Overview of Wal-Mart and Outsourcing Issue It Is Facing - Assignment Example

Deliverable 3 Choose a company you are familiar with. Describe it. Wal-Mart is the largest retailer business in theworld today. The company which was formed in 1962 by Sam Walton, runs thousands of discount department store chains in different cities all across the world. The company commands a huge market presence where it controls at least 65%. Due to its wide customer base, the company has established a major customer relations department that deals with issues arising from customer’s needs, demands, complains and compliments. The department is tasked with compiling all information about the company’s customers in order to help managers make decisions that can increase its profitability. The company has invested a lot of money in the development of a world class information system that integrates its delivery network and is capable of servicing many customers at a time (Wal-Mart Stores, Inc). However, the system that Wal-Mart uses is not very efficient as it should be since there are many customer needs and issues that go unnoticed or not dealt with. 2. Describe the IS outsourcing issue they are facing briefly. Do so from the perspective of a senior MIS person in that company For the longest time now, Wal-Mart has been carrying out all its operations in-house without outsourcing any of its services. The company has been relying on its in-house MIS team for most of its information systems needs (McKendrick). The customer service and care department operates as a centralized department within the company. The information systems that was designed to help the department deal with some of the many problems associated with customers. The system is connected to all of the company’s branches and any arising issues are dealt with directly from the company’s headquarters in the United States. It has not been easy for the company to deal with customer related issues from its wide branch network. This is an issue that the company has tried to solve using their internal information systems but problem still persists (McKendrick). As a way of solving this problem, outsourcing customer care information systems may seem like the best option. Since the company relies on its own technology and expertise to deal with customer relations issues, the company has not managed to effectively reach out to all its customers. There is a need to reverse this situation by getting the best customer care services from businesses which have the professional capability of dealing with such issues. By outsourcing its customer relations operations, the company will be able to reduce its overhead and operational costs. It will also be able to get better information systems from the company it outsources those services to (Hirschheim 122). This means that the huge amounts of money and man power that the company had invested in its customer relations department can be re-directed to other operations which are more directly connected to the success of the company. 3. Discuss for this IS. Why or Why Not the company should outsource it. There are many benefits that would come with outsourcing information systems related to customer care services. One of these benefits has to do with technology and knowledge. The human and material resources at Wal-Mart are straining under all the requirements of customer relations. This straining means that the company cannot fully address some of its present as well as future needs, something which might lead to customer dissatisfaction. By outsourcing its customer relations services, Wal-Mart will get to use the high levels of expertise that customer relation services vendors have to offer. These vendors are also likely to have a lot of experience in dealing with customer relations issues for companies like Wal-Mart. Therefore, by outsourcing this part of its operations, Wal-Mart will be making it possible for its customers to get services from knowledgeable, experienced professionals (Lacity 57). Customers can have all their issues solved efficiently and this is likely to boost the place of Wal-Mart in the market. Another benefit that Wal-Mart is likely to enjoy is cost reduction. If it outsources its customer services, there will be no need the company to continue operating a huge customer relations department which takes a sizable percentage of its budget. The money can be channeled elsewhere in other departments within the company. Other benefits that outsourcing may have on Wal-Mart’s business is data security and process discipline which are all likely to enhance productivity at the company (Hirschheim 186). Information systems and customer care are not part of the core businesses of Wal-Mart, therefore outsourcing these services would enable it to focus more on supplying the best products to its customers. The core business of Wal-Mart is to sell manufacturer’s products to customers. Some of the issues raised by its customers are not directly related to the company’s core business, but to the products produced by its suppliers. This means that its customer care department has to handle customer issues that are not vaguely related to the company’s mission and objectives. The cost of maintaining a customer care department is also quite high and Wal-Mart would be saving quite a huge amount by outsourcing the services to an able vendor (Lacity 85). Outsourcing Information Systems may be new to Wal-Mart which is used to operating using its in-house resources. However, the benefits that it will get from outsourcing its customer care service information systems will be much more than those it was getting without outsourcing. 