Strategic Information System - Offshore Outsourcing and EFQM Model - Essay Example

Strategic Information System Table of Contents Abstract 03 1. Introduction 04 2. Offshore Outsourcing 04 2.1. Advantages and Disadvantages 05 2.2. Relevant case histories 06 2.3. Reflection on Issues of Social Responsible Computing 07 2.4. Potential Issues in the future 07 3. EFQM Model 08 3.1. Advantages and Disadvantages 08 3.2. Relevant case histories 09 3.3. Reflection on Issues of Social Responsible Computing 10 3.4. Potential issues in the future 10 4. Reflection: relevance of the content of the assignment and unit 10 5. Conclusion 11 6. References 12 7. Bibliography 12 Appendix 14 Abstract Business is getting very competitive day by day and the margins have gone from thin to thinner. In those situations it has become very necessary for companies to implement some different tools for the reduction of either costs or increase of profits which in a way helps in generating revenue. In this assignment we come across two such tools namely offshore outsourcing and EFQM model which help the business as well as the government of different countries to meet the objectives. With offshore outsourcing the companies have come up with the reduction of costs and with the implication of the EFQM model the leadership skills and performance levels are improved. We come across the advantages and disadvantages of both the structures and also the future issues of the same. The dependence of the governments to fulfil the social responsibilities is also studied. With the changing business world the up gradation of technology and the optimum use of those resources have become very necessary for the companies to adapt those situations to gain competitive edge over the others and make profits out of those. 1. Introduction It is very important for any business to recognise the method of cost cutting in today’s business world. For a company to sustain and earn profit in this competitive global market, it is very essential to involve ways to cut down the costs. Offshore outsourcing has been considered as a key to lower costs which shall benefit not only in generating profits but also for the expansion of the business beyond geographical boundaries. European Foundation for Quality Management (EFQM) is a tool used improves internal processes and operations which support the development of the people, customer or the society and any key performance results. It is a tool used by the international companies mainly those based in the UAE. It helps in sharpening the leadership skills of the managers and working in better coordination with the goals and objectives. 2. Offshore Outsourcing In today’s world companies wanting to be competitive must offer a unique product. Currently 60% of the European companies enjoy the benefit of technology outsourcing. Outsourcing is the allocation of specific business processed to a specialist external service provider. Offshore outsourcing has served as a great tool for many international companies to reduce the cost involved and increase profit and be more competitive. It has become a business tool for such companies and attracts international customers. For example companies of China and India have utilised it to great extent. Software outsourcing has been a complex business strategy as it faces legal and cultural barriers and the intellectual property (IP). The ownership of the copyright is a very vital factor in software outsourcing for the companies. 2.1. Advantages and Disadvantages Advantages of offshore outsourcing The basic advantage id cost reduction for a company. Helps in outsourcing work with overall reduction in expenditure. Helps see an increase in the business revenue. Helps in solving matters and faster delivery to customers. Develops competitive skills for the organisation. Helps cut investment in non-capital assets and divert funds into strategically promising directions. An outsourcing company gives a guarantee of professional responsibility. It provides swiftness and expertise. Helps concentrate on core process rather than the supporting ones. Disadvantages of offshore outsourcing A sense of insecurity for the loss of information and thus ending in losing some material. These demands for a backup system with the implementation of the tool. The control could be low due to loss of track of operation. Items of quality control may be affected as not under direct control. The outsourcing operators get into contracts with more than one company at a time which shall result in delayed arrival of items. Any unclear requirement could directly affect the result. Communication issues with most contractors. High chances of hidden costs. 