Rob Gleasure R.Gleasure@ucc.ie robgleasure.com IS3321 Information Systems Solutions for the Digital Enterprise Lecture 3: Outsourcing and Virtual Teams Rob Gleasure R.Gleasure@ucc.ie robgleasure.com

IS3321 Last session Introduction to big data The 3 V’s of big data The Internet of Things This session Outsourcing Advantages and disadvantages of outsourcing Virtual teams Advantages and disadvantages of virtual teams

What is Outsourcing? “The strategic use of outside resources to perform activities traditionally handled by internal staff and resources” Dave Griffiths Internal functions performed by an outside firm Standard practices in many areas mean that certain functions can be pushed outside of the organisational boundary

Data center in the cloud Why Would We Outsource? In essence, it allows us to reduce the resources dedicated to a function or service to the bare minimum by only paying for them as we need them What does this remind you of? Demand Capacity Time Resources Demand Capacity Time Resources Static data center Data center in the cloud Slide Credits: Berkeley RAD Lab

Why Would We Outsource?

Different Forms of Outsourcing Outsourcing can take place in several forms Information Technology Outsourcing (ITO) Companies are forced to adapt to constantly changing technologies, updated platforms, new standards, etc. Some companies may feel that managing these changes does not add sufficient value to make it cost-efficient External specialised parties offer to take on this responsibility for a firm, delivering them only the IT they need, e.g. Xerox

Different Forms of Outsourcing Business Process Outsourcing (BPO) Operational functions are entrusted to a third party This can include front office tasks, e.g. customer relations management, marketing, technical support This can also include back office tasks, e.g. accounting, human resources, logistics, procurement, security, documentation, insurance, and manufacturing, Arguably the most popular form of outsourcing at present

Different Forms of Outsourcing Knowledge Process Outsourcing (KPO) Core value-adding information-related business activities are entrusted to a third party Examples include business/market/product research, legal services and patenting, training, product and service design, etc. Unlike BPO, outsourced firms are given managerial control of these activities, not just a list of processes to be implemented, e.g. KPMG

Different Forms of Outsourcing Knowledge Process Outsourcing Core business value proposition Business Process Outsourcing Information Technology Outsourcing

Advantages of Outsourcing Saves time and money Allows complex aspects of business to be handled by those with the necessary expertise Incorporation of best practices Lets businesses focus on specific areas where they may feel most capable Pushes risk out to third parties Drags many aspects of organisation towards industry standard Exposes organisation to excellence in troublesome domains?

Disadvantages of Outsourcing Loss of control over issues of quality, public image What if the third party goes under? Hidden costs and potential for misunderstanding Issues of security and confidentiality Involuntary innovation sharing Loss of knowledge and diversity inside organisation Outsourcing of accountability? https://www.youtube.com/watch?v=Qb7DKWk-Jlc

Virtual Teams vs. Outsourcing Increase in technological standardisation, bandwidth, etc. also means team members may be assembled from geographically dispersed specialists to create temporary remote teams Image from http://www.itd.com/virtual-teamworking-training/

Managing Virtual Teams Virtual Teams may coordinate their activities in a number of ways Video/audio conferencing Emails/voice mails Shared databases/repositories Remote desktop sharing/virtual machines Site visits Reports are also produced continuously to coordinate team with management

Advantages of Virtual Teams Allows a range of sites to share specialist expertise Exploitation of scale Allows individual workers to collaborate and learn from those with high levels of knowledge Saves time and cost of looking for people when non-routine needs emerge Encourages appreciation of diversity Allows shared organisational goals to be maintained

Disadvantages of Virtual Teams (coordination) Competition between units may create strain in terms of how projects are implemented Everyone always wants the good people at their station working on something  talent greed Non-parallel work days What if I need something urgently but my teammate’s work day is already over?

Media richness Image from https://en.wikipedia.org/wiki/Media_richness_theory

Media richness (continued) Richer media have been shown to improve perceptions of productivity and interaction quality

Disadvantages of Virtual Teams (social) Relationship building in a team is difficult Trust is harder to develop when people interact with different people all the time Cultural differences Misunderstandings get more frequent as communication media becomes leaner Accountability over specific goals can be vague Decreased build-up of Tacit knowledge Brainstorming is made challenging when individuals’ feedback is delayed

Next Session The wisdom of crowds and an introduction to crowdsourcing

Readings https://bpophilippinesoutsourcing.wordpress.com/2013/06/14/bpo-vs-kpo-five-basic-differences/ https://www.kpmg.com/LU/en/IssuesAndInsights/Articlespublications/Documents/Knowledge-Process-Outsourcing.pdf http://blog.hubstaff.com/remote-team-management/