Introduction
An information system refers to the integration of information technology with the organizational activities, with the main objective of offering support and efficient execution of management and organizational operations (Burkholder 140). The nature of an information system deployed in an organization is determined by the manner through which individuals in an organization interact with the technology and the underlying data, with the principal aim of supporting business processes (Borghoff 89). This implies that information systems are becoming an important part of the organizational functions that can be used as a tool for establishing the competitive advantage in the present business context. In the modern business world, organizations are increasingly depending on the use of information systems to enhance business efficiency and address the challenges imposed by the complexity of the business environment (Effy 86). This section of the paper discusses the use of information systems at the British Telecom.
Overview of British Telecom
The British Telecom is a global company that has its headquarters in London and specializes in the provision of telecommunication services. The company is one of the largest businesses organizations in the global telecommunications sector, having other affiliates in 170 countries. British Telecom is also a major provider of telecommunication services and equipment to governments and corporate clients across the global divide. This is facilitated through the division of BT Global services. The company’s retail division also supplies broadband internet connection and subscription TV services in the United Kingdom and has customer base of approximately 18 million clients. It is arguably evident that the scope of operations for the company requires an effective management system (Bansal 100).
The mission of British Telecom focuses on total dedication regarding the quality of service that the clients receive from the company. The retail division of British Telecom is customer-centric with the main objective of growing the shareholder value and delivering good customer service that is constantly improving. This will be achieved by offering differentiated services that have been tailored in accordance to the customer requirements. In addition, the company aims establishing new marketing routes and managing the products and services portfolio of the organization. The company also aims at encouraging people to take full advantage of the value that they are creating for themselves and the larger community that they are undertaking their activities.
The vision of the British Telecom denotes the future position that the company wants to be, the direction of the business and potential achievements in future. With respect to this, British Telecom appreciates that life is increasingly becoming more complex because of the rapid advancements in technology, as a result, it is the role of the company to ensure that the life complexity is transparent and ensure things are undertaken easily. In addition, it is the vision of the company to ensure that each person, organizations and business enterprises achieve their maximum potential using communication technologies. The vision therefore states “connecting your world, completely”. This is because the company has the capability of connecting people, businesses with other businesses and customers and connecting communities with other communities. In order to fulfill the mission and vision of the company, the company will use its organizational strategy in ensuring that business goals and objectives are met. It is vital to take into consideration that information systems are integral part of the organizational strategy that the company intends to deploy.
The company’s business strategy with respect to the realization of its mission and vision focuses on enhancing customer satisfaction, customer experience and creation of value for the company’s stakeholders. The strategy implementation will entail the following core strategic areas: financial, customer, process and people. The success of the process strategy significantly relies on the effective implementation of information systems by the organization. In fact the process strategy is vital in ensuring the success of other strategic areas such as customer satisfaction.
The use of Information systems at the British Telecom
There are various types of information systems that British Telecom uses to ensure that organizational operations are executed effectively. The following are the types of information systems used at the company and their respective roles.
Office Information Systems
This comprises of various computer hardware, networks and software applications that are used to ensure the efficiency of workflow and employee communication. Most of the employees within the company offices undertake their tasks electronically and communicate with other employees via a groupware application that supports e-mail and collaboration services. Basically, British Telecom relies on the aspect of office automation to increase employee productivity. Some of the roles undertaken by the Office automation systems include messaging, scheduling and accounting. Some of the software applications used to facilitate office automation at the British Telecom includes e-mail applications, database management software and Personal Information management.
Office Information systems helps in fostering employee productivity through enhancing the effectiveness of task execution compared to the traditional manual system that was paper based. The groupware application used also helps in facilitating employee communication and knowledge sharing within the organization. In addition, the office information system is an effective cost saving strategy owing to the fact that organizational tasks are undertaken electronically implying that it will reduce the number of employees needed to undertake a particular task.
The office information system also helps in linking the various business divisions the company. The business divisions include Retail, Wholesale, Open-reach, Global services, group operations and BT Exact. An integration business functions results to overall business efficiency at the British Telecom.
Transaction processing systems
This are mainly used for data processing during the daily organizational activities that can range from the corporate to business level transactions such as customer payments, orders, corporate funds payments and other business activities (Borghoff 74). The transaction processing system deployed at the British Telecom makes use of the Online Transaction Processing, whereby customers can conduct business with the company via a web-based platform, the company tracks its customers using a Customer Relationship Management system that is web-based (Effy 74). Online Transaction Processing is an integral element of the organization because its operations are global; therefore, it eliminates the constraints imposed by geographical barriers. The real time communication with its customers also helps in enhancing customer satisfaction, which is in accordance with the business strategy that aims at the realization of the goals and objectives (Verhoef 89).
The use of online transaction processing systems helps in improving the business efficiency of the company (Verhoef 85). Enhanced business efficiency implies that there is improved employee productivity, which in turn transforms to customer satisfaction. The outcome of this is that company develops a competitive advantage and increases its market share in the telecommunications industry both at the local UK market and at the global market place (Engardio 78).
