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

2. 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

3. 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

4. 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

5. Why Would We Outsource?

6. 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

7. 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

8. 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

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

10. 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?

11. 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?

12. 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

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

14. 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

15. 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?

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

18. 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

19. Next Session
The wisdom of crowds and an introduction to crowdsourcing

20. Readings