Management Information and Communication Systems Expansion - Assignment Example

Critically discuss reasons why organisations outsource IT and E-Commerce 0 Introduction Information and communication technology continues to be an important component of organisational management and has been identified to be a crucial part of staying competitive in today’s global business environment (quote). It is not surprising that most modern organisations have become more focused on the need to look into management information and communication systems (MICS) expansion as a key principle to their strategic management. This is because MICS and for that matter information systems helps in achieving the modern day competitive ambition of being both effective and efficient at the workplace (quote). This is because it helps in the management of resources that is at the disposal of the organisation in such as way that a little resource can be used to achieve several constitute components of the organisational processes. By extension, any organisation that is implementing MICS must be in a position to do things right and in the best approach to achieve needed results. There are times that organisations may be found to be in very good positions to execute IT and e-commerce for themselves. There are other times that doing this for themselves simply do not seem the best way out. In such instance where going about IT and e-commerce does not seem the best way out for an organisation, it tends to resort to the outsourcing of IT and e-commerce. Given the important role that MICS plays in organisation and the fact that it is not always that organisations will be in a position to undertake such IT processes for themselves, the paper seeks to critically discuss reason why organisations outsource IT and e-commerce. IT and e-commerce outsourcing will thus be treated as constitute components of the larger concept of MICS in this paper. To this better, the nature of MICS as a collective concept in organisational management shall be reviewed. This will lead up to an understanding of how MICS helps organisations to improve their management decision making, noting that the outcome of the organisation’s processes is largely dependent on its management decision making (quote). After noting the nature of MICS and how it improves management decision making, the various strategies of MICS in different organisations shall be examined. More particularly, the researcher will be looking into the case of small and medium scale enterprises (SMEs) and large multinational companies (MNC). As these different organisations engage in MICS strategies, the factors they consider to yield innovation and some of the key limitations they face in this quest shall also be reviewed in the study. Finally, the paper shall give an overview of how organisations, in both the SMEs and MNCs can integrate various management functions to enhance the overall performance of organisations. 2.0 Information Technology System and E-Commerce as components of MIC systems and 2 MICS is such a complex component of organisational management that it has several constitute parts coming together to form it. Information technology (IT) system and e-commerce are two important aspects of MICS. IT system is used to depict a situation in the organisation where the complementary networks that form the hardware and software of organisational processes are put together into a common unit (quote). This is very typical of centralising the individual roles and tasks within the organisation that encompass the use of one form of information technology or the other. The term centralisation of information technology is sometimes used to denote IT system or information system (IS) for short because IS comes to act as a means by which the different parts of IT are coordinated towards the achievement of a common goal for the organisation, rather than having each individual department or office having to regulate its IT needs in a disorganised and haphazard manner (quote). IS fits perfectly into the nature of MICS as its idea of centralisation enables organisations to have an easy means to approach the management of information communication systems. What is more, both concepts work based on the ideology that It is best utilised when it is used in a manner that is interrelated rather than independent (quote). Electronic commerce or e-commerce is another big aspect of MICS. Today, e-commerce has become the driving force in the globalisation era of doing business. This is because through e-commerce the walls and borders of trade restrictions are broken. This is because instead of being present to physically conduct business, e-commerce provides a virtual marketing and sales platform through the use of the internet or other electronic systems (quote). It would be noted that e-commerce is directly a part of MICS as it functions purposely on the platform of information and communication technology, with the internet and other computer networks, being its major pathway. According to quote (year), e-commerce is best utilised within organisations that have a very formidable IS. This is because when e-commerce functions in an isolation of the individual IT structures of the organisation, it becomes extremely difficult to monitor its progress and limitations. In the context of this paper therefore, IS and e-commerce are treated as a coordinated component of MICS that describes the nature of MICS as a system of using information technology to accomplish corporate management goals. This means that the two shall be treated together, rather than in isolation. 