2.2. Relevant Case Histories The urgency in the global economy has forced companies to operate under unparalleled competitive and regulatory pressure. Markets today are becoming short time-to-market. Business decisions starting from banks to manufacturing companies are all based on accurate and insightful data. Analytics has become a very important part of the business plan of any organisation. This also helps to analyse the business environment and future trends. The growing need of this analytics services has grown from just banking and financial services to insurance, telecom, media, etc. One such example is the analytics use by the company named Tata Consultancy Services (TCS), India. TCS recent survey amongst buyers has brought forward the fact for the need of analytics for the data for different companies. The survey studied that 40% were buyers of outsourcing services, 45% were service providers and the remaining 15% were analysts and advisors. Analytics uses a huge ground of data so the use of technology becomes equally important for those companies. TCS, analytics platform offers a wide range of solutions across functional areas to provide information. They offer solutions for marketing, merchandise planning, trade promotion management, demand planning and forecasting and many more. http://www.deloitte.com/assets/DcomSouthAfrica/Local%20Assets/Documents/global%20financial%20services%20offshoring.pdf This tool has also been used by many financial institutions, like deloitte. The top performers have presented reports showing costs reductions by almost 60% and the bottom performers about 20%. 2.3. Reflection on issues of Social Responsible Computing The strong economical link between cutting cost and offshore outsourcing has helped many companies and the government departments to reduce the cost of their services by hiring contractors for managing those services at cheaper costs. The social responsibility, behind its implication, should be clear and it should benefit on a wider social level. The use of such technology aims that competition is permitted for all and it does not harms any other competitor or customer. For example the parliament in the government of England is very keen to cut the multibillion pound spending with the usage of IT in its departments like the public sector. It looks forward to enter into deals with offshore service firms in India to take responsibilities of the public sector IT departments. It is targeting the competition amongst different companies to reduce public spending. This plan has a serious concern of raising offshore shore jobs but the aim is to make routes which benefit the public and the UK workers. 2.4. Potential issues in the future for (five years ahead) OFFSHORE OUTSOURCING The future issues of offshore outsourcing are: As cited by Healy and Linder, poor mutual understanding of the contract between the clients. Lack of required skill. End-users resistant towards adopting new methods. Cultural clash between client and service provider. 3. EFQM This model is a tool which can be used in most organisations either government or private companies. This depends hugely on the size of the business. This model creates way for companies to share information and previous experiences to attain results. There are nine elements in the model as follows: Five are enablers for the identification of what and in which way an organisation does. The rest four are for results to see what the organisation has accomplished. An ongoing success can only be attained through strong leadership, strategic plans. Also the processes, employees and partnerships are required to be upgraded which shall ensure that the customer satisfaction is so high that it matches with the expectations. The model also helps in learning, creating and innovating. This cyclical process allows enablers to reach effective results. 3.1. Advantages and Disadvantages Advantages of EFQM Customer satisfaction and loyalty: this can be attained through open channels like considering their suggestions and complaints. Successful leaders and management: the leaders should be able to use strategies through participation, awareness and application. It acts as a great assist for employees to actively interact in situations where change is concerned. Helps in delivery of more accurate base for information. Provides platform for all including employees to provide strength to benefit the majority. Helps develop positive efforts towards goal attainment and financial rewards. Constant and well managed change. An upward flow of ideas. Engaged and motivated people and other stakeholders. Disadvantages According to Paton the size of the firm is a big criterion making it an expensive tool for small enterprise. Involves a great deal of documentation. The process of nine elements is a time taking one. The attained information may be of les or no use and shall require re-procurement. 3.2. Relevant Case Histories With the numerous tools and techniques of management that are being commonly used EFQM model is one such example. This model allows the people to understand the cause and effect relationship within their organisation. In excess of 30000 companies in Europe have adopted this model. Vodokanal, which is one of the most successful companies in Russia, engineered the water and sewerage system since 1858. It adopted the EFQM model to offer services to around five million homes in St. Petersburg the second largest city in Russia. European and Dutch healthcare centres have brought forward very good results with the implication of the EFQM model. http://intqhc.oxfordjournals.org/content/18/1/58.short According to Sanchez and Gonzalez with the implication of the model, in hospitals in Spain, the overall patients’ satisfaction was higher than 89% in all settings and more than 95% in most cases. 3.3. Reflection on issues of Social responsible Computing This is a model which can serve as the most efficient tool that give the management a clear picture of the correct heading of its IT. Responsible and effective uses of computers have become an integral aspect of success. The socio responsibility, for the welfare of the community, with the use of electronic services has been the aim of companies and government departments. It has served as a great link between the people and the departments proving such services to the community. With a vision to bring people in understanding technology shall create capacity for change in future. 