OUTSOURCING DEVELOPMENT
• In the high-speed global business environment, an organization needs to maximize its profits, enlarge its market share, and restrain its ever-increasing costs
• 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
• Benefits from outsourcing include:
1. Financial savings
2. Increased technical abilities
3. Market agility
• Factors driving outsourcing growth include:
1. Core competencies
2. Rapid growth
3. Industry changes
4. The Internet
DEVELOPING STRATEGIC OUTSOURCING PARTNERSHIP
• Business process outsourcing (BPO) – contracting of a specific business task, such as payroll, to a third-party service provider
• BPO is divided into two categories:
1. Back-office outsourcing
2. Front-office outsourcing
SOURCING’S NEW SURGE – OFFSHORING
• Offshore outsourcing – using organizations from developing countries to write code and develop systems
• According to Forrester Research, nearly half of all businesses use offshore providers, and two-thirds plan to send work overseas in the near future
TEAMS, PARTNERSHIP AND ALLIANCES
• 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 – 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
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
• It is just as important for an organization to form teams, partnerships, and alliances with other organizations
• An organization that uses a core competency strategy will focus on its core competency and form partnerships with other organizations to handle nonstrategic business processes
• The most common example of this is outsourcing payroll or accounting functions
• Many organizations want to focus on the marketing and selling of a unique product or service. These organizations do not want to incur the expense of maintaining accounting or tax experts on staff, hence they will outsource these functions to a business partner
• This is a great time to refer back to the opening case
• Discuss how Levi’s core competency is brand-name differentiation and recognition, while Wal-Mart’s core competency is retail cost leadership
• The partnership between these two organizations enables cost-leadership selling of a widely recognized brand name
• 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 allows people, teams, and organizations to leverage and build upon the ideas and talents of staff, suppliers, customers, and business partners
• It involves a unique set of business challenges that:
• Include complex interactions between people who may be in different locations and desire to work across function and discipline areas
• Require flexibility in work process and the ability to involve others quickly and easily
• Create and share information rapidly and effortlessly within a team
• Increasingly, organizations are extending their focus from internal operations like planning and scheduling, enterprise resource planning and sales force automation, toward operations beyond their own four walls with external customers and suppliers
• 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 system – supports the capturing and use of an organization’s “know-how”
2. Content management system (CMS) – provides tools to manage the creation, storage, editing, and publication of information in a collaborative environment
3. Workflow management system – controls the movement of work through a business process
4. Groupware – software that supports team interaction and dynamics including calendaring, scheduling, and videoconferencing
Knowledge management system
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”
• 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
• Knowledge management systems include:
§ Knowledge repositories (databases)
§ Expertise tools
§ E-learning applications
§ Discussion and chat technologies
§ 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)
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
