Chapter Nineteen Outsourching in The 21st Century

                                 Chapter Nineteen Outsourching 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

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 

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 Thirteen Creating Innovative Organizations

Chapter Thirteen Creating Innovative Organizations

Disruptive Technology

Digital Darwinism- implies that organizations that cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction. 

Disruptive versus sustaining technology

• Disruptive technology- new ways of doing things that initially does not meet the needs of existing customers.
• Sustaining technology- produces an improved product customers are eager to buy, such as faster car or larger hard drive.

          - It provides us with better, faster, and cheaper products in established markets.

Disruptive and Sustaining Technologies

• Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies. 

The Internet- Business Disruption
Evolution of the internet

• Internet- a global public network of computer networks that pass information from one to another using common computer protocols.
•  Protocols- are the standards that specify the format of data as well as the rules to be followed during transmission.
• Internet Engineering Task Force (IEFT) - the protocol engineering and development arm of the internet.
• Internet Architecture Board (IAB)- responsible for defining the overall architecture of the Internet, providing guidance and broad direction to the IETF). 
• Internet Engineering Steering Group (IESG)- responsible for technical management of IETF activities and the internet standards process.

Evolution of the World Wide Web

• The internet was restricted to noncommercial activities, and its users included government employees, researchers, university professors, and students. The World Wide Web changed the purpose and use of the internet.
• World Wide Web (WWW)- a global hypertext system that uses the internet as its transport mechanism.
• Hypertext transport protocol (HTTP)- the internet standard that supports the exchange of information on the WWW. 

           - It enables web authors to embed hyperlinks in web documents      
           - It defines the  process by which a web client, called a browser, originates a request for information and sends it to a web server, a program designed to respond to HTTP requests and provide the desired information.

 Reasons for World Wide Web Growth:

• The microcomputer revolution made it possible for an average person to own a computer.  
• Advancements in networking hardware, software, and made it media possible for business PCs to be inexpensively connected to larger networks.
• Browser software such as Microsoft’s Internet Explorer and Netscape Navigator gave computer users an easy-to-use graphical interface to find, download, and display web pages.
• The speed, convenience, and low cost of email have made it an incredibly popular tool for business and personal communications. 
• Basic web pages are easy to create and extremely flexible.
• Digital divide- is when those with access to technology have great advantages over those without access to technology

Internet’s Impact on Information

• Easy to compile- searching for information on products, prices, customers, suppliers, and partners is faster and easier when using the internet. 
• Increased richness- information richness refers to the depth and breadth of information transferred between customers and businesses. Businesses and customers can collect and track more detailed information when using the internet.
• Increased reach- information reach refers to the number of people a business can communicate with, on a global basis. Businesses can share information with numerous customers all over the world.
• Improved content- a key element of the internet is its ability to provide dynamic relevant content. Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition. Content and product description establish the common understanding between both parties to the transaction. As a result, the reach and richness of that content directly affects the transaction. 

File Formats Offered over the WWW.Web 2.0

• A set of economic, social, and technology trends that collectively from the basis for the next generation of the internet- a more mature, distinctive medium characterized by user participation, openness, and network effects. 
• It is more than just the latest technology buzzword; it is a transformative force that is catapulting companies across all industries toward a new war of performing business.

Chapter Fifteen Creating Collabrative Partnerships

Chapter Fifteen Creating Collabrative Partnerships

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

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

Ø  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

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

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

Ø  The internet has dramatically increased the ease and availability for IT – enabled organizational alliance and partnerships

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

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

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

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”

EXPLICIT AND TACIT KNOWLEDGE

Ø  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

Ø  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

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 assets management system (DAM)

§  Web content management system (WCM)

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

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 email 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

GROUPWARE SYSTEMS

Groupware technologies

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

WEB CONFERENCING

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

VIDEOCONFERENCING

Ø  Video conference – A set of interactive telecommunication technologies that allow two or more locations to interact via two-way video and audio transmissions simultaneously 

INSTANT MESSAGING

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

Ø  Instant messaging – types 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 Fourteen Ebusiness

Chapter Fourteen Ebusiness

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-business Emarketplace Overview.

·         Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers.

·         Existing marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials.

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.

Mashups

·         Web mashup- a website or web application that uses content from more than one source to create a completely new service.

·         The web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on.

·         Application Programming Interface (API)- set of routines, protocols, and tools for building software applications. A good API makes it easier to develop a program by providing all the building blocks.

·         Mashup editors- they are WYSIWYGs (What You See Is What You Get) for mashups. They provide a visual interface to build a mashup, often allowing the user to drag and drop data points into a web application.