ICT is a management tool to support an agency's business requirements.
It typically includes components such as applications development, infrastructure (mainframes, midrange machines, desktops and servers), communications, strategy and administration.
ICT sourcing determines how an agency's ICT components are obtained, managed and run.
The basic objective of ICT sourcing is to deliver the required level of support for the agency's business requirements in the most cost effective way.
This is encapsulated in the Government's policy objective of achieving the best overall Value for Money ICT outcome.
For some agencies, the 'best level of support' may mean access to skills and expertise not available internally, or greater flexibility to allow ICT to meet changing business requirements.
Others may use ICT sourcing as a way to release resources and allow for a greater focus on strategic objectives.
We have defined three broad types of ICT sourcing, based on the degree to which ICT is managed externally and the number of vendors involved:
Self-managed: ICT is predominantly managed and run by internal resources, possibly including contractors or consultants, with little or no service level agreements (SLAs) with external vendors.
Single sourcing: ICT is predominantly run by a single external party under an SLA.
Selective sourcing: ICT is predominantly run by multiple external parties under one or several SLAs.
Single sourcing and selective sourcing are often grouped together and called 'outsourcing', while self-managed is also be referred to as 'in-house'.
In a self-managed arrangement, agencies would purchase goods from suppliers, and procurement would largely be transactional.
In an external arrangement - either single or selective - agencies would generally need to manage a more complex relationship with a vendor.
There are other sourcing models such as business process outsourcing (BPO), shared services, co-sourcing, offshore, and contracting out.
These can be considered variations within the three basic models described above.
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