Chapter 15: Outsourcing in the 21st Century

Outsourcing Projects

• Insourcing(in-house development) is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.
• Outsourcing is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.

Common Departments Outsourced by Organizations

Reasons Companies Outsource

• Onshore outsourcing-engaging another company within the same country for services
• Nearshore outsourcing-contracting 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.

 Outsourcing Models and Cost Savings

 Typical Salary Rangers for Computer Programmers

• Core competencies-many companies have recently begun to consider outsourcing as a means 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.
• Rapid growth-a company sustainability depends on both speed to market and ability to react quickly to changes in market conditions.
• Industry changes-high levels of reorganization 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 became more comfortable with outsourcing.
• Globalization-as markets open worldwide,competition heats up.

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).
• Competitive edge- effective and innovative use of IT can give an organization a competitive edge over its rivals.
• Confidentiality- in some organizations,the information stored in the computer systems in central to the enterprise's success or survival,such as information about pricing policies,product mixing formulas,or sales analysis.
• Scope definition-most IT projects suffer from problems associated with defining the scope of the system.

 Outsourcing Opportunities

Chapter 14: Creating Collaborative Partnerships

Teams,Partnerships,and Alliances

• to be successful and avoid being eliminated by the competition an organization must constantly undertake new initiatives,address both minor and major problems,and capitalize on significant opportunities.
• to support these activities an organization often will create and utilize teams,partnerships,alliances because the expertise needed is beyond the scope of a single individual or organization.
• these teams,partnerships,and alliances can be formed internally among a company's employees or externally with other organizations.
• the core competency of an organization is its key strength,a business function that it does better than any of its competitors.
• a core competency strategy is one in which an organization chooses to focus specifically on what other specialist organizations to handle nonstrategic business processes.
• information technology makes such business partnerships ans alliances easies to establish and manage.
• an 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.
• the advent of the internet has greatly increased the opportunity for IT-enabled business partnerships and alliances.

 Teams,Partnerships and Alliances Within and External to an Organization

Collaboration Systems

• a collaboration system is an IT-based set of tools that supports the work of teams by facilitating the sharing and flow of information.
• collaboration solves specific business tasks such as telecommuting,online meetings,deploying applications,and remote project and sales management
• unstructured collaboration(sometimes referred to as information collaboration) includes document exchange,shared whiteboards,discussion forums,and email.
• structured collaboration(or process collaboration) involves shared participation in business processes,such as workflow,in which knowledge is hard-coded as rules.

 Collaborative Business Areas

Typical Collaborative Business Functions

Knowledge Management Systems(KM)

• involves capturing,classifying,evaluating,retrieving,and sharing information assets in a way that provides context for effective decisions and actions.

• supports the capturing,organization,and dissemination of knowledge(know-how) throughout an organization.

1. Explicit and Tacit Knowledge

• consists of anything that can be documented,archived,and codified,often with  the help of IT.

      2. Tacit Knowledge

The following are two best practices for transferring or recrating tacit knowlegde:

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

Key Reasons Organizations Launch Knowledge Management Systems

Content Management Systems

• content management system provides tools to manage the creation,storage,editing,and publication of information in a collaborative environment

 Common Types of Content Management Systems

Working Wikis

• wikis are web-based tools that make it easy for users to add,remove,and change online content
• business wikis are collaborative web pages that allow users to edit documents,share ideas,or monitor the status of a project.

 Major Content Management System Vendors

Workflow Management Systems

• workflow defines all the steps or business rules,from beginning to end,required for a business process.
• workflow management systems facilitate the automation and management of business processes and control the movement of work through the business process.
• messaging-based workflow systems send work assignments through an email system.
• database-based workflow systems store documents in a central location and automatically ask the team members to access the document when it is their turn to edit the document.

 Workflow Management System Features

Groupware Systems

• groupware is software that supports team interaction and dynamics including calendaring,scheduling,and videoconferencing.

1. Videoconferencing: is a set of interactive telecommunication technologies that allow two or more locations to interact via two-way video and audio transmissions simultaneously.
2. Web Conferencing: blends audio,video,and document-sharing technologies to create virtual meeting rooms where people "gather" at a password-protected website.
3. Instant Messaging: email is by the dominant collaboration application,but real-time collaboration tools like instant messaging are creating a new communication dynamic within organizations.

 Groupware Systems

Groupware Advantages

 Videoconferencing

Web Conferencing

 Instant Messaging Application

Chapter 13: E-Business

Ecommerce

• The buying and selling of goods and services over the internet
• Ecommerce refers only to online transactions.

Ebusiness

• derived from the term ecommerce,is the conducting of business on the internet,not only buying and selling,but also  serving customers and collaborating with business partners.

