[8] 2002 e-business-strategies-for-virtual-organizations

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Outsourcing, partnering and the virtual organization worked with best-in-class business partners. Starting out as an efficiency-driven cost-cutting tactic, outsourcing has grown into a vast trend of business practice that is now become concerned with redefining and redesigning the firm for increased adaptability, flexibility and competitiveness. Starting as a small trend in the 1980s, outsourcing grew rapidly in the 1990s into a global phenomenon accounting for transactions priced at hundreds of billions of dollars. The Corbett Group’s 1999 Strategic Outsourcing Study found that one-third of executive budgets are externally sourced today, and predict that that there is more external sourcing to come in the future. Dun & Bradstreet estimate that by 2001, global outsourcing will be worth over $1 trillion. As the size of the outsourcing phenomenon has grown, so has the scope. While the early trend tended to see outsourcing being undertaken for specific functions or activities (such as cleaning services, canteen services, IT services and so on) outsourcing now encompasses almost all business services. The major business services outsourced are IT, human resources, marketing and sales, and administration, with IT comprising 30% of the total, human resources 16%, marketing and sales 14%, and administration 9%. 9.4.1 Outsourcing and external sourcing Outsourcing can be viewed as one of a number of external sourcing options, which include: � Supplemental staffing – an external sourcing option in which non-company personnel are used, often at times of peaks in demand, to help carry out business operations. Such personnel could be unskilled or skilled temporary operatives or clerical workers, consultants or contractors. � Selective sourcing – the outsourcing of aspects of a function or business process. For example, an IT department may decide to outsource computer systems development and retain other IT services internally. Or more selectively still, only certain computer systems development projects may be outsourced. � Total outsourcing – the contracting out of an entire business process all function. However, often the term total outsourcing is used for a situation in which a large proportion, 80% or more, of a department or function is outsourced. � Strategic alliance – a situation in which investments are shared between one or more business partners, each business partner focusing on their areas of competence. In a 195
e-Business Strategies for Virtual Organizations strategic alliance, separate revenue streams are maintained for each organization. � Joint venture – the creation of a new business entity with its own revenue stream. Investments in the new entity are shared between business partners. Often, supplemental staffing, selective sourcing and the outsourcing of a business process or function are all collectively referred to as outsourcing. It is worth noting that when outsourcing is viewed as a long-term relationship with a provider of business services, this relationship gets very close to what we have referred to above as a strategic alliance. However, outsourcing is essentially a fee-for-service relationship based around a contract. In a strategic alliance, not only do the strategic partners share resources, they also share in profits and losses. External sourcing then is sometimes taken to be more general than outsourcing in the sense that supplemental staffing is not taken to be outsourcing. In this chapter we will treat outsourcing as including supplemental staffing as well as selective sourcing. However, we recommend that, with us, you distinguish between outsourcing and strategic alliances and joint ventures in which profits and losses are shared. 9.5 Strategic outsourcing, transformational outsourcing and tactical outsourcing 196 There are three broad approaches to outsourcing, namely strategic, transformational and tactical. Strategic outsourcing is an approach in which the firm invests internally in those business activities from which it derives a competitive advantage and outsources the other necessary business activities to best-in-class providers of those activities. Essentially the firm concentrates on its core competencies and actively considers outsourcing its other business activities. In transformational outsourcing the firm utilizes outsourcing to bring about innovative change. Relationships with world-class vendors of business operations and services are utilized to help move the firm to global best practice in all non-core business processes. Thus outsourcing helps in achieving the firm’s strategic vision, and supports the management of organizational transformation. Tactical outsourcing is the use of outsourcing to bring about operational efficiencies. In tactical outsourcing, internal business
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e-Business Strategies for Virtual O
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e-Business Strategies for Virtual O
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Contents Computer Weekly Profession
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Contents 6 Globalization and e-busi
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Contents 11.6 The increasing power
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Computer Weekly Professional Series
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Authors’ Preface There are dozens
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Authors’ Preface model will there
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Authors’ Preface alliances, bette
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1 e-business and the virtual organi
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e-business and the virtual organiza
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Figure 1.2 e-business and the virtu
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1.5 e-business e-business and the v
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Figure 1.3 e-business and the virtu
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Figure 1.4 Virtual objects, Scholz
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Characteristics of the virtual orga
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Figure 2.1 Formation of business al
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� empowerment of staff; Character
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e-business models for virtual organ
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3.4 Models of efficient response e-
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Figure 3.4 Star alliance model e-bu
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Figure 3.6 Market alliance model Fi
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Figure 3.10 Virtual alliance framew
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Figure 3.11 Virtual organizational
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References e-business models for vi
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IS planning strategies for emerging
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Figure 4.1 The evolution of IS/IT p
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Figure 4.3 A framework for SISP (Wa
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Figure 4.4 Planning adopts a busine
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Figure 4.5 Interconnected ecologies
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Figure 4.6 The interrelationships b
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4.8 Conclusion IS planning strategi
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References IS planning strategies f
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Moving from e-business to i-busines
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Globalization and e-business strate
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Adoption and deployment of online i
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Table 6.1 Online business models On
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Figure 6.2 VIM strategy Globalizati
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7 Developing knowledge-based strate
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Page 186 and 187: 8 Evaluating strategies for e-busin
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Page 194 and 195: Customer view Whatisour image? Eval
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Page 218 and 219: Figure 9.2 Outsourcing, partnering
Page 220 and 221: 9.9 Summary Outsourcing, partnering
Page 222 and 223: References Outsourcing, partnering
Page 224 and 225: e-business strategies in the virtua
Page 242 and 243: 10.10 Summary e-business strategies
Page 244 and 245: 11 Creating virtual cultures for gl
Page 246 and 247: Creating virtual cultures for globa
Page 262 and 263: Four stages of market evolution Mar
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Figure 11.4 The four paths of evolu
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References Creating virtual culture
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Creating virtual cultures for globa
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Creating virtual cultures for globa
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Advanced knowledge, see Knowledge A
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[8] 2002 e-business-strategies-for-virtual-organizations

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