3.0 How MICS improve Management Decision Making 3 Berisha-Namani M. (2010) identified three major levels of management decision making that MICS can easily be applied. The three levels are demonstrated in the diagram below and subsequently discussed. Figure 1: 3-Levels of Management Decision Making Berisha-Namani M. (2010, p. 115) At the first level, which is the strategic management level, decision making is said to be generally unstructured. This is because the decisions are made among the executives and directors and therefore do not come with the application of much professionalised expertise. As a result information at this point is generally ad hoc, unscheduled, summarised and infrequent. This notwithstanding, MICS, and for that matter IT can still be used and implemented at this level of decision making. Quote (year) noted that when IT is used at the strategic management level, it helps in making the acquisition of information very easy and forthcoming. This is because at this level, executives and directors hardly have enough time to digest decisions to the latter. Coupled with the fact that the executives and directors are not the implementers of decision taken at this level, they do not require much commitment to making the decisions structured so that it can be followed in a very thorough manner (quote). The concern of the executives and directors therefore becomes left with the need to find as much information as possible. Using the power of the internet and other computer systems, the retrieval, processing and usage of information for processing into decision making becomes very free flowing at the strategic management level. At the tactical management level, decisions that are made at the strategic management level are pushed one step down to business unit managers and self-directed teams. Normally, these people are also not the implementers of the decisions and so do not seek to get things done in a structured manner. Because they also have superiors to please, they cannot also choose to do things in an unstructured manner and so tend to go about decision making in a semi-structured manner (quote). Information that is used at the tactical management is generally wide scope and pre-specified. Normally, IT is utilised to improve tactical management decision making through the proper allocation of roles and resources. This is because according to quote (year), allocating responsibilities to the right people is much as important in decision making process as the actual act of coming up with decisions. Using IT, business unit managers and self-directed teams are able to identify within their organisation, the right human resource to execute various aspects of the decisions that are made. A very typical instance where IT may be used in tactical management decision making to allocate responsibilities is through the use of human resource information system (HRIS) (quote). 4.0 Strategy of MICS in different types of organisations In the utilisation of MICS in organisations, various organisations may have the options of either using an in-house IT and e-commerce or outsourcing e-commerce and IT as strategies. In this paper, emphasis is placed on outsourcing among two types of organisations namely multinational companies (MNCs) and small and medium scale enterprises (SMEs). 4.1 Outsourcing in MNC One is likely to thinking that once MNCs are well established and have all the needed funds to carry out IT and e-commerce, they would want to do it all by themselves all the time. But there are instances when this does not work out like that and the MNCs go for the services of IT companies outside their own to undertake core IT and e-commerce processes. When this happens, IT and e-commerce outsourcing is said to take place (quote). One of the core reasons and rationales for which these MNCs would undertake IT and e-commerce outsourcing is for the need to focus on their core operations. A typical example of this can be cited with a car engine company that wants to engage in IT and e-commerce components such as an automated customer support, online payment, internet security, and e-mail support. Because of the need not to lose track of their core operations, and given the fact that the IT and e-commerce are equally important to the growth and success of the car engine making company, they would outsource a company that is purposely into such IT and e-commerce business to undertake the IT and e-commerce. Using this strategy can surely help the MNC to get things done in the best ways that they ought to be done (quote). This is because they avoid the temptation of taking charge of something that is not their expertise to carry out. Another rationale under which a MNC would choose outsourcing is when the company wants to avoid culture clashes. In most of these MNCs, organisational culture is a relevant variable in staying competitive (quote). Meanwhile, there are always so many activities, departments, human resource, strategies and decisions to coordinate at any point in time. By selecting the in-house IT and e-commerce strategy, what will happen is that they would have to create an all new culture