Leveraging IT for Business - Assignment Example

Leveraging IT for Business Introduction Business process outsourcing (BPO) is the management of a single or multiple business functions as well as supporting information technology of a company by a third party (Weth 2005). This means that a number of companies do not run all their functions exclusively. They hire other companies to do the work for them. This can be within the front-office where the services deal directly with the company’s clients or back-office which means the services like human resource, finance among others. This paper will look at the business of outsourcing and what it entails as well as its benefits and other wise. Section I Question 1 The benefits of off shoring are numerous to the company that engages in it. These include the reduction of the cost of doing business. Businesses have been able to reduce costs especially on the salaries that it pays out as well as other benefits. This is of benefit to the organization as it enables the organization to continue to function without unnecessary expense added to it (Click and Duening 2005). This is because most of the outsourcing destinations like China, India and other countries offer cheaper labour to these companies that outsource to them. Another benefit of outsourcing is the competitive advantage that it gives to those companies that use it. This is gained both in the local as well as in the international scene. This is due to the lower cost of business operations and the proximity to the available market for the finished goods. On the other hand, the difficulties of outsourcing a business are also present and must be put into consideration. These include the proportionality of the projects availed and the provider of the BPO to fulfil the obligations. As the size of the provider goes up, so is the risk. At the same time, there is the matter of trust between the provider and recipient. The people or companies that are the recipients of the services that are being outsourced may be unknown. This means that it is a testing venture when a company, for example, far away, Australia decides to entrust its business to a little known group like in India. The end result may be a poor show of the BPO which may be a great threat to the survival of the company. Another challenge to outsourcing is that it has the capacity to cause brain drain. According to unions within Australia, the outsourcing has driven a number of nationals from Australia to other countries in search of better terms of employment (Switzer 2006). This is because when companies outsource, they reduce the number of local jobs that they have. This is nature of unemployment that drives the job seekers elsewhere to try and survive. Outsourcings will, therefore, cost the country a lot of its highly productive labour. Question 2 I agree with Haensley about the need for Australian firms taking advantage of the global village for a number of reasons. One of these is the benefits that outsourcing grants to the local companies is the cheap labour that can be gotten from other countries. According to Haensley, a company can be able to remove some expenses like salaries as well as benefits accrued to employees. Aside from this, company can easily reduce the cost of production by 30-40%. This means that apart from the really necessary expenses, all other costs can be sent outside companies that will handle them. In addition, there is the benefit of improving the skill level of the local manpower. Generally outsourcing does not mean moving the business to a company outside Australia. The companies can also outsource within the country. In this case, the companies that handle these services are highly specialized. This, therefore, allows the country’s skill base to grow. In the global market, the ability of local company to gain a foothold is very hard. This is due to a number of factors that determine company’s productivity. As a result of outsourcing, the company’s productivity is improved and the output goes up while the cost comes down. With the company offers low cost goods, it is able to compete in the global market. Consequently, this allows the country to gain as the returns are remitted back to Australia. This foothold also allows the company to have influence on matters of trade in the global scene. BPO has the benefit in the case of Australian firms by making them competitive globally. Due to their capability to produce cheap goods, companies have the capacity to make high sales since they are not undergoing a lot of costs. In the case of information technology firms, especially those that deal with call centres, the cheaper call services that come with outsourcing allows the company make more returns, which translates to more income through taxes for the government. Question 3 In a company, when considering what services to outsource and which to retain in the house, as a manager there are several issues that I would consider. One of the factors to think about is the existing and potential new clients (Rivard and Aubert 2008). In addition, the interests of the clients will be vital in determining the ICT systems that need to be moved out and those that will be retained. In the case that the client will be best served by outsourcing the ICT services, then, the client will be served by the outsourced BPO. In the same breath, if new customers can be won over through outsourcing, this is a determinant to outsource. At the same time, the costs of doing business locally and abroad will determine the decision to outsource or not. If the cost of keeping the ICT systems local is high in terms of taxes and security among other, it will be better to outsource from a place where the services will not be of much cost to the company. This is influenced by the profit motive of the business. In the case that the company wishes to cut costs, it will have to outsource some of its investments to reduce the burden on itself Preference for one-stop-shopping is another factor. This means that the service provider has all the facilities that will be required in the transactions. It also means that the customer will be fully attended to in case the service being outsourced is a front-office