The main risks that I see for Globshop's outsourcing strategy are:
1. The inability to transfer knowledge in terms of business processes, practices and business information. This would mean that the outsourcer could not match Globshop in terms of what they want and their vision and the relationship would fail. This would mean that the exercise was time and cost consuming.
2. Reliance on the outsourcer. This reliance would mean that Globshop is critically dependent on the outsourcer for many IT operations and Globshop would be relinquishing control over their business. Globshop are somewhat at another organisation’s mercy as to when things get done and to what quality.
Another effect of the reliance on the outsourcer is that Globshop has to retrench employees within the organisation in order to make the initiatve cost effective. This could mean that valuable information and key expertise is lost. Globshop would also then have a harder time understanding what the outsourcer is doing in terms of IT as the people who could explain what they are doing are not with the company anymore.
3. Entrusting critical projects like supply chain initiatives to an offshore vendor are risky as this could erode the relevance of Globshop as a company. If the outsourcer is doing all of the work for Globshop then Globshop could be obsolete.
GlobShop is seeking to get the most effective co-operation from ISS (Indo-Systems Solutions) to acquire or have access to corresponding competencies through their outsourcing relationship. In doing so, the organisation lowers the inherent risk of project sharing (and possible losses). However, there are other risks that can revoke this.
Discontent - from employees that had to be layed off. These employees had knowledge regarding GlobShop’s IT systems and applications (and also information about how the business ran). This meant that there was risk of weak management from the employees from ISS. This weak management can lead to increased conflict and dissatisfaction because they do not understand how GlobShop effectively runs.
Business uncertainty – as the outsourcing contract between GlobShop and ISS was nearing its end, the managers have to rethink whether to continue outsourcing with ISS and/or find new vendors to outsource. This is especially important because of the volatile environment that GlobShop operates in, the environment is prone to unanticipated changes.
There was a large risk of becoming too dependent on ISS for many of its IT operations. Because ISS has grown to the level where they can do without GlobShop, if they ever left the outsourcing relationship, GlobShop would find it difficult to continue operating. GlobShop also has less control over their business as they gradually expanded their relationship to improve coordination and structuring, for example, ISS took over a significant portion of their merchandising system.
Possible hidden costs – the two project managers that had learnt GlobShop’s business systems and had formed good relationships with, were replaced with two new managers. This meant there was increased costs relating to redeployment, relocation and management costs (resources and time). Because outsourcing is a long-term practice, the business has to be prepared for possible hidden costs in such unforeseen circumstances.
Business Processes and Practices: As the organisation is very diverse business processes and practices are different will be different and Globshop's vision and goals may not be achieved due to the inability to be on the same page. Dealing with different supply chain structures and retail processes could be time and cost consuming.
Decentralized set-up: With a decentralized set-up there will be duplication of applications, services, technology resources and lack of standard processes which will increase operational costs
Reliance: By outsourcing much of Globshop's IT, Globshop will rely on ISS. With Globshop's decision to entrust ISS with value-added projects, Globshop will now depend on ISS much more and increase the risk.
What do you see as the main risks of Globshop’s outsourcing strategy? (Why?)
Uncertainty: GlobShops CIO is uncertain of whether to continuing using ISS services or to extend its offshore services to other vendors. In changing vendors GlobShop could lose its strong links that it had with ISS.
Job Loss: with most of it's IT structure being outsourced, many of GlobShops's internal IT jobs had to be reduced by over 50%. Again Rodger was unsure of the future role of the company's direction.
Decentralised: GlobShop had a decentralised structure that made the processes very difficult to handle as each region had it own IT division to cater its own needs. This made it very hard to maintain and hard to communicate between each region. This became a costly situation for the organisation.
Issue regarding the transfer of knowledge from current employees to offshore employees as this knowledge was built up throughout the years and is invaluable to the organisation.
ISS have grown over the years and GlobShop feel that the best ISS employees are being diverted to other ISS clients. If this happens, GlobShop may not achieve as much through outsourcing as they would normally have.
GlobShop has become too dependent on ISS as their sole offshore partner, and they feel that they have lost independence. There are trust issues regarding outsourced projects, as GlobShop will have less control over them. Internal IT units would not develop as well as more resources were being sent off shore, so there would be no relevance in having the company.