that suits the new MICS. The reason an in-house strategy will require a new culture was explained by quote (year) who stated that MICS and for that matter IT and e-commerce are such important aspects of organisational management that when they are not treated as independent components with an independent culture, they may either be overshadowed by existing culture or overshadow existing cultures. Once any of these happens, there will be a deficiency for the organisation. In order to avoid such culture clashes, IT and e-commerce outsourcing is undertaken to ensure that these two components of MICS do not become part of the core cultures or departments that the MNC would have to handle. In the long run, this strategy helps in ensuring that the MNC is able to get its eyes covering all its traditional roles, whiles continuing to benefit from MICS. 4.2 Outsourcing in SMEs SMEs have also used the strategy of IT and e-commerce outsourcing to a very large extent but in different contexts from MNCs. According to quote (year), one of the core reasons why SMEs engage in outsourcing is to ensure that they get things done right. SMEs as used in this context refers to companies and organisations that are rated as either small or medium and not having any international openings by way of physical presence, franchise or public offer (quote). Regardless of the limitations of being restricted in terms of size and capital, SMEs also love to take advantage of globalisation and for that matter MICS. Such ambitions are very workable especially where these SMEs have a strong differentiation strategy that can easily win global recognition. As the ideas may be right in the type of product or service the SME carries, it would also want to get it right with its IT and e-commerce so that once presented to the international community through the platform of the internet, the company can be accepted as competitive. Quote (year) noted that outsourcing really has the guarantee of getting things done right with IT and e-commerce, especially when the right IT companies are consulted. Meanwhile, the public image that these IT companies put up also have potential of pushing the SMEs into global fame and recognition, and thus growth. For most SMEs also, they go into outsourcing strategy as a means of saving cost. Most of the time, when a company wants to get things right with IT and e-commerce, it requires a lot of capital, especially to start and maintain. Once this is said, it is important to note that there is a very high level of justification in getting things done right and in a competitive manner rather than merely choosing to do things anyhow. This is because the ordinary user who sits behind the computer to surf the internet barely has any obligation to visit a particular page and stay with the page. It is the power of the page through means like how easily it is to locate the page, and how accommodating and interactive the page is that will earn the time of the internet user. Because of this, the need to spend to make one’s IT and e-commerce platform useful to the customer is very crucial (quote). Because traditional IT companies are concentrated on IT and e-commerce, they normally have logistics, expertise and resources that can make the setting up of IS and e-commerce very simple and cost effective for any company. For example, the company going in for the outsourcing does not have to worry about things like training and development. In effect, the need to save cost to make it possible for the SME to have enough funds to run other activities within the organisation therefore becomes a key rationale for use the strategy of outsourcing. 167 5.0 Factors leading to innovation in MIC systems and 4///factors to consider The need to be innovative with IT and e-commerce outsourcing is very important. Due to the fact that almost every other company is now using one form of MICS or the other, it is the degree to which a given company is able to be innovative that determines the extent of competitive advantage that will be derived (quote). Generally, there are a number of factors that ought to be considered, as well as approaches to use, if one wants to be innovative with MICS. Below is a discussion of how MNCs and SMEs can each implement factors leading to innovation with IT and e-commerce outsourcing. 5.1-Innovation within MNCs For most MNCs, quote noted that the type of innovative approach they use is the business process outsourcing. By business process outsourcing, reference is being made to the management of a specific marketing or IT function within the organisation. Examples of specific marketing and IT functions that organisations may use include database management, leads generation (CMO Exclusive, 2014). Business process outsourcing has been found to be a promising factor leading to innovation within MNCs because instead of the company having to use its same old models and approaches to marketing, it is offered the opportunity of trying out novelty ideas and approaches that are offered by the external company such as a call centre company handling the telemarketing marketing function of the company. The innovation that is brought into the MNCs e-commerce and IT has actually been described as one that transcends not just into the social structure of the organisation but into its technological setup and systems (quote). This is because the