How Information systems contribute to organizational effectiveness at British Telecom
There are diverse strategic benefits associated with the use of information systems at the British Telecom. One of the most strategic advantages of IS at the company is that it fosters organizational efficiency, which is achieved by ensuring that there is smooth organizational information and workflow. By use of automation, organizational tasks are executed effectively in a timely manner owing to the fact IS eliminates the need of the manual system and that organizational tasks are undertaken manually. In addition, information systems facilitate the organizational management process through offering frameworks through which employees can be tracked and their work monitored. In addition, the information system integrates all the business functions within the organization such as sales and human resource management. This generally ensures that there is organizational efficiency (Effy 136).
The second strategic advantage of Information systems at the British Telecom is that it provides avenues through which employees can communicate and share knowledge (Burkholder 78). This means that the Information system incorporated at the company incorporates an aspect of Knowledge management, which plays n important role in ensuring organizational effectiveness (Bansal 45). Knowledge management refers to the detailed management of critical knowledge and information that is processed by organizational members in such a manner that it can used and shared at the organizational level with the main objective of transforming the corporate intellectual and organizational knowledge into business intelligence (Borghoff 85). Knowledge management strategies can be deployed by organizations to facilitate the creation, distribution, representation and the implementation of organizational insights. These kinds of insights usually consist of knowledge that the individuals in an organization can use during the execution of organizational processes. Therefore, knowledge management is important in the formulation of business strategies in an organization, which in turn helps in enhancing the organizational effectiveness (Bansal 78).
Future Plans regarding the use of information systems at the company
Currently, the company is satisfied with the strategic benefits achieved by use of the information systems. In addition, the information system is customized such that it can meet the changing organizational requirements that may be imposed with increasing scope of operations and a customer base. Some of the potential types of the information systems that the company aims at adopting include expert information systems and decision support systems. Decision support systems will help the potential users such as sales managers to make effective decisions in ill-structured decision situations. For instance, there might be a need to set annual sales quotas basing on an increased volume of sales and low cost of production. Such cases will require the role of DSS in future.
Outsourcing can be defined as the sub contracting of any task, products or operations to a third party within a given duration of time in accordance with the contractual requirements (Borghoff 144). In most cases, organizations usually outsource for products and services that it has the capability to produce using the available in-house resources. In addition, the services or products offered by the third party can be provided on-site or off-site depending on the cost effectiveness of the program. Decisions concerning whether to undertake outsourcing normally require a critical analysis of the benefits and disadvantages, with respect to the operational strategies of an organization. This entails a critical analysis of the efficiency of the in-house resources versus the effectiveness of subletting to a third party service provider.
Benefits to the company associated with outsourcing of the application development project
In the present business environment, it is almost impossible for a business enterprise to meet all its needs by itself, the viable solution that may seem appropriate at that instant is outsourcing. Although there are other strategies such as employee training, they are only effective in the long terms and come with high implementation costs, and have no guarantee that the Return on Investments is worth the undertaking. Business ventures may contract out for numerous reasons depending on the necessity of the impending projects. Irrespective of the approach to outsourcing, the fundamental causes behind outsourcing are universal to any business enterprise. Despite the disadvantages associated with outsourcing such as quality issues, language barriers, competing problems, and management challenges, it is evident that outsourcing is a prime requirement for the company, especially with respect to its current application development.
The first reason why the company should outsource its application development project is that it allows the company to focus on the core business activities. This is because the company is currently experiencing a rapid growth, implying that the scales of its operations are bound to expand. The current application project development is subject to consume the company resources on the basis that its development serves the purpose of meeting the expansion needs of the company. In case the application development is undertaken using the in-house development team, the project will consume both human and capital resources of the company. Therefore, outsourcing the application development project will make the company to focus on other core business functions that are important to the continuity of the business without having an effect on the process of the application project development. For example, if the application development requires a short period of time, the outsourcing the application project development is the most effective approach to be deployed instead on relying the in-house development team, which will consume a lot of capital and human resource towards the project, and the same time result in a shift in the attention of the business priorities.
The second reason for outsourcing the current application development project to a third party is because of the complex nature of the back-office operations at the company. In addition, the size of the company is a significant constraint in undertaking the application development project at a lower cost. This makes outsourcing the most viable alternative of making sure that the application project development is cost effective. A typical scenario associated with this case is that the in-house development team has no ability to meet all the requirements of the application development. This makes outsourcing the most suitable strategy for the company in such a context basing on the argument that it fosters cost and efficiency savings.
Currently, the expenses associated with performing a specific business process using the in-house staff is normally expensive, characterized by high values of overhead expenses. One of such back-office business processes is the current application development project, and outsourcing the project implies that the company is free from incurring extra overhead expenses associated with undertaking the project using in-house staff.
