THE MAKING OF CHAPTER 15

Outsourcing in the 21^st Century

Insourcing : A common approach using the professional expertise within an 

organization to develop and maintain the organization’s information technology 

systems. Insourcing has been instrumental in creating a viable supply of IT 

professionals and in creating a better quality workforce combining both technical 

and business skills.

Outsourcing :  Is an arrangement by which one organization provides a service or 

services for another organization that chooses not to perform them in-house. In 

some cases, the entire information technology department is outsourced, including 

planning, and business analysis as well as the installation, management, and 

servicing of the network and workstations.

The three different forms of outsourcing options a project must consider are :

§  Onshore outsourcing -  engaging another company within the same country for sevices.

§  Nearshore outsourcing – contracting an outsourcing arrangement with a company in a nearby country. Often this country will share a border with the native country.

§  Offshore outsourcing – using organizations from developing countries to write code and develop systems. In offshore outsourcing the country is geographically far away.

The influential drivers afeecting the growth of the outsourcing market include:

§  Core competencies – many companies have recently begun to consider outsourcing as a mean to fuel revenue growth rather than just a cost-cutting measure.

§  Financial savings – it is typically cheaper to hire workers in China and India than similar workers in the United States. Technology is advancing at such an accelerated rate than companies often lack the resources and etc.

§  Rapid growth – a company’s sustainability depends on both speed to market and ability to react quickly to changes in market conditions.

§  Industry changes – high levels of organization across industries have increased demand for outsourcing to better focus on core competencies.

§  The internet – the pervasive nature of the internet as an effective sales channel has allowed clients to become more comfortable with outsourcing.

§  Globalization – as markets open worldwide, competition heats up. Companies may engage outsourcing service providers to delivers to deliver international services.

OUTSOURCING BENEFITS.

§  Increased quality and efficiency of a process, service, or function.

§  Reduced operating expenses.

§  Resources focused on core profit-generating competencies.

§  Reduced exposure to risks involved with large capital investments.

§  Access to outsourcing service provider’s economies of scale.

§  Access to outsourcing services provider’s expertise and best-in class practices.

§  Access to advanced technologies.

§  Increased flexibility with the ability to respond quickly to changing market demands.

§  No costly outlay of capital funds.

§  Reduced head count and associated overhead expense.

§  Reduced frustration and expense related to hiring and retaining employees in an exceptionally tight job market.

§  Reduced time to market for products or services.

OUTSOURCING CHALLENGES

§  Contract length – most of the outsourced IT contracts are for a relatively long time period (several years). This is because of the high cost of transferring assets and employees as well as maintaining technological investment. The long contract causes three particular issues:

1.      Difficulties in getting out of a contract is the outsourcing service 

provider turns out to be unsuitable.

2.      Problems in foreseeing what the business will need over the next 5

or 10 years (typical contract lengths) hence creating difficulties in 

establishing an appropriate contract.

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

period is finished.

§  Competitive edge – effective and innovative use of IT can give an organization a competitive edge over its rivals. A competitive business advantage provided by an internal IT department that understands the organization and is commited to its goals can be lost in an outsourced arrangement.

§  Confidentially – in some of organizations, the information stored in the computer system is central

THE MAKING OF CHAPTER 14

Creating Collaborative Partnerships

COLLABORATION

Ø  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  Explicit and Tacit Knowledge

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

THE MAKING OF CHAPTER 13

E-Business

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

·        Touch customers

·        Enrich products and services with information

·        Reduce costs

E-Commerce & E-Business

How do e-commerce and e-business differ?

·        E-commerce – the buying and selling of goods and services over the Internet (online transactions)

·        E-business – the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners (online transactions, serving customers and collaborating with business partner)

Industries Using E-Business

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

Electronic marketplace (e-marketplace)

• Electronic marketplaces, or e-marketplaces, present structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels
• Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers
• Existing e-marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials

Electronic Marketplaces

Search Engine Marketing

Business-to-Consumer (B2C)

·        Common B2C e-business models include:

Ø  e-shop – a version of a retail store where customers can shop at any hour 

of the day without leaving their home or office

Ø  Example

Ø  e-mall – consists of a number of e-shops; it serves as a gateway through 

which a visitor can access other e-shops

Ø  Example

Business types:

Ø  Brick-and-mortar business- operates in a physical store without an Internet 

presence. Eg: Bata.

Ø  Pure-play business- a business that operates on the Internet only without a 

physical store. Examples include fashionvalet.com.

Ø  Click-and-mortar business– a business that operates in a physical store and 

on the Internet .Eg: Hijabs by Hanami

Amazon.com

Consumer-to-Business (C2B)

Priceline.com is an example of a C2B e-business modelThe demand for C2B e-business will increase over the next few years due to customer’s desire for greater convenience and lower prices

Priceline.com

Agoda.com

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

Consumer-to-Consumer (C2C)

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-Bay

mudah.my

E-Business Benefits

include:

Ø  Highly accessible

Businesses can operate 24 hours a day, 7 days a week, 365 days a year

Ø  Increased customer loyalty

Additional channels to contact, respond to, and access customers helps contribute to customer loyalty

Ø  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

Ø  Increased convenience

E-business automates and improves many of the activities that make up a buying experience

Ø  Increased global reach

Businesses, both small and large, can reach new markets

Ø  Decreased cost

The cost of conducting business on the Internet is substantially smaller than traditional forms of business communication

E-Business Challenges

include:

Ø  Identifying Limited Market Segments

The main challenge of e-business is the lack of growth in some sectors due to product or service limitation.

Ø  Managing Consumer Trust

Internet marketers must develop a trustworthy relationship to make that initial sale and generate customer loyalty.

Ø  Ensuring Consumer Protection

Implement Internet Security, protect from misuse of customer information.

Ø  Managing Consumer Trust

Companies that operate online must obey a patchwork of rules about which customers are subject to sales tax on their purchase and which are not.

E-Business Benefits and Challenges

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

·        Transaction fees

·        License fees

·        Subscription fees

·        Value-added fees

·        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

Web Mashups