possibility that the business process outsourcer will introduce new technological interface for customers and external users of the MICS of the company is higher. Once the MNC is using the business process outsourcing, there are various factors that they must consider to make innovation a permanent part of their practice. In the first instance, Webgistix Corporation (2009) advised that MNCs seeking to go the way of business process outsourcing would have to ask for how much specific information they would have access to as part of the outsourcing process. This is an important requirement for the company going out to know, given the fact that knowledge of how much information they will have access to from the outsourcing company will determine the extent to which they will have to put in place strategies to cover the areas of information that the outsourcer will not cover. One important thing about IT and e-commerce outsourcing is that it is always important to ensure that there is yardstick with which the company going out will measure what it gets in terms of outsourcing. By knowing the quantum of information to access, it is possible to make up for any lapses that do not meet the targeted model. 5.2 Innovation within SMEs With SMEs, factors leading to innovation in IT and e-commerce outsourcing have been described to be quite different. This is because in their case, the use of managed services has been described as the most ideal type of outsourcing leading to innovation. According to CMO Exclusive (2014), “managed services mean the delivery and use of specific marketing applications that may be owned and hosted by the company.” This means that instead of giving out an entire marketing function, there are only specific applications that are given out to the outsourcer to deal with. Readily, it would be expected that this option will be more preferable for SMEs since it is not as capital intensive as the use f business process outsourcing. An innovative component of this approach is that it gives the SME the opportunity of owning its own marketing applications so that there can be in-service training on the usage of these applications by the outsourcer. Once such in-service training and cooperative relationship takes place, the SME can add up its voice to whatever is taking place as part of IT management so that the eventual outcome will not be something that is far apart from the company’s philosophies and principles (quote). Whiles using the managed service, there are some specific factors that the SME must ensure are in place to consolidate the innovation that is expected. Very importantly, even though the outsourcer may be using the marketing applications of the SME, it is advised that the selection of an outsourcer will be based on a company that has its own established functionaries, warehouse and applications. This is because backup is a very important aspect of outsourcing. For this reason, the outsourcer must at every point in time give a guarantee that it is in a position to providing the kind of technical, logistical, human resource, and systematic backup that the company may need. What is more, it is important to choose a fulfilment provider that is compatible with the business model of the SME (Webgistix Corporation, 2009). This must also not be overlooked with the thought that the outsourcer will be working directly with the company and so the company will directly impact the outsourcer to work in a manner that suits the business needs of the SME. This is because once the business model of the SME is not the specialisation of the outsourcer, the results will certainly not be the same. 6.0 Understanding the limits of application of MICS 3 As much as there are advantages and reasons why MNCs and SMEs undertake outsourcing of IT and e-commerce, there are limitations that outsourcing strategy comes with. It is always important that the companies deciding to go in for outsourcing will be aware of these weaknesses so that they can put in place the right hedging formulas to deal with them. The first issue that limits the application of MICS that has to do with IT and e-commerce outsourcing is a supposed loss of managerial control. This is often referred to, given the fact that the outsourcer acts as an independent and functional company on its own. Especially in cases where the company is using business process outsourcing instead of managed service, the management of the company going in for the outsourcer is often forced to operate within the business model and philosophies of the outsourcer. In such instance, the likelihood that the managerial control over key issues having to do with IT and commerce may be lost (quote). As an intervention to dealing with this situation, the use of managed service is advised in most instances. As explained earlier, when the company is using managed service, the simple implication is that the outsourcer would have to work with the marketing application of the parent company. Ahead of this, the parent company can adjust its applications in such a way that is highly suitable to its managerial philosophies. There are companies that have thought that having a contract with an outsourcer means claiming management control as well but this is not the case (quote). Another limitation to IT and e-commerce outsourcing is the issue of threat to security and confidentiality. In IT and