An important aspect associated with outsourcing the application development project is the flexibility of staffing. This is due to the fact that business processes to the company such as the application development project are seasonal, and its implementation is only done once, while not on a continual basis such as other business functions like record keeping (Engardio 148). Therefore outsourcing the project implies that the company will only contact the providers in times where there are cyclic demands such as the application development. The in-house staff in charge of application development project is short-handed, and outsourcing such like business functions implies that there are supplementary resources for a specified duration of time at a steady cost.
It is arguably evident that outsourcing the application development has significant benefits to the company such as a focus on the core business processes, flexibility in staffing, and a reduction in the overhead expenses for the company and cost and efficiency enhancements to the organization. All these variables transform to the profitability of the company and enhance business continuity.
Disadvantages associated with outsourcing of application project development
The first significant disadvantage associated with IT/IS outsourcing revolves around control issues. When outsourcing an Information System project development project to a third party, the management and control relating to the project is handed over to the third party organization. The service Level agreements do not usually involve management decisions. This is a potential cause for conflicts that may jeopardize the success of the project.
The second disadvantage is outsourcing is usually associated with hidden costs. Additional tasks that are not outlined in the outsourcing contract will require additional costs. Other forms of costs associated with outsourcing include the hiring of a law professional to review the contract and the times that are spent when attempting to negotiate. In some instances, it is usually cost effective to rely on in-house staff for IT/IS project development.
There are potential risks associated with outsourcing of an IT/IS application development project. This is because there is visibility of confidential information implies that there is the probability of a confidentiality breach. For example, outsourcing for the development a payroll application will mean that the application developers will be supplied with the payroll data and other personal information. It is important to critically evaluate the outsourcing company prior to embarking on outsourcing.
Another disadvantage associated with outsourcing is quality problems. This may occur in cases whereby the third-party company is largely aggravated by profits and cost saving strategies. Provided the conditions under the contract agreement are met, the third party company is paid. In addition, outsourcing imposes significant constraints regarding the ability to quickly respond to adjustments in the business requirements. The outsourcing contract is normally specific in terms of project scope and scope, any changes in the contract will result to extra costs. Outsourcing also imposes significant morale implications on the in-house employees, which may in turn lower their productivity regarding the use of the developed system because they were not part of the development process.
Example of IT/IS outsourcing
The increasing need to adopt up to date technological infrastructures and the lack of availability of such expertise results to an increase in the demand for such services. In addition, many business enterprises put much emphasis on the core functions of the business, which may be technological infrastructure, investments or human resource (Engardio, 2006). For the case involving technological infrastructures, companies may require outsourcing their IT support to companies that are more specialized in IT in order to facilitate business efficiency. The present state of affairs makes outsourcing of IT support services a key requirement for existence of business enterprises. Another principal reason that makes outsourcing a key requirement for business enterprises is the decreasing adoption of corporate computing. This is due to increasing cases of leasing applications rather than develop applications and providing an in-house support.
An example of an IT/IS outsourcing project is when an organization leases its network implementation project to a third party company. IT/IS outsourcing is usually undertaken because of the lack of the in-house team for application development and IT infrastructure implementation. In such a scenario, the company that is outsourcing and the third party company must negotiate the terms and conditions of the contract that includes the scope, cost, privacy issues in cases whereby the third party company will be required to handle any organizational information and a legal advisor to review the contract agreement. It is vital for both companies not to breach terms stated in the outsourcing contract, and that a change in requirements will require a renegotiation. In addition, it vital for the third party company to meet the requirements stated in the service Level Agreement in accordance to the contract terms. Cases of user support and training should also be taken into consideration during the process of IT/IS outsourcing.
Conclusion
Information systems are a significant element of the business processes at British Telecom. In fact, the company relies on information systems to leverage its competitive advantage in the industry. The company’s business strategy with respect to the realization of its mission and vision focuses on enhancing customer satisfaction, customer experience and creation of value for the company’s stakeholders. Information systems are integrated in all the elements of the company’s business level strategy, this is because the applicability of IS within the organization covers diverse areas such as office automation systems and online transaction processing systems. It is arguably evident that information systems at British Telecom makes significant contributions towards the enhancement of organizational effectiveness through enhancing organizational efficiency by facilitating the execution of business processes and facilitating organizational management.
Outsourcing on the other hand imposed significant strategic benefits to the organization such as providing an opportunity, through which the company can focus on its core competencies, overcoming the complexity associated with backend operations, flexibility in staffing, and a reduction in the overhead expenses for the company and cost and efficiency enhancements to the organization. All these variables transform to the profitability of the company and enhance business continuity. Despite the strategic benefits associated with outsourcing, there are other disadvantages such control issues, costs, outsourcing quality and negative impact it imposes on the moral of the in-house staff, which may in turn lower their productivity regarding the use of the developed system because they were not part of the development process. In addition, outsourcing imposes significant risks associated with confidentiality breaches; this is because there is visibility of confidential information implies that there is the probability of a confidentiality breach.
Works Cited
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Engardio, Paul. “Outsourcing: Job Killer or Innovation Boost?” Business Week, 2006.
Verhoef, Wijers. IT Outsourcing: Contracting the Partner. New York: Van Haren Publishing, 2009.