OUTSOURCING IN THE 21ST CENTURY

INSOURCING(IN-HOUSE-DEVELOPMENT)

A common approach using the professional expertise within an organization to develop and maintain the organization ‘s information technology system.

OUTSOURCING

An arrangement by which one organization provides a service or services for another organization  that chooses not to perform them in-house.

DIFFERENT FORMS OF OUTSOURCING OPTIONS A PROJECT MUST CONSIDER

INFLUENTIAL DRIVERS AFFECTING THE GROWTH OF THE OUTSOURCING

• Core Competencies
• Financial Savings
• Rapid Growth
• Industry Changes
• The Internet
• Globalization

OUTSOURCING BENEFITS

• Increased quality and efficiency
• Reduced operating expenses
• Outsourcing non-core processes
• Reduce exposure to risk
• Reduced time to market products and  services
• No costly outlay of capital funds

OUTSOURCING CHALLENGES

~Contract  length

• Difficulties in getting out of a contract
• Problems in foreseeing future needs.
• Problems in reforming an internal IT department after the contracts  is finished.

~Competitive edge

~Confidentially

~Scope definition

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CREATING COLLABORATIVE PARTNERSHIPS

CHARACTERISTICS BUSINESS 2.0

CONTENT SHARING THROUGH OPEN SOURCING

• OPEN SYSTEM- consists of non proprietary hardware and software based on publicly known standard s that allow third parties to create add-on products to plug into or interoperate with the system. 
• SOURCE CODE- contains instructions written by a programmer specifying the actions to be performed by computer software.
• OPEN SOURCE- any software whose sources code is made available free for any third party to review and modify.

 USER-CONTRIBUTED CONTENT

• USER-CONTRIBUTED CONTENT-created and updated by many users for many users. Ex: youtube, flickr and Wikipedia. 
• REPUTATION SYSTEM-buyers post feedback on sellers

COLLABORATION INSIDE THE ORGANIZATION 

• COLLABORATION SYSTEM- set of tools that supports the work of teams or groups by facilitating the sharing and flow of information.
• COLLECTIVE INTELLIGENCE- collaborating and tapping into the core knowledge of all employees, partners, and customers.
• KNOWLEDGE MANAGEMENT- involve capturing, classifying, evaluating, retrieving, and sharing information assets. 
• OBJECTIVES-to be sure company’s knowledge of facts, sources of information and solution are available to all employees. 

 COLLABORATION OUTSIDE THE ORGANIZATION

• CROWDSOURCING- refers to the wisdom of the crowd. 
• ASYNCHRONOUS COMMUNICATION- communication such as email in which the message and the response do not occur at the same time. 
• SYNCHRONOUS COMMUNICATION- communications that occur at the same time such as IM or chat.

NETWORKING COMMUNITIES WITH BUSINESS 2.0

• SOCIAL MEDIA

Refers to website that rely on user participation and user-contributed content such as FACEBOOK, YOUTUBE and DIGG.

• SOCIAL NETWORK

An application that connects people by matching profile information .

• SOCIAL NETWORKING

Practice expending your business and/or social contacts by constructing a personal network.

• SOCIAL NETWORKING ANALYSIS (SNA)

Maps group contacts identifying who knows each other and who work together.

SOCIAL TAGGING

• tags : specific keywords or phrases incorporated into website content for means of classification or taxonomy.
• social tagging : describe the collaborative activity of marking share online contents with keywords tag as a way to organize it for future navigation.

Business 2.0 Tools for Collaborating

1. blog
2. wikis
3. mashups

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E-BUSINESS

E-COMMERCE AND E-BUSINESS

 

INDUSTRIES USING E-BUSINESS ( EXAMPLE)

E-BUSINESS MODELS

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

BUSINESS-TO-CONSUMER (B2C)

  

•  Common B2C e-business models include:

•          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 a visitor can access other e-shops

•   Business types:

•          Brick-and-mortar business

•          Pure-play business

•          Click-and-mortar business 

• Brick-and-mortar business -

•          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.

•  Can you name a company that operates in each of the different business types?

