Detailed Analysis: Outsourcing Key IT Functionalities at Aztek

This report provides an in-depth analysis of Aztek's decision to outsource key IT functionalities to a third party within the Australian financial services sector. It explores the benefits, such as cost reduction and the ability to focus on core business processes, while also addressing potential risks and vulnerabilities, including data security concerns and the need for robust auditing and access controls. The report reviews current practices, assesses threats and consequences, and offers insights into managing outsourcing security issues. It highlights the importance of clear agreements with third-party vendors, the establishment of individual login IDs, and ongoing monitoring of customer information to mitigate risks. The financial service sector is reviewed, and the impact of IT on the sector is also evaluated, with a focus on ensuring successful business operations through effective IT outsourcing strategies. The report underscores the importance of IT in financial services, the need for IT risk management, and the necessity of establishing a strong security posture.

RUNNING HEAD: OUTSOURCING KEY IT FUNCTIONALITIES 1
Outsourcing key IT functionality to a third party
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OUTSOURCING KEY IT FUNCTIONALITIES 2
Executive Summary
Information technology plays a vital role in any organization. This report is based on an
overview of outsourcing key IT functionality from a third party in Aztek. Aztek is a business
organization that is popular in the Australian financial services sector. The proposed project of
outsourcing of main IT functionality from a third party involves the range of information
technology functions in a business process such as network software and hardware, operation
system, app development, transaction process, distribution of micro and minicomputer system
among many others. Thus, the idea of outsourcing IT functions from a third party together with
organizational, financial and logical considerations aids to develop a prospective business
operation in the financial sector industry. Outsourcing of IT functions from a third party is a
popular act in the mainframe of the financial service sector industry. If enterprises in the
financial service sector like Aztek aim to operate their businesses successfully, it is necessary for
them to outsource critical IT functionalities from a third party vendor. What the project of
outsourcing major IT features from a third party is of benefit to business as it is said to reduce
the operation cost. If a financial service sector embraces outsourcing of key IT functions for a
long-term, helps change varying cost into a fixed cost operation and is easy to predict the future
and this contributes to properly running the system.
An organization like Aztek have to share this type of information to the personnel of the client
upon implementation of outsourcing key IT functions to a third party. Auditing rights to
information security is also a problem with the project of outsourcing IT functions in operational
procedures of the financial service sector. Most organizations in the financial industry fail to
establish agreements with the outsourced third party during the negotiation process of the IT
functions which cost them additional payments in the time of system crash to come up with a

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backup for lost data. Many outsourcers do nor give rights to access their daily responsibilities of
data generated from the server or database to the client's human resource management. It is
associated with great problems since the outsourcers' staff have no clear knowledge of their
business procedures, or the firm's major customer's hence huge data loss, and theft chance is
created. Aztek need to put their offshore operations in control to address this issues. The
company's management should also negotiate apparently on who should be granted access
permission. The outsourcer is supposed to set the rules on who accesses the system. People login
ID will be fixed for every personnel and client by the outsourcer's administrator. The admin will,
therefore, be responsible for monitoring customers' information together with access data in the
system. The third party will foresee that the staff only use the company's devices for making
customers applications.

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Table of Contents
Introduction..................................................................................................................................................4
Financial service sector review...................................................................................................................6
Current Practices and security posture review.........................................................................................9
Pros and cons of outsourcing key IT functionality to a third party......................................................11
Threats, vulnerabilities and consequences assessment...........................................................................13
Threats of outsourcing IT services...........................................................................................................13
Vulnerabilities of outsourcing IT services...............................................................................................14
Consequences of assessment of outsourcing IT services.........................................................................15
Data security...............................................................................................................................................16
Security issues of outsourcing.................................................................................................................16
Process of controlling outsourcing security issues..................................................................................16
Conclusion..................................................................................................................................................18
References...................................................................................................................................................19

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Introduction
From the perspective view of information technology, IT risk management is one of the most key
use for a company's risk management. IT manages risks that are linked to the IT sector like
network, desktop, mobile computing and other associated applications such as ICT, ERP, and
KMS among others. Use of IT has greatly been employed in the financial service sector
currently. Most of the organizations specifically bankers in the financial sector outsources IT
functions like network, desktop, mobile computing and other associated applications to a third
party vendor to make their procedures digital. Information technology is among the numerous
valued systems that make businesses run their activities automatically. This report evaluates the
risk management process concerning outsourcing of major IT functionalities within Aztek. The
organization runs their operations fruitfully in the Australian financial services sector. Aztek has
a portfolio of projects to for implementation with the view of automating the system within the
firm's operational procedures (Pfleeger, 2003). The company has outsourced its key IT
functionalities like desktop management, network and other application development from a
third party vendor.
Outsourcing of this functionalities will bring about a capital agreement to Aztek from the
perspective of improving the flow of cash within the company. The outsourcers would be fully
responsible for availing the system and service guarantee if Aztek outsourced the key IT
functions from a third party. They will, however, benefit like admin of the outsourcing
organization to come up with the right program by the company's specialist. The administrator
will be tasked with making an individual login database in IDs for the personnel as well as
perform a continuous system upgrade. Aztek will be able to have an overall information system
in their surrounding through the key IT functions outsourcing project from a third party. Aztek as
the outsourcer will be performing duties such as accessing, control and administration of

