Chapter 15: 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

• 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

 

Factors driving outsourcing growth include:

• Core competencies
• Financial savingsRapid growth 
• Industry change
• The Internet
• Globalization

Outsourcing benefits:

• 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:

• Contract length
• Competitive edge
• Confidentiality

Chapter 14: Creating Collaborative Partnerships

TEAMS, PARTNERSHIPS AND ALLIANCES

Organizations create and use teams, partnerships and alliances to:

• Undertake new initiatives

• Address both minor and major problems

• Capitalize on significant opportunities

 

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

 

 

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.

 

 

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

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

 

 

COLLABORATION SYSTEMS

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

 

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

 

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 assets 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 allows users to edit documents, share ideas or monitor the status of a project

WORKFLOW MANAGEMENT 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 email 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 – software that supports teams interaction and dynamics including calendaring, scheduling and videoconferencing.

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

 

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

 

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

 
 
 

 

Chapter 13: E-Business

E-commerce- the buying and selling of goods 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.

E-Business Models

• Business-to-business (B2B) - Applies to businesses buying from selling to each other over the Internet. E.g: 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) - Applies to any business that sells its products or services to consumers over the Internet. E.g: 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 visitor can access other e-shops.
• Consumer-to-business (C2B) - Applies to any consumer that sells a product or service to a business over the Internet. E.g: Brick-and-mortar business- operates in a physical store without an Internet presence, Pure-play business- a business that operates on the Internet only without a physical store, Click-and-mortar business- a business that operates in a physical store and on the Internet.
• Consumer-to-consumer (C2C) - Applies to sites primarily offering goods and services to assist consumers interacting with each other over the Internet. E.g: Electronic auction(e-auction), forward auction, reverse auction.

E-business benefits:

• Highly accessible
• Increased customer loyalty
• Improved information content
• Increased convenience
• Increased global reach
• Decreased cost

E-business Challenges:

• Identifying limited market segments 
• Managing customer trust
•  Ensuring consumer protection
• Adhere to taxation rules

E-business benefits and challenges:

• Transaction fees
• License fees
• Subscription fees
• Value-added fees
• Advertising fees

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

Case Study 3

1. Effects of ERP failure based on the case above :

• Failed information technology implementations have created serious financial problems for a member of corporations. 

• Hersyey Food Corporation, for example issued a major profits warning because of massive distribution problems following the flawed implementation of an ERP system.

• Many stores lacking Hersyey ERP imlplementation.

• Whirlpool Corporation had similar problems due to a problematic ERP implementation.

• Problems with an ERP implementation at the pharmaceutical distributor FoxMeyer caused  the company to announce US 500 million lawshit against SAP and Andersen Consulting (now Accenture).

• British organizations, including the BBC and Newcastle University also experienced major ERP implementation problems.

2. Factors that organization should access in choosing ERP vendor :

There are four factors that an organization should assess when choosing ERP vendor. First factor is establish an internal project team comprised of IT leaders and process or functional owners from different areas to review potential vendors. Most software companies offer a wide variety of solutions but typically specialize in four to five vertical markets. To find out which companies have the best track records in your industry and functional areas, do market research. Second factor is study IT industry analyst reports. They will tell you which software products are best-of-breed and which vendors are committed to your industry. Both publications and analyst reports will keep you up to date on general trends and developments in the industry. Third factor is develop pointed questions that address any key concerns or unique needs.For example, do you need a payroll module? Do you use encumbrance accounting? Not every vendor offers these capabilities. The fourth factor is evaluate each vendor’s financial stability, including its available cash, its ability to continue product investments, its outstanding obligations, payment history (by looking at Dun & Bradstreet reports), and company profile and credit ratings. For public companies, financial data is accessible from financial Web sites and public filings like 10Ks and 10Qs. Review the company’s balance sheet, profitability, market share, market capitalization, and analyst opinions. For private companies, limited information may be available.

Case Study 2

1. Identify five (5) of competitive advantages used by AirAsia.

• AirAsia launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed.

• AirAsia undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US $0.27).

• AirAsia operates scheduled domestic and international flights and is Asia's largest low fare,no frills airline.

• AirAsia pioneered low cost travelling in Asia which is then followed by Tiger Airways, Jetstar Asia, Nok Air, Lion Air and Cebu Pacific.

• AirAsia also the first airline in the region to implement fully ticket-less travel and unassigned seats. 

2. Which of the Porter's generic strategies were applied by AirAsia in the case study and explain with examples.

•  Differentation

The products or services have particular difference. Certain or only few people purchase the product instead thinking of the price.

Example:

Instead of giving low cost travelling, AirAsia is the first airline in the region to implement fully ticket-less travel and unassigned seats. AirAsia also operates with the world's lowest unit cost of US$0.023/ASK(available seat per kilometer) and a passenger break-even load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilization rate of 13 hours a day.

3. Based on Porter's Five Force Model, analyze AirAsia's buyer power and supplier power.

•  Buyer power

 AirAsia assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item.

example: AirAsia giving low cost travelling to their customers and also operates with the world's lowest unit cost of US$0.023(ASK) . Usually airline industry has high buyer power because of customer have many choices.

• Supplier power

 AirAsia assessed by the suppliers' ability to directly impact the price they are charging for suppliers.

example: AirAsia is currently the main customer of the Airbus A320. The company has place an order of 175 units of the same plane to service its route. AirAsia also enhance its route network by connecting all the existing  cities in the region and expending further.

Usually airline industry has high supplier power has as there are limited plane and engine manufacturers to choose from.
 





 

Case Study 1

1. Explain how Apple achieved business success through the use of information, information technology, and people 

Initially, Steve Jobs was worried that he had missed the MP3 bandwagon. Jobs was fixated on developing video editing software and was oblivious to the MP3 phenomena. Jobs took the MP3 phenomena information and crafted a strategy on how Apple could enter the MP3 market. Jobs’ strategy began by bringing together the right people to tackle the iPod project including Jeff Robbin from SoundStep and his MP3 software, an iPod development team, and an iTunes development team. Bringing together the right people, with the right information, and access to technology enabled Jobs to take the iPod from inception to product delivery in 9 months.

2. Describe the types of information employees at an Apple store require and compare it to the types of information the executives at Apple’s corporate headquarters require. Are there any links between these two types of information?

Staff employees at an Apple store will look at data – how much is a certain item, how long is an item on sale for, what hours are they working, when are their days off, etc. Executives at Apple’s corporate headquarters require information – do we have enough inventory to meet demand, are prices too high or too low, what is employee turnover per store, where should we build a new store, should we close a store, etc. Of course, store employees use information to do their jobs also, it is just at a store level, not a corporate level. Executives require information from many stores and the volumes of data they use to gain information are significantly larger than store employees.

3. Identify the type of information culture that would have the greatest negative impact on Apple’s operations. 

Information-Functional Culture Employees use information as a means of exercising influence or power over others. For example, manager in sales refuses to share information with marketing. This causes marketing to need the sales manager’s input each time a new sales strategy is developed. With this type of culture it would be difficult for Apple to gain visibility into its overall operations.

Chapter 12: Integrating The Organization From End to End- Enterprise Resource Planning

Enterprise Resources 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 systems.

Middleware- several different types of software which sit in the middle of and provide connectivity between two or more software applications.

Enterprise application integration (EAI) middleware- packages together commonly used functionality which reduces the time necessary to develop solution that integrate applications from multiple vendors.

ERP systems must integrate various organization processes and be:

• 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.