•          Brick-and-mortar business – local book store, college book store (there are not many today)

•          Pure-play business – Amazon.com, eBay 

       Click-and-mortar business – Barnes and Noble

CONSUMER-TO-BUSINESS (C2B)  

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

•          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-BUSINESS BENEFITS AND CHALLENGES

 

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

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ENTERPRISE RESOURCE PLANNING

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

ERP systems automate business processes

BRINGING THE ORGANIZATION TOGETHER

ERP – The organization before 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

 

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CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management (CRM) is a means of managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization’s profitability

RECENCY, FREQUENCY AND MONETARY VALUE

Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value

• How recently a customer purchased items (Recency) 
• How frequently a customer purchased items (Frequency)
• How much a customer spends on each purchase (Monetary Value)

EVALUATION OF CRM 

OPERATIONAL AND ANALYTICAL CRM

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

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

THE UGLY SIDE OF CRM

CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS

CRM success factors include:

1. Clearly communicate the CRM strategy. 
2. Define information needs and flows. 
3. Build an integrated view of the customer. 
4. Implement in iterations. 
5. Scalability for organizational growth.

 

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SUPPLY CHAIN MANAGEMENT

A supply chain consists of all parties involved, directly or indirectly, in the procurement of a product or raw material

Supply Chain Management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

The supply chain has three main links:

• Materials flow from suppliers and their “upstream” suppliers at all levels.

• Transformation of materials into semi-finished and finished products through the organization’s own production process.

• Distribution of products to customers and their “downstream” customers at all levels.

BASIC SUPPLY CHAIN

INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN

IT’s primary role is to create integrations or tight process and information linkages between functions within a firm

1.VISIBILITY

Supply chain visibility – the ability to view all areas up and down the supply chain

Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain

2.CONSUMER BEHAVIOR

Companies can respond faster and more effectively to consumer demands through supply chain enhances 

Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

3.COMPETITION

Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain

Supply chain execution (SCE) software – automates the different steps and stages of the supply chain

SCP and SCE in the supply chain

 4.SPEED

 

Three factors fostering speed

SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS

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ENABLING THE ORGANIZATION - DECISION MAKING

ASSALAMUALAIKUM.

For this post I want to share about decision making in an organization.

MAKING BUSINESS DECISIONS

*Decision making is one of the most important and challenging aspect of management.
*Today with massive volumes of information available managers are challenged to make highly complex decision.
*Figure below displays the three primary challenges managers face when making decision.

THE DECISION-MAKING PROCESS

They are plays crucial role in communication and leadership.There are numerous academic decision making models.

DECISION-MAKING ESSENTIAL

*Few key concepts about organizational structure will help our discussion of making decision-making tools. Structure similar to a pyramid.

*Different level require different types of information to assist in decision making, problemsolving and opportunity capturing.

OPERATIONAL

*Employees develop, control and maintain core business activities required.

*Also considered structured decision ,arise in situations where established process offer potential solutions.

*Made frequently and are almost repetitive in nature.

MANAGERIAL

*Employees are continuously evaluating company operations  to hone the firm's abilities to identify, adapt, to and leverage change.

*Cover short and medium range plans, schedules and budget along with policies, procedure and business objectives for the firm.

*Semistructured decision occur in situation few established process help to evaluate potential solutions.

EXAMPLE:decision about producing new product

             changing employee benefits range from unstructured to

semistuctured

STRATEGIC

*Managers develop overall business strategies, goals, and objectives.

*Monitor strategic performance and its overall direction in political,economic and competitive business environment.

*Unstructured decisions,in situation in which procedures or rules exists to guide decision makers.

SUPPORT: ENHANCING DECISION MAKING WITH MIS

OPERATIONAL SUPPORT SYSTEMS

TRANSACTION PROCESSING SYSTEMS

Moving up through the organizational pyramid users move from requiring transactional information to analytical information

• Transaction processing system - the basic business system that serves the operational level (analysts) in an organization
• Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information
• Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

DECISION SUPPORT SYSTEMS

Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

Three quantitative models used by DSSs include:

• Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model
• What-if analysis – checks the impact of a change in an assumption on the proposed solution
• Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output

What-if analysis

 Goal-seeking analysis

 Interaction between a TPS and an EIS

EXECUTIVE INFORMATION SYSTEMS

Digital dashboard – integrates information from multiple components and presents it in a unified display

ARTIFICIAL INTELLIGENCE (AI)

Four most common categories of AI include:

• Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
• Neural Network – attempts to emulate the way the human brain works
• Fuzzy logic – a mathematical method of handling imprecise or subjective information
• Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
• Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

DATA MINING

Data-mining software includes many forms of AI such as neural networks and expert systems

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