Chapter 19 – Outsourcing in the 21st Century

OUTSOURCING PROJECTS

Ø  Insourcing (in-house-development) – A common approach using the professional expertise within an organization to develop and maintain the organization’s information technology systems

Outsourcing – An arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house

Ø  Onshore outsourcing – engaging another company within the same country for services

Ø  Near shore outsourcing – contracting an outsourcing arrangement with a company in a nearby country

Ø  Offshore outsourcing – using organizations from developing countries to write code and develop systems

Ø  Big selling point for offshore outsourcing “inexpensive good work”

Ø  Factors driving outsourcing growth include;

§  Core competencies

§  Financial savings

§  Rapid growth

§  Industry changes

§  The Internet

§  Globalization

Ø  According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger and more profitable than those that do not”

Ø  Most organizations outsource their noncore business functions, such as payroll and IT

OUTSOURCING BENEFITS

Ø  Outsourcing benefits include;

§  Increased quality and efficiency

§  Reduced operating expenses

§  Outsourcing non-core processes

§  Reduced exposure to risk

§  Economies of scale, expertise and best practices

§  Access to advanced technologies

§  Increased flexibility

§  Avoid costly outlay of capital funds

§  Reduced headcount and associated overhead expense

§  Reduced time to market for products or services

OUTSOURCING CHALLENGES

Ø  Outsourcing challenges include;

§  Contract length

1.       Difficulties in getting out of a contract

2.       Problems in foreseeing future needs

3.       Problems in reforming an internal IT department after the contract is finished

§  Competitive edge

§  Confidentiality

§  Scope definition 

chapter 15 creating collaborative partnership

TEAMS, PARTNERSHIPS AND ALLIANCES

Ø  Organizations create teams, partnerships and alliances both internally with employees and externally with other organizations

§  Organizations from alliance and partnerships with other organizations based on their core competency

1.      Core competency: An organization’s key strength, a business function that it does better than any of its competitors

2.  Core competency strategy: Organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes

3.     Information partnerships:  Occurs when two or more organizations cooperate by integrating their IT systems, to provide customers with the best of what each can offer.

COLLABORATION SYSTEMS

Collaboration system: an IT- based set of tools that supports the work of teams by facilitating the sharing and flow of information.

Ø  It solves specific business tasks such as telecommuting, online meetings, deploying applications, and remote project and sales management

Ø  It allows people, teams and organizations to leverage and build upon the ideas and talents of staff, suppliers, customers and business partners.

Categories of collaboration:

                i.            Unstructured collaboration (information collaboration):  includes document exchange, shared whiteboards, discussion forums, and email.

It can improve personal productivity, reducing the time spent searching for information/chasing answer.

       ii.        Structured collaboration (process collaboration) – involves shared participation in business processes such as workflow in which knowledge is hard coded as rule

      Types of collaboration systems include:

a)      Knowledge management systems

b)      Content management systems

c)      Workflow management systems

d)     Groupware systems

a)      KNOWLEDGE MANAGEMENT SYSTEMS

Ø  Knowledge management (KM):  involves capturing, classifying, evaluating, retrieving and sharing information assets to provide context for effective decisions and actions.

Ø  Knowledge management system (KMS)/ know-how: supports the capturing, organization and know-how through an organization. It to determine what information qualifies as knowledge and provide information contained in spreadsheets, databases and doc.

EXPLICT AND TACIT KNOWLEDGE

Intellectual and knowledge-based assets fall into two categories;

1.       Explicit knowledge: consists of anything that can be documented, archived and codified with the help of IT. Examples: patents, trademarks, business plan and customers list.

2.       Tacit knowledge: knowledge contained in people’s heads. Examples are how to recognize, generate and manage information that arises in people’s head

Two best practices for transferring or recreating tacit knowledge

a)      Shadowing: less experienced staff observe more experienced staff to learn how their more experienced counterparts approach their work

b)      Joint problem solving: new employees and expert employees work together on a project which will bring out the details on how the expert handles responsibilities and work issues.

Key reasons why organization launch knowledge management system:

b)   CONTENT MANAGEMENT

Ø  Content Management System (CMS): provides tools to manage the creation, storage, editing and publication of information in a collaborative environment.

Types of CMS:

        i.            Document management system (DMS)

Ø  Support the electronic capturing, storage, distribution, archiving and accessing of doc.

·         It to optimize the use of doc within an organization independent of the publishing medium and provides a doc repository with information about other information

      ii.             Digital assets management system (DAM)

·         Through similar to doc management, DAM works with binary rather than text files such as multimedia files types. It emphasizes file manipulated and conversation. E.g., converting GIF files.

    iii.            Web content management system (WCM)

·         Adds an additional layer to doc and digital asset management that enables publishing content both to intranets and to public websites

WORKING WIKIS

Ø  Wikis: web-based tools that make it easy for users to add, remove, and change online content

Ø  Business wikis: collaborative web pages that allows users to edit documents, share ideas or monitor the status of a project

c)    WORKFLOW MANAGEMENT SYSTEMS

Ø  Workflow: defines all the steps or business rules, from beginning to end, required for a business process.

Ø  Workflow management system: facilitates the automation and management of business processes and controls the movement of work through the business process. Work activities can be performed in series or in parallel that involves people and automated computer systems

Types of workflow systems:

        i.            Messaging-based workflow system: sends work assignments through an email system. It where each time a step is completed, system automatically sends the work to the next individuals in line. Example: each time the member complete the project, the systems automatically sends the document to the next team member.

      ii.           Database-based workflow system: stores documents in a central location and automatically asks the team members to access the document when it is their turn to edit the document

d)  GROUPWARE SYSTEMS

Ø  Groupware: software that supports teams’ interaction and dynamics including calendaring, scheduling and videoconferencing. It used to communicate, cooperate, coordinate, solve problem and negotiate.

i.            VIDEOCONFERENCING/ VISUAL COLLABORATION

ii.            WEB CONFERENCING

    

iii.            INSTANT MESSAGING

a

CHAPTER 14 E-BUSINESS

Ebusiness

Biggest benefit of the internet: how it enables organizations to perform business with anyone, anywhere, anytime.

