Chapter 19 : Outsourcing in the 21st Century

OUTSOURCING PROJECTS

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



Reasons companies outsource



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

Nearshore 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:

1)Core competencies
2)Financial savings
3)Rapid growth
4)Industry changes
5)The Internet
6)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:

1)Increased quality and efficiency
2)Reduced operating expenses
3)Outsourcing non-core processes
4)Reduced exposure to risk
5)Economies of scale, expertise, and best practices
6)Access to advanced technologies
7)Increased flexibility
8)Avoid costly outlay of capital funds
9)Reduced headcount and associated overhead expense
10)Reduced time to market for products or services

Outsourcing Challenges

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 Partnerships

Teams, Partnerships, and Alliances

Organizations create and use teams, partnerships, and alliances to:
1)Undertake new initiatives
2)Address both minor and major problems
3)Capitalize on significant opportunities

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

Collaboration system :supports the work of teams by facilitating the sharing and flow of information.



Organizations form alliances 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.

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

~Collaboration Systems~

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

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



Two categories of collaboration:

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

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

~Collaborative business functions~



Collaboration systems include:

1)Knowledge management systems
2)Content management systems
3)Workflow management systems
4)Groupware systems

~Knowledge Management Systems~

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

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

~Explicit 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, often with the help of IT
2)Tacit knowledge - knowledge contained in people’s heads

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

1)Shadowing – less experienced staff observe more experienced staff to learn how their more experienced counterparts approach their work
2)Joint problem solving – a novice and expert work together on a project

Reasons why organizations launch knowledge management programs


~KM Technologies~

Knowledge management systems include:

1)Knowledge repositories (databases)
2)Expertise tools
3)E-learning applications
4)Discussion and chat technologies
5)Search and data mining tools

~KM and Social Networking~

Finding out how information flows through an organization:

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

~Content Management~

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

CMS marketplace includes:
Document management system (DMS)
Digital asset management system (DAM)
Web content management system (WCM)

Content management system vendor overview


~WORKING WIKIS~

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

Business wikis - collaborative Web pages that allow users to edit documents, share ideas, or monitor the status of a project

~Workflow Management Systems~

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

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

Workflow management system – facilitates the automation and management of business processes and controls the movement of work through the business process

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

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

~Groupware Systems~

Groupware technologies



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



~VIDEOCONFERENCING~

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~

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~

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

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

Instant messaging application

Chapter 14: E-Business

E-Business

The Internet is a powerful channel that presents new opportunities for an organization to:

1)Touch customers
2)Enrich products and services with information
3)Reduce costs

How do e-commerce and e-business differ?

E-commerce – 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

Industries Using E-Business



E-Business Models

E-business model – an approach to conducting electronic business on the Internet







Business-to-Business (B2B)

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



Business-to-Consumer (B2C)

Common B2C e-business models include:
e-shop – a version of a 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

Business types:
Brick-and-mortar business
Pure-play business
Click-and-mortar business

Consumer-to-Business (C2B)

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

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)

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

C2C communities include:
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 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-on-one with Michael Jordan

E-Business Benefits and Challenges

E-Business benefits include:

1)Highly accessible
2)Increased customer loyalty
3)Improved information content
4)Increased convenience
5)Increased global reach
6)Decreased cost

E-business challenges include:

1)Protecting consumers
2)Leveraging existing systems
3)Increasing liability
4)Providing security
5)Adhering to taxation rules

There are numerous advantages and limitations in e-business revenue models including:

1)Transaction fees
2)License fees
3)Subscription fees
4)Value-added fees
5)Advertising fees

Mashups

Web mashup - a Web site or Web application that uses content from more than one source to create a completely new service

Application programming interface (API) - a set of routines, protocols, and tools for building software applications
Mashup editor - WSYIWYGs (What You See Is What You Get) for mashups