The main risk in Globshop’s outsourcing strategy is the ability or lack of it to transfer all the information from the business onto the new employees from the outgoing, any miscommunications or delays in getting information to the new employees would result in increased costs and loss of businesses for the company.
If Globshop outsources the majority of their application development they effectively taking a huge risk that may result in diminished quality control and potentially give up a large proportion of control over their business. New employees will need training and be learn the company values and be able to understand the organizational strategy. The company may also face issues with sharing information and applications over such a large distance, with possible different time zones and language barriers.
What do you see as the main risks of Globshop’s outsourcing strategy? (Why?)
The Growth of ISS – The relationship between Globalshop and ISS may change as ISS has had increased growth, and this could lead to them thinking the relationship they have with Globalshop is not that important. If ISS were to think like this, then it would be hard for Globalshop to maintain a relationship with ISS.
Reliance on ISS – Since Globalshop has most of its IT outsourced; they rely a lot on ISS. If they are outsourcing more and trusting ISS with projects, it would mean they have to rely on them more.. This means ISS has a lot of power, and Globalshop would be better off outsourcing to multiple vendors, to decrease this power which ISS would have over them.
With Increased growth of ISS the organisation will eventually think that Globalshop is not needed for them in order to achieve success therefore could have catastrophic outcomes for Globalshop. It is relying heavily on ISS so ISS holds the power of how much globalshop progresses.
The main risks associated with Globshop’s outsourcing strategy are: • Reliance on ISS – This is the biggest risk for Globshop’s outsourcing strategy because if anything happened to ISS at any given moment (i.e. natural disaster, shut-down for whatever reason), this will affect Globshop hindering their ability to further continue business. An easily resolvable issue but will take a lot of time and money to fix. • Security issues – This risk affects Globshop’s confidentiality in terms of passing information that may be critical to the success of Globshop’s competitive strategy and could be used as part of ISS’s business strategy. • Vertical integration – This risk is associated with the security issue stated above because if ISS has an insightful view of how Globshop is competing in the market, ISS could move into that industry and compete against Globshop.
The main risks that I see for Globshop's outsourcing strategy are:
ReplyDelete1. The inability to transfer knowledge in terms of business processes, practices and business information. This would mean that the outsourcer could not match Globshop in terms of what they want and their vision and the relationship would fail. This would mean that the exercise was time and cost consuming.
2. Reliance on the outsourcer. This reliance would mean that Globshop is critically dependent on the outsourcer for many IT operations and Globshop would be relinquishing control over their business. Globshop are somewhat at another organisation’s mercy as to when things get done and to what quality.
Another effect of the reliance on the outsourcer is that Globshop has to retrench employees within the organisation in order to make the initiatve cost effective. This could mean that valuable information and key expertise is lost. Globshop would also then have a harder time understanding what the outsourcer is doing in terms of IT as the people who could explain what they are doing are not with the company anymore.
3. Entrusting critical projects like supply chain initiatives to an offshore vendor are risky as this could erode the relevance of Globshop as a company. If the outsourcer is doing all of the work for Globshop then Globshop could be obsolete.
GlobShop is seeking to get the most effective co-operation from ISS (Indo-Systems Solutions) to acquire or have access to corresponding competencies through their outsourcing relationship. In doing so, the organisation lowers the inherent risk of project sharing (and possible losses). However, there are other risks that can revoke this.
ReplyDeleteDiscontent - from employees that had to be layed off. These employees had knowledge regarding GlobShop’s IT systems and applications (and also information about how the business ran). This meant that there was risk of weak management from the employees from ISS. This weak management can lead to increased conflict and dissatisfaction because they do not understand how GlobShop effectively runs.
Business uncertainty – as the outsourcing contract between GlobShop and ISS was nearing its end, the managers have to rethink whether to continue outsourcing with ISS and/or find new vendors to outsource. This is especially important because of the volatile environment that GlobShop operates in, the environment is prone to unanticipated changes.
There was a large risk of becoming too dependent on ISS for many of its IT operations. Because ISS has grown to the level where they can do without GlobShop, if they ever left the outsourcing relationship, GlobShop would find it difficult to continue operating. GlobShop also has less control over their business as they gradually expanded their relationship to improve coordination and structuring, for example, ISS took over a significant portion of their merchandising system.