service. This will, therefore, be a determinant on what to outsource and what not to do. In relation to a decision to outsource, it is vital to understand the capacity of the buyer of the BPO. This is important because the person who is going to work on the BPO function will cost the organization a lot in terms of profit and reputation if they are incompetent and, therefore, it is vital that they know their trade well. Question 4 When deciding which systems to outsource a managerial officer will look at both quantitative and qualitative approaches. The quantitative factors include aspects like money. Here, the owner of the factor of production will compare the cost of production locally as well as the cost he/she is going to be incurring while conducting the BPO (Heisinger 2010). In the case that the cost of running the business is lower locally and not abroad, the company will be in a better position if it stays put within the country as this is where its returns are safe. On the other hand, if the company has better terms in outsourcing, it will be advisable to outsource. The other type of approach will be a qualitative approach. In this approach, the owner or manager of a company will look at other factors that cannot be quantified but can be felt. Some of these factors include the quality of a commodity after its production has been outsourced. An illustration of this is an automobile dealer. In the home country, for example, Australia, a company has the plants based locally. However, the cost is high for maintaining the production. There is, however, the risk that if the company moves the services to a country like India or china, this may cease to be the case, something that the company will have to sort out. Another factor is to look at the financial stability of the product. The product should be in a position to stand on its own in the market. This means that once its production is outsourced, the product must still be in a position to remain afloat and sell itself. This means that the organization has to certify that the product remains relevant and within the reach of its customers whether through lower costs or even loyalty of the customers to the product. At the same time, outsourcing does not imply having to lay off all the members of the department that has been outsourced. It is a form of threat that other workers may interpret this to be a threat and, therefore, may turn to channels that may prove automatically to be expensive for the owner. Section II a) List the typical support that ICT provides at the operational level within a Hospital. Then mention one way in which ICT supports the managerial level of a Hospital. Within the hospital, ICT plays a vital role in the day to day running of affairs. First of all ICT plays the role of communication as well as information processing (Haux, Winter, Ammenwerth and Brigl 2004). Looking at the two roles separately communication is the act of sending a message through a channel and receiving feedback. ICT has ensured that the doctors are informed in case they are needed somewhere. This has been done through mediums like pagers and mobile phones. This has helped especially when a doctor is urgently needed. It is still through the same communication that complex procedures are undertaken in hospital theatres. This is done through teleconferencing which allows doctors to consult while they conduct complex operations on sick patients. In the case of information processing, ICT has allowed the hospitals to keep proper records of all the activities that happen within the hospital walls. This, therefore, allows a doctorate easily retrace records of a patient who has come for more treatment (Haux, Winter, Ammenwerth and Brigl 2004). ICT has also played a vital role in ensuring that the medication is well regulated for the patient. An example of this is the morphine drops that are placed next to the patient’s bed to allow the patient some relief when in intense pain. Looking at the hospital management, there are a number of uses that ICT plays. One of these roles is that of security. A hospital is a sensitive place which has equipment, as well as, dead bodies and sick patients in the wards among others. The role of ICT is to give the management the ability to keep an eye on things and thus prevent the occurrence, for example, of theft or even a threat to patients in any way. b) What is Knowledge Management? How does Knowledge Management improve the decision making capability of an organisation? Knowledge management can be viewed as the systematic and deliberate attempt by an organization to ensure that the information or knowledge is fully utilised. This attempt also combines the human skills, innovations and ideas to ensure that the organization succeeds. The use of knowledge has the benefit of improving the conduction of business within the organization. Within the organization knowledge has the capacity to help the organization create a pattern. This will be instrumental in detecting future events and even predicting them (Watson 2003). Acquisition and application of knowledge management will allow the organization gain and maintain competitive advantage (Jennex 2007). In light with this, the organization will be able to become relevant if it can find ways of taking advantage of the information that it has. According to Jennex (2007), the increasing gap between the book value and market value of an organization point out to the valuable nature of knowledge management as a key business resource. If the management of the organization are well informed, they can then apply this information in the decision making process. This means that the companies have the ability to improve themselves together with their employees if the employees have access to organizational memories. According to Dalkir (2005), the organizational memory is explicit. However, Knowledge management provides tacit knowledge, which his added to the corporate memory. c) What is Customer Relationship Management? How does Customer Relationship Management improve the decision making capability of an organisation? Customer relationship management (CRM) is the use of a number of resources such as people, information, processes and technology to