Economics of infrastructure management and selective sourcing

This paper presents a services model for management of IT infrastructure based on the core-actual-augmented (CAA) framework. This model allows simplification, categorisation and prioritisation of investments that enhance strategic agility with respect to business goals. The economic competitive market model is then used to analyse feasibility of outsourcing the prioritized IT investments to the market. It is shown that, it is uneconomical to the value of the Dead-Weight-Loss (DWL) for an organization to outsource its assets to the market, unless all internal efficiencies in the form of economies of scale, scope, management and organizational process flows have been optimized to full potential where possible.