Possible hidden costs – the two project managers that had learnt GlobShop’s business systems and had formed good relationships with, were replaced with two new managers. This meant there was increased costs relating to redeployment, relocation and management costs (resources and time). Because outsourcing is a long-term practice, the business has to be prepared for possible hidden costs in such unforeseen circumstances.
Business Processes and Practices: As the organisation is very diverse business processes and practices are different will be different and Globshop's vision and goals may not be achieved due to the inability to be on the same page. Dealing with different supply chain structures and retail processes could be time and cost consuming.
ReplyDeleteDecentralized set-up: With a decentralized set-up there will be duplication of applications, services, technology resources and lack of standard processes which will increase operational costs
Reliance: By outsourcing much of Globshop's IT, Globshop will rely on ISS. With Globshop's decision to entrust ISS with value-added projects, Globshop will now depend on ISS much more and increase the risk.
What do you see as the main risks of Globshop’s outsourcing strategy? (Why?)
ReplyDeleteUncertainty: GlobShops CIO is uncertain of whether to continuing using ISS services or to extend its offshore services to other vendors. In changing vendors GlobShop could lose its strong links that it had with ISS.
Job Loss: with most of it's IT structure being outsourced, many of GlobShops's internal IT jobs had to be reduced by over 50%. Again Rodger was unsure of the future role of the company's direction.
Decentralised: GlobShop had a decentralised structure that made the processes very difficult to handle as each region had it own IT division to cater its own needs. This made it very hard to maintain and hard to communicate between each region. This became a costly situation for the organisation.
The main risks of GlobShops IT oursourcing were
ReplyDeleteIssue regarding the transfer of knowledge from current employees to offshore employees as this knowledge was built up throughout the years and is invaluable to the organisation.
ISS have grown over the years and GlobShop feel that the best ISS employees are being diverted to other ISS clients. If this happens, GlobShop may not achieve as much through outsourcing as they would normally have.
GlobShop has become too dependent on ISS as their sole offshore partner, and they feel that they have lost independence. There are trust issues regarding outsourced projects, as GlobShop will have less control over them. Internal IT units would not develop as well as more resources were being sent off shore, so there would be no relevance in having the company.
The main risk in Globshop’s outsourcing strategy is the ability or lack of it to transfer all the information from the business onto the new employees from the outgoing, any miscommunications or delays in getting information to the new employees would result in increased costs and loss of businesses for the company.
ReplyDeleteIf Globshop outsources the majority of their application development they effectively taking a huge risk that may result in diminished quality control and potentially give up a large proportion of control over their business. New employees will need training and be learn the company values and be able to understand the organizational strategy. The company may also face issues with sharing information and applications over such a large distance, with possible different time zones and language barriers.
What do you see as the main risks of Globshop’s outsourcing strategy? (Why?)
ReplyDeleteThe Growth of ISS – The relationship between Globalshop and ISS may change as ISS has had increased growth, and this could lead to them thinking the relationship they have with Globalshop is not that important. If ISS were to think like this, then it would be hard for Globalshop to maintain a relationship with ISS.
Reliance on ISS – Since Globalshop has most of its IT outsourced; they rely a lot on ISS. If they are outsourcing more and trusting ISS with projects, it would mean they have to rely on them more.. This means ISS has a lot of power, and Globalshop would be better off outsourcing to multiple vendors, to decrease this power which ISS would have over them.
With Increased growth of ISS the organisation will
ReplyDeleteeventually think that Globalshop is not needed for them in order to achieve success therefore could have catastrophic outcomes for Globalshop. It is relying heavily on ISS so ISS holds the power of how much globalshop progresses.
The main risks associated with Globshop’s outsourcing strategy are:
ReplyDelete• Reliance on ISS – This is the biggest risk for Globshop’s outsourcing strategy because if anything happened to ISS at any given moment (i.e. natural disaster, shut-down for whatever reason), this will affect Globshop hindering their ability to further continue business. An easily resolvable issue but will take a lot of time and money to fix.
• Security issues – This risk affects Globshop’s confidentiality in terms of passing information that may be critical to the success of Globshop’s competitive strategy and could be used as part of ISS’s business strategy.
• Vertical integration – This risk is associated with the security issue stated above because if ISS has an insightful view of how Globshop is competing in the market, ISS could move into that industry and compete against Globshop.