3.4. Future Issues With EFQM model being very successful and being used by a large number of companies the demand for the model shall multiply in the next five years. All companies would target bigger achievements and great returns to the shareholders and increased profits. One major issue regarding the model is that it has not been translated into other languages for maximum organisations to benefit from it. 4. Reflection: relevance of content and assignment and unit Different managements are trying to implement different tools in this highly competitive business environment globally. Every possible model or tool that shall assist the security and performance is accounted for. With EFQM model and offshore outsourcing the management has got some good tools in their hands with an increase in the success rate in the future. These tools have been devised to demonstrate accuracy and cost reduction both being very necessary in today’s business world. Although some companies do not intend to use outsourcing on the grounds of controlling confidential data there are still possibilities of setting up own centres abroad to meet those gaps. EFQM is also relatively important as it also helps to improve leadership and human resources. Both consider the socio responsibility very strongly and help the use of technology for developing business structure and growth. 5. Conclusion Offshore outsourcing and EFQM model are both very effective tools used by the government and the companies to achieve good benefits to the public and the business structure. It helps in reduction of costs and development of leadership skills and helping in innovation and creativity and still maintains high standards. 6. References Paton, R. 2003 Managing and Measuring Social Enterprises, (London: Sage) T. J. Healy and J. C. Linder. 2002. “Outsourcing in government – the path to transformation.” Accenture Survey, February 2002. http://www.tcs.com/SiteCollectionDocuments/White%20Papers/BPO_Whitepaper_Increased_Business_Agility_through_Outsourcing_Analytics_0412-1.pdf http://www.deloitte.com/assets/DcomSouthAfrica/Local%20Assets/Documents/global%20financial%20services%20offshoring.pdf http:www.ipo.org/wp-content/uploads/2013/03/monicayang.pdf www.outsource2india.com/why-outsurce/articales/advantages-disadvantages-outsourcing.asp http:www.computing.co.uk/ctg/analyses/1835492/government-it-offshore http//www.efqm.org/efqm-model-criteria Molar.crb.ucp.pt/cursos/2ciclomestrados/gestao/201012/QTGO/1012/Artigos/EFQM/EFQMModelBenefits.pdf 7. Bibliography Carmel, E. and Nicholson, B. (2005). Small Firms and Offshore Software Outsourcing: High Transaction Costs and Their Mitigation. Journal of Global Information Management . Vol.13(3),22 Doh. J.P. (2005). Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice. Journal of management Studies. Vol.42(3),695-704 Jacobs,B. and Suckling,S. (2007) "Assessing customer focus using the EFQM Excellence Model: a local government case", The TQM Magazine, Vol. 19(4), 368 – 378 Paton, R. (2003) Managing and Measuring Social Enterprises, (London: Sage) Pfannenstein, L. and Tsai, R. (2006). Offshore Outsourcing: Current and Future Effects on American IT Industry. Journal on Information Management System. Vol.21(4), 72-80 Sanchez, E., Letona, J., Gonzalez, R., Gracia, M., Darpon, J. and Garay, J. (2005). A descriptive study of the implementation of the EFQM excellence model and underlying tools in the Basque Health Service. International Journal for Quality in Health Care. Vol.18(1),58-65 T. J. Healy and J. C. Linder. (2002). “Outsourcing in government – the path to transformation.” Accenture Survey, February 2002. Wongrassamee,S., Simmons,J. and Gardiner,P.D. (2003) "Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model", Measuring Business Excellence, Vol. 7(1),14 – 29 Appendix A1 Review of three major cited sources, related to offshore outsourcing Pfannenstein, L. and Tsai, R. (2006). Offshore Outsourcing: Current and Future Effects on American IT Industry. Journal on Information Management System. Vol.21(4), 72-80 retrieved on 18-03-14 http://www.tandfonline.com/doi/abs/10.1201/1078/44705.21.4.20040901/84190.9#.UyhNcfmSzVM This article explains that the American outsourcing industry has taken outsourcing to a different meaning and level. Maximum companies, over the years, have outsources to selected IT projects and functions. But with the passage of time the offshore outsourcing has grown in size and number and have provide maximum benefits to companies and the governments in ways of lower labour costs and other benefits. This tool has provided an array of current and future affects on the IT Industry in America. It highlights the business that the IT industry has attained through the development of outsourcing and the benefits of cost reduction that the customers have attained from the use of this tool. Doh. J.P. (2005). Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice. Journal of management Studies. Vol.42(3),695-704 re http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6486.2005.00515.x/fulltrived on 18-03-2014 This article brings a debate over off shoring of our collective understandings of international business and management and management theories. The changing strategies of multinational companies and the impact of the world economy have forced companies to come up with tools like adaption of offshore outsourcing. Carmel, E. and Nicholson, B. (2005). Small Firms and Offshore Software Outsourcing: High Transaction Costs and Their Mitigation. Journal of Global Information Management . Vol.13(3),22 retrieved on 18-03-2014 http://www.igi-global.com/article/small-firms-offshore-software-outsourcing/3627 The article highlights the surprising fact the small firms engage in offshore outsourcing although they lack in resources that large firms already have to overcome any difficulties. This article focuses on the transaction costs that are involved in three stages namely contact costs, contract costs and control costs. The article states the reduction of costs for the small firms through the mitigation approach to reduce the transaction costs. A 2 review of 3 major cited sources, related to EFQM Sanchez, E., Letona, J., Gonzalez, R., Gracia, M., Darpon, J. and Garay, J. (2005). A descriptive study of the implementation of the EFQM excellence model and underlying tools in the Basque Health Service. International Journal for Quality in Health Care. Vol.18(1),58-65 retrieved on 18-3-2014 http://intqhc.oxfordjournals.org/content/18/1/58.short This journal describes the implementation of EFQM excellence model as a common framework for quality management and leadership in the regional health care service. Effective results in the attaining quality have resulted in the progressive implementation of the EFQM model. The health care services have implemented the model to attain good leadership results which have benefited the management immensely. With the employees more active in reacting to situations has helped the management to react to situations faster. Jacobs,B. and Suckling,S. (2007) "Assessing customer focus using the EFQM Excellence Model: a local government case", The TQM Magazine, Vol. 19(4), 368 – 378 retrieved on 18-03-2014 http://www.emeraldinsight.com/journals.htm?articleid=1612474 The paper shows how the EFQM model enables the managers to efficiently self-assess critical performance issues relating to customer focus. It highlight how the managers of one-stop-shop customer centre, known as South Staffordshire Solutions manage critical problems in attainment of customer focus. How it sharpens the managerial skills to help achieve performances of customer satisfaction. The self-assessment ability of the mangers enables them to contact customers broadly and meet the problems at rapid rates. The paper develops a narrative about sustained customer value creation by combining the fundamental concepts of the model with the value proposition that the service has rendered to the customer. Wongrassamee,S., Simmons,J. and Gardiner,P.D. (2003) "Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model", Measuring Business Excellence, Vol. 7(1),14 – 29 retrieved on 18-03-2014 http://www.emeraldinsight.com/journals.htm?articleid=843738&show=abstract Performance improvement is always a serious agenda for all organisations. With the growing number of improvement models all companies around the world consider it to be always developing changes to keep the performance level high. The paper compared the Kaplan and Norton’s Balanced Scorecard and the EFQM Excellence Model. The paper compares the concept used by both the models and the benefits it adds to an organisation in improving its managerial efficiencies and strategic performances. The use of the model as a performance measurement tool has been very successful in different organisations and is being rapidly adopted by other organisations globally. Major Cited Sources 1. Pfannenstein, L. and Tsai, R. (2006). Offshore Outsourcing: Current and Future Effects on American IT Industry. Journal on Information Management System. Vol.21(4), 72-80 retrieved on 18-03-14 http://www.tandfonline.com/doi/abs/10.1201/1078/44705.21.4.20040901/84190.9#.UyhNcfmSzVM 2. Doh. J.P. (2005). Offshore Outsourcing: Implications for International Business and Strategic Management Theory and Practice. Journal of management Studies. Vol.42(3),695-704 re http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6486.2005.00515.x/fulltrived on 18-03-2014 3. Carmel, E. and Nicholson, B. (2005). Small Firms and Offshore Software Outsourcing: High Transaction Costs and Their Mitigation. Journal of Global Information Management . Vol.13(3),22 retrieved on 18-03-2014 http://www.igi-global.com/article/small-firms-offshore-software-outsourcing/3627 4. Sanchez, E., Letona, J., Gonzalez, R., Gracia, M., Darpon, J. and Garay, J. (2005). A descriptive study of the implementation of the EFQM excellence model and underlying tools in the Basque Health Service. International Journal for Quality in Health Care. Vol.18(1),58-65 retrieved on 18-3-2014 http://intqhc.oxfordjournals.org/content/18/1/58.short 5. Jacobs,B. and Suckling,S. (2007) "Assessing customer focus using the EFQM Excellence Model: a local government case", The TQM Magazine, Vol. 19(4), 368 – 378 retrieved on 18-03-2014 http://www.emeraldinsight.com/journals.htm?articleid=1612474 6. Wongrassamee,S., Simmons,J. and Gardiner,P.D. (2003) "Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model", Measuring Business Excellence, Vol. 7(1),14 – 29 retrieved on 18-03-2014 http://www.emeraldinsight.com/journals.htm?articleid=843738&show=abstract Read More