· Ecommerce- the buying and selling of goods and services over the internet.

- It refers only to online transactions.

· Ebsuiness- derived from the term Ecommerce. It is the conducting of business on the internet, not only buying and selling, but also serving customers and collaborating with business partners.

-  Also refers to online exchanges if information.

Ebusiness Models

· Ebusiness Model- is an approach to conducting electronic business on the internet

-  Takes place between two major entities- business and consumers.

   Business-to-business (B2B)

·         Applies to business buying from and selling to each other over the internet.

·         Electronic marketplaces represent a new wave in B2B ebusiness models.

·         Electronic marketplaces or emarketplaces- are interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.

-  They represent structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels.

Business-to-consumer (B2C)

·Applies to any business that sells its products or services to consumers over the internet.

        Eshop

·Sometimes referred to as an estore or etailer. It is a version of a retail store where customers can shop at any hour of the day without leaving their home or office.

· These online stores sell and support a variety of products and services.

·The other online businesses channeling their goods and services via the internet only, such as Amazon.com, are called pure plays.

Types of Businesses:

· Brick-and-mortar business- a business that operates in a physical store without an internet presence.

· Pure-play (virtual) business- a business that operates on the internet only without a physical store. Examples include Amazon.com and Expedia.com

· Click-and-mortar business- a business that operates in a physical store and on the internet. Examples include REI and Barnes and Noble.

  Email

·  Email- consists of a number of eshops. It serves as a gateway through which a  visitor can access other eshops.

 - It may be generalized or specialized depending on the products offered by the eshops it hosts.

- Eshops in emails benefit from brand reinforcement and increased traffic as visiting one shop on the email often leads to browsing “neighboring” shops.

Consumer-to-business (C2B)

·  Applies to any consumer that sells a product or service to a business over the internet.

·  An example is Priceline.com where bidders (or customers) ser their prices for items such as airline tickets or hotel rooms, and a seller decides whether to supply them.

Consumer-to-consumer (C2C)

·  Applies to sites primarily offering goods and services to assist consumers interacting with each other over the internet.

·The internet’s most successful C2C online auction website, eBay, links like-minded buyers and sellers for a small commission.

· C2C online communities, or virtual communities, interact via email groups, web-based discussion forums, or chat rooms.

Online auctions:

· Electronic auction (eauction)- sellers and buyers solicit consecutive bids from each other and prices are determined dynamically.

· Forward auction- an auction that sellers use as a selling channel to many buyers and the highest bid wins.

· Reverse auction- an auction that buyers use to purchase a product or service, selecting the seller with the lowest bid.

C2C Communities:

· Communities of interest- people interact with each other on specific topics, such as golfing and stamp collecting.

·Communities of relations- people come together to share certain life experience, such as cancer patients, senior citizens, and car enthusiasts.

· Communities of fantasy- people participate in imaginary environments, such as fantasy football teams and playing one-to-one with Michael Jordan.

Ebusiness Benefits and Challenges.

Ebusiness Benefits:

· Highly Accessible- businesses can operate 24 hours a day, 7 days a week, and 365 days a year.

· Increased Customer Loyalty- additional channels to contact, respond to, and access customers helps contribute to customer loyalty.

· Improved Information Content- in the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and web pages present customers with updated information in real time about goods, services, and prices.

· Increased Convenience- Ebusiness automates and improves many of the activities that make up a buying experience.

· Increased Global Reach- Business, both small and large, can reach new markets.

·Decreased Cost- the cost of conducting business on the Internet is substantially less than traditional forms of business communication.

Ebusiness Challenges:

·Protecting Consumers- consumers must be protected against unsolicited goods and communication, illegal or harmful goods, insufficient information about goods or their suppliers, invasion of privacy, and cyberfraud.

·Leveraging Existing Systems- most companies already use information technology to conduct business in non-Internet environments, such as marketing, order management, billing, inventory, distribution, and customer service. The internet represents an alternative and complementary way to do business, but it is imperative that ebusiness systems integrate existing sytsems in a manner that avoids duplicating functionality and maintains usability, performance, and reliability.

· Increasing Liability- Ebsuiness exposes suppliers to unknown liabilities because internet commerce law is vaguely defined and differs from country to country. The internet and its use in ebusiness have raised many ethical, social, and political issues, such as identity theft and information manipulation.

·Providing Security- The internet provides universal access, but companies must protect their assets against accidental or malicious misuse. System security, however, must not create prohibitive complexity or reduce flexibility. Customer information also needs to be protected from internal and external misuse. Privacy systems should safeguard the personal information critical to building sites that satisfy customer and business needs. A serious deficiency arises from the use of the internet as a marketing means. Sixty percent of internet users do not trust the internet as a payment channel. Making purchases via the internet is considered unsafe by many. The issue affects both the business and the consumer. However, with encryption and the development of secure websites, security is becoming less of a constraint for ebusinesses.

·Adhering to Taxation Rules- the internet is not yet subject to the same level of taxation as traditional businesses. While taxation should not discourage consumers from using electronic purchasing channels, it should not favor internet purchases over store purchases either. Instead, a tax policy should provide a level playing field for traditional retail businesses, mail-order companies, and internet-based merchants. The internet marketplace is rapidly expanding, yet it remains mostly free from traditional forms of taxation. In one recent study, uncollected state and local sales taxes from ebusiness were projected to exceed $60 billion in 2008.