Case Study

Module 9 Case Study

Embry-Riddle Aeronautical University

Module 9 Case Study

1.) The case mentions the dependence of BP’s IT organization on external contractors. Why would this be an issue? When is it a good idea for IT departments to hire contractors, and when is it not? Discuss some scenarios.

BP was having a problem with the amount of contractors they were employing and the amount of money that was being funneled to these contractors. The extent in which BP was relying on contractors caused them to lose control over the projects that the contractors were completing. This in demonstrated by the company not even having a number of how many contractors they had employed, to the point where they had to stop counting (O'Brien & Marakas, 2013). Having too many contractors puts projects out of the view of managers which can cause problems if the project goes overdue or over budget. Essentially, the dependence on external contracts by the IT organization resulted in difficulties in maintaining control of the IT department due to the majority of them not actually belonging to BP.

When a company needs to focus on its core business, it might be wise to use contractors to address IT issues not directly related to the business field in which they operate. For example, Albertson’s, a U.S. based grocery chain, outsources IT positions that allow them to spend more time and effort on business practices that benefit their corner of the market. Another benefit to using outside contractors for IT business solutions is the avoidance of adding more staff to BP’s payrolls. Upfront costs may be noticeable when hiring outside resources, but certain cost of benefits that must be paid to BP’s regular employees are avoided. BP is not responsible to pay for expenses to contractors such as training, medical, dental, life insurance, paid vacation, and worker’s compensation. Finally, contractors provide a level of flexibility to a business through experience levels and the...