4. Assuming the company decided to outsource this IS, discuss How the company should do so and what risks it will need to address. If Wal-Mart decides to outsource its customer relations services, it has to meticulously plan for it. There should be professional involved in drawing up the outsourcing plan so that no stone is left unturned. This should include the scope definition and a clear schedule for the outsourcing plan. This will be particularly important to vendors who will need a full account of accurate information about the company’s customer care practices. The plan should include specific information about what Wal-Mart expects from the vendor. This will help create a healthy working relationship between the vendor and Wal-Mart itself (McKendrick). The company must be ready to face some of the challenges that come with offshore outsourcing. In many cases, companies that have outsourced their services may have had to deal with the problem of delivery failure by the vendor, loss of business knowledge, different government regulation, personnel turnover and non-performance by the vendor (Davison). Wal-Mart does not have to experience these drawbacks if it plans for its outsourcing well in advance. The planners must first of all scout the outsourcing market to find the best vendors there are of customer relations services. They must then sift through their lists of vendors and choose only those who can be trusted to offer quality services to Wal-Mart and its customers (Stair and Reynolds 32). Since outsourcing customer care services to another company will mean that the in-house department will have to be reduced or shut down, some employees may be left without work. To prevent massive turnover, the company can absorb these employees in other areas where their skills can help propel profitability. The company does not even have to worry about loss of business knowledge (Hirschheim 209). The information systems developed by Wal-Mart’s employees can be utilized for other purposes such as logistics which is a function more closely related to the company’s core competencies than customer care is. 5. Should they decide to offshore this specific project, what additional issues should they pay attention to? If Wal-Mart decides to offshore its customer services information systems, there are issues that they would need to pay attention to. One of these, which could also be the most important consideration, is the security or safety of outsourcing. Outsourcing comes with a lot of risks, which include the risk of outsourcing to unscrupulous dealers or companies. The retailer would have to carefully vet any company that wants to be selected to offer customer relations services on behalf of Wal-Mart (McKendrick). Wal-Mart would have to be careful and systematic if it decides to go the outsourcing way. The manner in which the company chooses a business partner for its customer care services will highly determine how well its customers will be served. The company that will be selected to offer customer services on behalf of Wal-Mart should have key competencies that are aligned with the retailer’s. This means that the company will have to select an outsourcer whose corporate support functions are close to its mission and main objectives (Davison). Wal-Mart will also have to consider all its stakeholders and what they want for the company. One of the effects of outsourcing may have on Walmart is raising its stock. Stakeholders need to be kept in the know if and when the company decides to outsource its customer care IS so that they know what to expect. It is also important that Wal-Mart should involve the right people in the outsourcing venture. The people who are tasked with planning the outsourcing project should have a clear understanding of why Wal-Mart is outsourcing its customer relations services. They should therefore pay attention to the criteria they will use in looking for an appropriate vendor, whose credentials should not only be beyond reproach. The vendor should be able to apply hi tech information systems in customer care so as to provide Wal-Mart’s customers with the best services (Stair and Reynolds 134). In other words, the vendor should fully understand the needs of Wal-Mart’s customers and should be in a position to ensure that all their needs are met. Works Cited Davison, Dean. Top 10 Risks of Offshore Outsourcing. ZD Net. 2003. Web. 29 August 2011, http://www.zdnet.com/news/top-10-risks-of-offshore-outsourcing/299274 Hirschheim, Rudy. Information Systems Outsourcing: Enduring Themes, Global Challenges and Process Opportunities. New York: Springer, 2009. Print. Lacity, Mary Cecelia. Information Systems Outsourcing: Myths, Metaphors and Realities. Hoboken, NJ: John Wiley & Sons, 2006. Print. McKendrick, Joe. Watch out for falling technology: Wal-Marts IT issues, 2007. Web. 29 August 2011, http://www.zdnet.com/blog/service-oriented/watch-out-for-falling-technology-wal-marts-it-issues/988 Stair, Ralph and George Reynolds. Principles of Information Systems. New York: Cengage Learning, 2011. Print. Wal-Mart Stores, Inc. Company Profile, Information, Business Description, History, Background Information on Wal-Mart Stores, Inc. 2011. Web. 29 August 2011, http://www.referenceforbusiness.com/history2/20/Wal-Mart-Stores-Inc.html#ixzz1VYLWrO53 Read More