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security, installing information security software and maintaining the installed software. The
company will also perform other tasks such as investigation and review of report violation,
maintaining processes and policy of clients' information security, establish a relationship with its
staff and customers, tactics and awareness building to use of information security system through
training and others. Aztek will face the main issue of sharing data with the personnel of the
outsourcer upon its implementation of outsourcing IT service project to a third party. It will be
constituted by the fact that the company keeps client's information together with other several
sensitive information that is related to their business such as target market, details of the bank,
target customers and many other things.
Financial service sector review
The financial service industry is an attractive area that varies its organizational processes as time
goes by. IT in financial service industry specifically in the operational procedures of Aztek have
been witnessing great changes especially in the company's business process (Jin & Du, 2014).
The company has experienced tough competition in the financial industry which has resulted in
declining in their clients' base. Moreover, the cost framework of Aztek which is uneconomic has
been locked. Stiff competition has forced the company to establish extreme capacity in its
organization processes and lower the profit margins. The best way of provocation to the
company towards the establishment of a great risky portfolio and doing away with the margins is
to embracing a marginal edge of risk thinking (Acquisti, 2008). Numerous barriers in the
financial service sector restrict Aztek and make its condition worse than those of their rivals. Due
to this, competition in the organizational procedures, Aztek is operating at two medium levels as
a result of slow technology development and other common factors. The financial service sector
is likely to underperform in the current world with the use of IT systems in its business process.

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IT is one of the key critical technologies in the financial sector that makes the generation of
processes automatic (Borek, 2014). There are some different types of IT system in Australian
financial sector that aid in the provision of information, management of market inventory, and
billing among others. Outsourcing critical IT functions will help Aztek establish a broad
customer base.
The company can be in a place to offer improved services to its clients through the fulfillment of
their needs and attract more clients by the adoption of an information technology system in its
business process (Coplan & Masuda, 2011). Many business organizations within the financial
service industry have outsourced their key IT functions to a third party and diversified their
processes which have greatly contributed to the generation of high revenues as well as
consolidation of their organization's operational processes. Realization of high-profit margins
and information technology in the financial sector helps lower the complexity level and
dependence on the accumulated interest. Consequently, some enterprises in the financial sector
consolidate as a result of main regulation changes in their processes. The consolidation resulting
from IT functionalities have led to increased assets associated with security like the use of
antivirus, ant hacking technology, and others. The financial service industry has been a great
success in its business operations in the past few years due to putting these types of strategies in
place (Dinsmore & Cabanis-Brewin, 2011). However, not all are successful because of
diversification of revenue results to a mix between interest and non-interest income. This is
among the negative sides of IT systems because the third party vendor from whom Aztek
outsourced their key IT functionalities acted negatively. Most bankers changed their product
value from negative to positive in the financial services sector since the outsourcing of IT
functions from a third party. Adoption of an IT system also saw the banking sector increase its

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value of products from savings to fixed deposits as well as improve the annual products value to
premium products. The IT system also makes it possible for banking companies in rigid products
flexibility, increase the level of advice from high to a level of having extended service and
creating a new customer base and increased marketing.
Provision of excellent services such as e-payments in the financial service industry provided by
IT systems makes the companies in the sector make them achieve high customer retention and
attracting new clients. Insurance businesses in the area have been able to shift their services from
cultural products to a service culture with the help of IT systems. The financial service sector has
also contributed to the improvement of the quality of service through implementation of a
method that uses IT and uses IT functionalities from a third party (Schiesser, 2010).
Organizations have been able to achieve fast service delivery in areas such as documentation
products like billing, information, etc. through the implementation of a computer system that
does not keep customers waiting for long. IT makes it possible to better the handling processes
associated with claims and advice via telephone. However, the information technology within
these organizations in the financial service sector faces some challenges like standardization of
products because of the specialized high system, high chance of possible loss of data or hacking
of the information from the system server. Introduction of the IT system in the industry has
brought the business world greatly (Shah & Clarke, 2009). Information technology works to
ensure that business process run smoothly and the organizations reap a broad variety of benefits.
Use of IT system in the financial service industry has led to a development of an automatic
process involving a high range of security. Thus, IT is very key in the removal of organization's
local barriers in the financial service sector as well as in any other industry. Implementation of
IT system makes it possible to change the view for the organization from the perspective view of