manage the customer’s relationship with one’s company (Kincaid 2003). This involves a cross section of strategies like sales and marketing, and they revolve around the entire consumer life cycle. From the definition, three important benefits to the company arise. These are the ability of the company to identify key customers (Bok 2008). In this case, the company is able to plan and attract people who will be of the most benefit to itself. This means that the company will make plans specifically to target that key customer. This means that everything the company does from the packaging of the product to the marketing of the said product will be in such a manner that the customer will be drawn to the product. The other benefit is that the CRM is also helpful in developing proper relationship with these key customers (Bok 2008). In this case, the CRM has the benefit of assisting the organization to develop a working relationship with the key customers. This means that the management will be careful in formulating sale policies that they do not interact with the customer in a manner that angers the customer. It, therefore, means that the management will try as much as possible to appease the customer in order to gain from them. It is also worth mentioning according to Bok (2008), that the CRM helps segment the customers. This means that management can decide to split the customers into segments which would make the sale of commodities much easier as they can tell the most important from those who do not make many purchases. d) An organisational culture of “Information Silos” has been cited as one impediment to implementing Knowledge Management. Explain what that means and what change would be necessary to overcome that impediment Information silos tend to come up where there is asymmetry in the organizational make up. This means that the organization does not lay emphasis on the communication flowing through out the organization. According to Narayanan et al. (2005), the silos are designed to support business units and their functional areas rather than the overall corporate unit. It is clear that the information silos are an impediment to information sharing. This means that there are some individuals who will loose out on opportunities due to the lack of crucial information. The silos can be eliminated through mapping the affected areas (Narayanan and Armstrong, 2005). This action will paint a picture of the duty that such units play in the overall organizational structure. Narayanan et al. (2005) posit that this will lead to an associated reduction of information silos. This thus strengthens symmetry and eliminates asymmetry which is a party to the existence of information silos. Narayanan et al. (2005) go on to state that there is always the danger of asymmetry setting in the organization. As a counter, to this happening they suggest that an organization should plan ahead and get to have contingencies that will keep formation of asymmetry in check. This way the organization can acknowledge the existence of asymmetry in the organization and all the while keep it in check. The non existence of information silos means that knowledge management will aptly suit all employees and not a select few. e) Cloud Computing’ and how might it change the way in which computing power is provided to businesses? Cloud computing is an abstraction of web based computers among other devises that developers can use to implement complex web bases activities (Jamsa 2013). This means that the cloud computing as a method of data storage is virtual in nature. This means that the information is not located on any physical data storage device. According to Jamsa (2013), there are a number of benefits to cloud computing, which have made it the way forward for businesses. These benefits are scalability of the cloud storage. This means that the business can increase or decrease its storage capacity to align it with the business needs. Another advantage is that it is affordable and reasonable to operate. This means that the user will only pay for what they need and use thus preventing them from having to incur unnecessary costs. This means that, the even a small scale investor can take advantage of this service to back up vital information regarding the business. The service is also easily accessed by anyone whom wants to gain access to their information. This means that all the user needs is access to the internet and the information is accessible to them. The device is also easy to use for the investor looking to use this method of data storage. The instructions to employ are simple, and the business person will not be lost in translation. Bibliography: Bock, M., 2008. The Advantages and Disadvantages of Relationship Management: How can a Company Integrate Recent Research Findings to make its CRM system more efficient? Norderstedt: Grin-Verlag. Click, R. L. and Duening, T. N., 2005. Business Process Outsourcing: The Competitive Advantage. New Jersey: John Wiley & Sons, Inc. Dalkir, K., 2005. Knowledge Management in Theory and Practice. Oxford: Elsevier Science. Haux, R., Winter, A., Ammenwerth, E. and Brigl, B., 2004. Strategic Information Management in Hospitals: An Introduction to Hospital Information Systems. New York: Springer-Verlag. Heisinger, K., 2010. Essentials of Managerial Accounting. Mason, OH: South Western Cengage Learning. Jamsa, K. A., 2013. Cloud Computing. Burlington: Jones & Bartlett Learning. Jennex, M. E., 2007. Knowledge Management in Modern Organizations. London: Idea Group Publishing. Kincaid, J. W., 2003. Customer Relationship Management: Getting it Right! New Jersey: Prentice-Hall, Inc. Narayanan, V. K. and Armstrong, D. J.K., 2005. Causal Mapping for Research in Information Technology. London: Idea Group, Inc. Switzer, R., 2006. Outsourcing opens doors in global village. Accessed on 20th October 2012 from: http://www.theage.com.au/news/technology/outsourcing-opens-doors-in-global-village/2006/03/19/1142703218218.html. Watson, I., 2003. Applying Knowledge Management: Techniques for Building Corporate Memories. San Francisco: Elsevier Science. Weth, A., 2005. Business process outsourcing in the European Financial Industry. Norderstedt: Grin Verlag. Read More