e-commerce, there is a lot of premium placed on user data, based on which important decisions are made. For example, the demographic and purchasing behaviour of consumers alone are important data that helps a company to strategise its marketing plan. But once a company decides to go into outsourcing, much of these data and the control of it become left with the outsourcer (quote). Such exposure of data to an outsider may realise a lot of security and confidentiality issues including possible invasion of systems, after outsourcing contracts are over. Even where outsourcing contracts are ongoing, it is not expected that unauthorised entry into systems will take place. The need to guard against such practices is however not guaranteed in the instance of outsourcing. There is also a risk and possibility that an outsourcer will unlawfully trade out information and data of customers to competitors or use the data in any other unauthorised way. There are a number of ways that this limitation and threat can be deal with. In most cases, using highly reputable companies is advised. This is because such companies have brand equity and public image to protect. Such responsibility of protecting their reputations and the merits of doing so has been found to be more costly to these companies than the outcome of engaging in any unlawful acts. Constant upgrading of security systems of companies is also advised as a useful way of avoiding the security and confidentiality risks. 7.0 How MICSs integrate the various management functions Once MICSs such as IT and e-commerce are used, it offers companies the opportunity to integrate the various management functions to enhance the overall performance of the company. In a typical company, there are a number of management functions that managers get involved in. From the figure below, four major management functions are outlined. In the performance of each of these functions, IT and e-commerce helps in achieving an integration that is focused on overall improved performance. Source: Microsoft (2013). In the measurement of program effectiveness, the use of human resource information system (HRIS) has been found to be an important IT system that can be used in ensuring that management is able to go about this real very effectively. For instance, using HRIS, management is able to code a performance output program that measures on a constant basis, the degree to which employees heed to specific measurement scales can be input in a much easier format. Such performance and evaluation outcomes can also be integrated into other management functions and procedures, especially in conducting decision support for the company. The reason this is said is that once the performance of employees is well know through the use of HRIS, management is able to take decisions pertaining to basic human resource issues (quote). Typical examples of human resource management decision support that this integration can bring include decisions on salaries, promotion, and recruitment. 9.0 Conclusion From the discussions above, there is one conclusion that can be drawn for the study. This conclusion is that outsourcing of IT and e-commerce is a practice that is beneficial to both SMEs and MNCs. Between the two however, SMEs stand to benefit most when it comes to the need to be efficient with resources. With MNCs, the outsourcing of IT and e-commerce is particularly relevant for the purpose of ensuring effectiveness with management of organisational activities. This is because for most SMEs, their major management decision making has to do with how to adequately allocate resources in order to stay competitive with MNCs (quote). The MNCs on the other hand normally have the quantum of the activities they have to deal with as a curse and so resort to outsourcing of IT and e-commerce to make space for adequate supervision (quote). For any organisation however, the best way to get the best out of outsourcing of IT and e-commerce is not with just using it for efficient resource management or effective organisational management. Rather, it is about the organisations are able to overcome the core limitations that face them in their quest to becoming innovative with their outsourcing. Very often, there is the temptation that outsourcing of IT and e-commerce should mean an absolute shift of responsibility to the company that is outsourced. This is however erroneous and hinders the need for there to be proactive growth. It is always important to start innovation from within the organisation that is undertaking the outsourcing request. References Berisha-Namani M. (2010). The Role of Information Systems in Management Decision Making – a Theoretical Approach. University of Pristina Press: Kosovo. Microsoft (2013). Service Management Functions: Security Management (Part 1) [Online] Available http://www.windowsecurity.com/whitepapers/Network_Security/Service-Management-Functions-Security-Management-Part1.html [May 4, 2014] CMO Exclusive (2014). 10 Reasons To Outsource More Of Your Marketing. [Online] Available from http://www.cmo.com/slide-shows/10-reasons-to-outsource-more-of-your-marketing.html [May 7, 2014] Webgistix Corporation (2009). 10 Secrets to Successfully Outsourcing your eCommerce Order Fulfilment. [Online] Available from http://webgistix.com/blogfolder/wp-content/uploads/2011/12/10-SecretstoSuccess-FINALv3.pdf [May 7, 2014] Read More