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the global market. Within the IT market, some companies give hardware and software packages
services for operational processes of the financial industry (Schwalbe, 2014). IT help complex
organizations achieve the value for service management in the financial sector. To create
products or value in the business of financial service industry, IT has a great impact on the
marginal cost that reacts directly with the revenue. Implementation of the outsourcing of key IT
functions will be of great importance to operational processes of Aztek (Bellini, 2009). These
include service development, process development, integration of stakeholder, improving the
cost-effectiveness and globalization among other benefits.
Current Practices and security posture review
Outsourcing of key IT functionalities in the business process of Aztec can cause the culmination
of making sense for the company which is one of the most important procedure to organizations
in the financial service industry. Making sense makes it possible for organizations to scan the
entire surroundings and interpret it according to with each other. The interpretation made
facilitates action taking (Xu, 2013). In the view of this, outsourcing key IT functions from a third
party at Aztek is an important method for maintaining security and the right operational process
(Tibble, 2012). Outsourcing key IT functionalities from a third party vendor at Aztec can help in
the network development and an adaptive communication process within the workplace that will
allow the monitoring of the work performance of personnel (Better et al., 2008). Information
technology networks like the knowledge management system or the ERP make it possible for
organizations to integrate with the other with ease. Aztek will have a lot of issues in recovering
the financial resources employed in the project which is not the only the affected but also the
company growth rate too. Outsourcing will present the business with a good chance of search for
the right resource like appropriate vendors, competent staff, shareholders, suppliers, etc. which

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can drive it towards success and increased growth (Caldwell, 2008). If Aztek outsources basic IT
functionalities from a third party, they will establish a wide network area incorporating staff,
shareholders, suppliers as well as the connection of management to each other. This will help
create the right resources to improve their employees work performance and increase its growth.
According to Roper (2011), outsourcing of key IT functionalities within an organization process
scanned the company's environment thus culminating it business operations. It is this view that
outsourcing of major IT functions from a third party has been termed effective in the business
process of the financial service industry.
Implementing the outsourcing project at Aztec process will greatly address the current pressure
that the company faces. This makes the outsourcing IT functions from a third party vendor is the
most effective way to increase the firm's profits together with the productivity (Dogra, Khara &
Verma, 2007). The availed services by the third party will greatly reduce the operational costs of
Aztek and hike its productivity. The outsourcing will also provide the organization with the
benefit of having an IT expert who will be provided by the third party who will then train the
company's staff on the technology. The company will also be fully responsible for maintaining
the security of the implemented system by the third party. One of the hard parts to undertake the
project will be budgetary constraint within the organizational process of Aztec. The company can
achieve access to information in the financial industry and constraint the budgetary if it
outsourced specific functions of IT assets (Bodea & Dascalu, 2010). The process of outsourcing
key IT functionalities with an enterprise in financial service sector can portray the transaction
cost theory contradiction. The implementation of the outsourcing project can help the company
monitor its costs in an improved way. The technology tactics also lower the product cost.
Adoption of IT in the business process lower the labor needed to operate in the financial service

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sector which in turn reduces the operational costs. Involving a third party vendor tasks them with
designing of an automatic information sharing within the network. IT resources can encourage
the process of decision-making within a company and thus discourage the cost transaction theory
(Jung, 2013). Outsourcing strategy will be key in the most business process of the company from
the perspective view that encompasses the leveraging possibility. Thus, outsourcing the key, IT
functions from a third party can lead to a strategic benefit at Aztec. The outsourcing of IT
functionalities presents Aztec with a key impact in restructuring its organizational process in the
long-term return (Caron & Salvatori, 2014).
Third party vendor will also help the company I maintaining information security system
because they are experienced in handling any time of issues that are likely to be present in the IT
system. Therefore, implementation the IT functionality to outsource vendor will be of great
advantage to Aztec (Nichols, 2014). Caron and Salvatori (2014) stated that outsourcing an
organization's IT specializes in maintaining information security. The providers can aid in
transforming the current information system for the company with the use of valuable assets to
tighten the security. In this context, outsourcing key IT functions gives information for the
development of the application at Aztec with the view of migrating or updating present in the
application security. The critical process of outsourcing IT functionalities in the financial sector
helps in saving the personnel for long-term evaluation process (Mehan, 2008).
Pros and cons of outsourcing key IT functionality to a third party
for many years now, Aztec has been opting to implement the project of outsourcing the key
information technology functionality to the third party there are some advantage as well as
disadvantage which has been associated with this these aspects are highlighted as follows.
Pros

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Convenience: outsourcing on the key IT functionality leaves the business to focus to the other
significant aspects to the business. The organization would focus to the other aspect of the
business.
The organization can gain more cost savings: with the outsourcing of the key IT functionality
Aztec they would save the costs. The organization will only pay to the third party providers to
per project or even the pay only for the hours rendered. There is no paying for any commission
or even the full time salaries.
Gain of more functionality from the project: The organization has the capability of gaining
significantly from the functionality provided by the third parties. In most of the time the third
parties usually have skills as well as technical knowhow on how to integrate the external
functionalities, features along with the services which could be corporate to the organization
(Dadios, 2012).
Better support services for the outsourced functionality: The third parties providers could deliver
extended services in regards to any upgrade or even troubleshooting functionality of an
application to be able to keep the operations to run as smooth as possible.
Cons
Outsourcing of the key information technology functionality to the third party could seems to be
a better proposition to the corporation, but before finalizing their decision to implement they
need to look at the following drawbacks associated to outsourcing.
Security and the privacy leakages: outsourcing entails you provide the organization with the
access to the private as well as sensitive information of the organization. the organization will
have less control to the access of the data.