Difference between ecommerce and ebusiness

• to exchanges of information
• to enhance productivity
• maximize convinence
• improve communications globally 

 Overview of Several Industries Using Ebusiness

Ebusiness Models

• is an approach to conducting electronic business on the Internet .

 Basic Ebusiness Models

 Ebusiness Models

Business to Business(B2B)

• applies to business buying from and selling to each other over the internet.
• online access to data,shipping date,delivery date and shipping status,provided either by the seller or third-party provider,is widely supported by B2B models.
• electronic marketplaces,or emarketplaces,are interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.

Business to Business Emarketplace Overview

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,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 online business channeling their goods and services via the internet only
• emall consists of a number of eshops it serves as a gateway through which a visitor can access other eshops.

Online Auctions

Consumer to Business(C2B)

• applies to any consumer that sells a product or service to a business over the internet.
• the demand for C2B e business will increase over the next few due to customers' desires for greater convenience and lower prices.

Consumer to Consumer(C2C)

• applies to sites primarily offering goods and services to assist consumer interacting with each other the internet.
• the internet's most successful C2C online auction website,e bay,links like-minded buyers and sellers for a small commission.

 C2C Communities

E- business Benefits

Mashups

• web mashups is a website or web application that uses content from more than one source to create a completely new service.
• API(application programming interface),which is a set of routines,protocols,and tools for building software applications.

 E- business Challenges

The Benefits and Challenge of Various E -marketplace Revenue Models

Chapter 12: Intergrating the Organization from End to End- Enterprise Resource Planning

Enterprise Resource Planning(ERP)

• at the heart of all ERP systems is a database,when a user enters or updates information in one module,it is immediately and automatically updated throughout the entire system.

Bringing the Organizations Together

ERP Process Flow

                               

 The Organizations befofe ERP

The Evolution of ERP

 ERP- Bringing the Organization Together

 The Evolution of ERP

Integrating SCM,CRM,AND ERP

• SCM,CRM,and ERP are the backbone of e-business. Integration of these applications is the key to success for many companies.Integration allows the unlocking of information to make it available to any user,anywhere,anytime.

 SCM Market Overview

 General audience and purpose of SCM, CRM, ERP

Integration Tools

• middleware-several different types of software that sit in the middle of and provide connectivity between two or more software applications.
• enterprise application integration(EAI) middleware-represents a new approach to middleware by packaging together commonly used functionality,such as providing prebuilt  links to popular enterprise applications,which reduces the time necessary to develop solutions that integrate applications from multiple vendors.

 Data point where SCM,CRM and ERP intergrate

ERP systems must intergrate variuos organization process and be:

• Flexible
• Modular and Open
• Comprehensive
• Beyond the company

Flexible – must be able to quickly respond to the changing needs of the organization

Modular and open – must have an open system architecture, meaning that any

module can be interface,

with or detached whenever required without affecting the other modules. 

Comprehensive – must be able to support a variety of organizational functions for a

wide range of businesses

Beyond the company – must support external partnerships and collaboration efforts

Enterprise Resource Planning's Explosive Growth

*ERP is a logical solution to the mess of incompatible applications that had sprung up in most business

*ERP address the need for global information sharing and reporting

*ERP is used to avoid the pain and expense of fixing legacy systems

Chapter 11: Building a customer -Centric Organization-Customer Relationship Management

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM enables an organization to;

Ø  Provide better customer service

Ø  Make call centers more efficient

Ø  Cross sell products more effectively

Ø  Helps sales staff close deals faster

Ø  Simplify marketing and sales processes

Ø  Discover new customers

Ø  Increase customer revenues

RECENCY, FREQUENCY AND MONETARY VALUE

An organization can find its most valuable customers by using a formula that industry insiders call FRM;

Ø  How recently a customer purchased items (recency)

Ø  How frequently a customer purchased items (frequency)

Ø  How much a customer speeds on each purchased (monetary value)

THE EVALUATION OF CRM

*CRM reporting technologies help organizations identify their customers across other applications. 

*CRM analysis technologies help organizations segment their customers into categories such as best and worst customers.

* CRM predicting technologies help organizations predict customer behavior, such as which customers are at risk of leaving. 

THE UGLY SIDE OF CRM: WHY CRM MATTERS MORE NOW THAN EVER BEFORE

CUSTOMER RELATIONSHIP MANAGEMENT’S EXPLOSIVE GROWTH

USING ANALYTICAL CRM TO ENHANCE DECISION 

Ø  Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers

Ø  Analytical CRM – supports back-office operations and strategic analysis and includes all system that do not deal directly with the customers

CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS

CRM success factors include;

Ø  Clearly communicate the CRM strategy

Ø  Define information needs and flows

Ø  Build an integrated view of the customer

Ø  Implement in iterations

Ø  Scalability for organizational growth

USING ANALYTICAL CRM TO ENHANCE DECISION

Operational CRM and analytical CRM