very challenging task because assigning a monetary value to cost and benefits and perceive the effects of IT is very difficult. To avoid any problems a business should have an experienced team to conduct cost/benefit analysis.
Sensitivity analysis can be done to estimate cost and benefits erroneously. It involves some changeable parameters such as costs, benefits, discount rate etc.
Critical success Factors:
Critical success factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity required for ensuring the success of a company or an organization. It can be utilized in many scenarios and stages of outsourcing decision, for example whether to outsource or not and to evaluate the outsourcing relationship. It can be used with other methods such as cost/benefit analysis that quantitatively assess alternatives. It allows a business to define the problem from several