Chapter 15 – Outsourcing in the 21st Century

Chapter 15 – Outsourcing in the 21st Century

• 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

• Onshore outsourcing – engaging another company within the same country for services
• Near shore outsourcing – contracting an outsourcing arrangement with a company in a nearby country
• Offshore outsourcing – using organizations from developing countries to write code and develop systems
• Big selling point for offshore outsourcing “inexpensive good work”

• Factors driving outsourcing growth include;

• Core competencies
• Financial savings
• Rapid growth
• Industry changes
• The Internet
• Globalization

• According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger and more profitable than those that do not”
• Most organizations outsource their noncore business functions, such as payroll and IT

Outsourcing Benefits

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

Outsourcing challenges include;

• Contract length

• Difficulties in getting out of a contract
• Problems in foreseeing future needs
• Problems in reforming an internal IT department after the contract is finishe

• Competitive edge
• Confidentiality
• Scope definition 

CHAPTER 14

Chapter 14

Creating Collaborative Partnerships

            

COLLABORATIONØ  Teams, Partnerships, and Alliances

Ø  Organizations create and use teams, partnerships, and alliances to:

·         Undertake new initiatives

·         Address both minor and major problems

·         Capitalize on significant opportunities

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

Collaboration System

Ø  Collaboration system – supports the work of teams by facilitating the sharing and flow of information

Ø  Organizations form alliances and partnerships with other organizations based on their core competency

·         Core competency – an organization’s key strength, a business function that it does better than any of its competitors

·         Core competency strategy – organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes

Ø  Information technology can make a business partnership easier to establish and manage

·         Information partnership – occurs when two or more organizations cooperate by integrating their IT systems, thereby providing customers with the best of what each can offer

·         The Internet has dramatically increased the ease and availability for IT-enabled organizational alliances and partnerships

Ø  Collaboration Systems

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

Ø  Collaboration system – an

·         IT-based set of tools that supports

·         the work of teams by facilitating

·         the sharing and flow of information

Ø  Two categories of collaboration

·         Unstructured collaboration (information collaboration) - includes document exchange, shared whiteboards, discussion forums, and e-mail

·         Structured collaboration (process collaboration) - involves shared participation in business processes such as workflow in which knowledge is hardcoded as rules

·         Collaboration Systems

Ø  Collaborative business functions

Ø  Collaboration systems include:

·         Knowledge management systems

·         Content management systems

·         Workflow management systems

·         Groupware systems

·         Knowledge Management Systems

Ø  Knowledge management (KM) – involves capturing, classifying, evaluating, retrieving, and sharing information assets in a way that provides context for effective decisions and actions

Ø  Knowledge management system – supports the capturing and use of an organization’s “know-how”

Ø  Intellectual and knowledge-based assets fall into two categories

·         Explicit knowledge – consists of anything that can be documented, archived, and codified, often with the help of IT

·         Tacit knowledge - knowledge contained in people’s heads

Ø  The following are two best practices for transferring or recreating tacit knowledge

·         Shadowing – less experienced staff observe more experienced staff to learn how their more experienced counterparts approach their work

·         Joint problem solving – a novice and expert work together on a project

Ø  Reasons why organizations launch knowledge management programs

Ø  KM Technologies

Ø  Knowledge management systems include:

·         Knowledge repositories (databases)

·         Expertise tools

·         E-learning applications

·         Discussion and chat technologies

·         Search and data mining tools

Ø  KM and Social Networking

Ø  Finding out how information flows through an organization

Social Networking 

·         Social networking analysis (SNA) – a process of mapping a group’s contacts (whether personal or professional) to identify who knows whom and who works with whom

·         SNA provides a clear picture of how employees and divisions work together and can help identify key experts

·         Social Networking

Ø  Content Management

Ø  Content management system (CMS) – provides tools to manage the creation, storage, editing, and publication of information in a collaborative environment

Ø  CMS marketplace includes:

·         Document management system (DMS)

·         Digital asset management system (DAM)

·         Web content management system (WCM)

Document management system (DMS)

Ø  Supports the electronic capturing, storage, distribution, archival,  and accessing of documents

Digital asset management system (DAM)

Ø  Similar to DMS, generally works with binary rather than text files, such as multimedia files types.

Web content management system (WCM)

Ø  Adds an additional layer to document and digital asset management that enables publishing content both to intranets and to public Web sites

Ø  Content management system vendor overview

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 allow users to edit documents, share ideas, or monitor the status of a project

Ø  Business wikis

Ø  Workflow Management Systems

Ø  Work activities can be performed in series or in parallel that involves people and automated computer 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

Ø  Messaging-based workflow system – sends work assignments through an e-mail system

Ø  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

Ø  Groupware Systems

Ø  Groupware technologies

Ø  Groupware – software that supports team interaction and dynamics including calendaring, scheduling, and videoconferencing

VIDEOCONFERENCING

Ø  Videoconference - a set of interactive telecommunication technologies that allow two or more locations to interact via two-way video and audio transmissions simultaneously.

WEB CONFERENCING

Ø  Web conferencing - blends audio, video, and document-sharing technologies to create virtual meeting rooms where people “gather” at a password-protected Web site.

INSTANT MESSAGING

Ø  E-mail is the dominant form of collaboration application, but real-time collaboration tools like instant messaging are creating a new communication dynamic

Ø  Instant messaging - type of communications service that enables someone to create a kind of private chat room with another individual to communicate in real-time over the Internet

Ø  Instant messaging application

CHAPTER 13 : E-BUSINESS

E BUSINESS

• Ø  The internet is a powerful channel that presents new opportunities for organization to;

§  Touch customers

§  Enrich products and services with information

§  Reduce costs

• Ø  How do ecommerce and e business differ?

§  Ecommerce – the buying and selling of goods and services over the internet

§  E business – the conducting of business on the internet including, not only buying and selling, but also serving customers and collaborating with business partners

E BUSINESS MODELS

• Ø  E business model – An approach to conducting electronic business on the Internet 

Business-to-Business (B2B)

Ø  Electronic marketplace (E market place) – interactive business communities providing a central market where multiple buyers and sellers can engage in e business activities.

Business-to-Consumer (B2C)

Ø  Common B2C e business models include;

§  E shop – A version of retail store where customers can shop at any hour of the day without leaving their home or office

§  E mall – consists of a number of e shops; it serves as a gateway through which a visitor can access other e shops

Ø  Business types;

§  Brick-and-mortar business

§  Pure-play business

§  Click-and-mortar business

Consumer-to-Business (C2B)

Ø  Priceline.com is an example of a C2B e business model

Ø  The demand for C2B e business will increase over the next few years due to customer’s desire for greater convenience and lower prices

Consumer-to-Consumer (C2C)

Ø  Online auctions

§  Electronic auction (E auction) – Sellers and buyers solicit consecutive bids from each other and prices are determined dynamically

§  Forward auction – Sellers use as a selling channel to many buyers and the highest bid wins

§  Reverse auction – Buyers use to purchase a product or service, selecting the seller with the lowest bid

Ø  C2C communities include;

§  Communities of interest – People interact with each other on specific topics, such as golfing and stamps collecting

§  Communities of relations – People come together to share certain life experiences, 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

Ø  E business benefits include;

• §  Highly accessible
• §  Increased customer loyalty
• §  Improved information content
• §  Increased convenience
• §  Increased global reach
• §  Decreased cost

Ø  E business challenges include;

• §  Protecting consumers
• §  Leveraging existing systems
• §  Increased liability
• §  Providing security