Outsourcing decisions require a clear understanding of the financial and operational implications. The CGEIT Review Manual 8th Edition advises that conducting a cost-benefit analysis is the first step to evaluate whether outsourcing non-core IT processes aligns with enterprise objectives.

Extract from CGEIT Review Manual 8th Edition (Domain 5: Benefits Realization):"Before outsourcing IT processes, the enterprise should conduct a cost-benefit analysis to assess the financial, operational, and strategic implications. This analysis determines whether outsourcing delivers value and supports business objectives." (Approximate reference: Domain 5, Section on Outsourcing Decisions)

Conducting a cost-benefit analysis for outsourcing (option D) provides the data needed to make an informed decision, comparing costs, risks, and benefits of outsourcing versus in-house management.

Why not the other options?

A. Update resource allocation policies: Policy updates follow the decision to outsource, based on the analysis.

B. Issue a formal request for proposal (RFP) to outsourcing vendors: Issuing an RFP is premature without confirming that outsourcing is viable.

C. Establish service-level metrics for outsourced activities: Metrics are defined after deciding to outsource and selecting a vendor.