INFO 33.12 External and Internal Resources

Specification

1. What do we mean by outsourcing?2. What do we mean by offshoring?3. What services might companies ‘outsource’ or ‘offshore’4. What reasons are there for outsourcing?5. What business reasons are there for offshoring?6. What customer/business issues arise with offshoring?7. What do we mean by rightshoring?8. What social and ethical issues arise with offshoring?9. What are the overall benefits and limitations of

offshoring?10. There are a number of different ways in which

organisations can obtain external services from suppliers or service companies. State these 3 ways.

To consolidate you should be able to answer these questions…

11. What are the company benefits and drawbacks of buying hardware, software and equipment?

12. What are the company benefits and drawbacks of contracting people, work space and equipment?

13. What are the company benefits and drawbacks of leasing software, communication links and equipment?

14. What 6 internal resources need to be managed by organisations?15. What issues should be considered with regards to People (as a resource)?16. What issues should be considered with regards to Hardware (as a

resource)?17. What issues should be considered with regards to Software (as a

resource)?18. What issues should be considered with regards to Communication (as a

resource)?19. What issues should be considered with regards to Consumables (as a

resource)?20. What issues should be considered with regards to Facilities and Power (as

resources)?

To consolidate you should be able to answer these questions…

Transfer of responsibility for a particular aspect of the business to an external agency (third party) The organisation does not have ownership of this agency.

12.1 What do we mean by outsourcing?

When an organisation purchases services in one country to be provided in a different country. The organisation has ownership of the services.

12.2 What do we mean by offshoring?

Outsource◦ Payroll◦ Invoicing◦ Accounting◦ Bulk printing◦ Backup and Recovery◦ ICT Support

Offshoring◦ Telephone call centres◦ Customer support◦ Storage◦ Programming◦ Website and internet development

12.3 What services might companies ‘outsource’ or ‘offshore’

Allows the company to concentrate on delivering a good service to their customers and not worry about other services.

Improved quality◦ Specialist outsourced companies provide high quality services

Staffing issues◦ The service company would have access to a range of staff and can allocate the work to

Capacity Management◦ The level of service needed by the organisation may vary from month to month depending on

how much work there is (haven’t had to employ staff who may not be required) Cost Benefits

◦ Should reduce overall costs to organisation (no wages, no national insurance payouts etc.) Economies of Scale

◦ E.g. Printing in bulk is cheaper than printing one offs so a company might outsource their printing

Reduced Development Time◦ Buying in additional support means that an organisation can develop products faster

Standardised Business Processes◦ Allows a range of businesses access to services previously only available to large corporations

Improved Risk Management◦ Using specialists for advise e.g. on backup and recovery, may reduce the risk of data loss

12.4 What reasons are there for outsourcing?

Lower Labour costs Lower Facility costs

12.5 What business reasons are there for offshoring?

Business Standards

◦ A service level agreement which specifies the nature, scope and quality of the service should be provided.

Customers Can be hostile to outsourcing e.g. oversees customer

support◦ Language barriers◦ Long waiting times◦ Increased stress◦ Lack of local knowledge◦ Under trained employees relying on scripts from knowledge

based systems

12.6 What customer/business issues arise with offshoring?

Using offshore centres for routine services e.g. routine call centres THEN UK based ones for more complex enquiries, that are likely to involve discussion

12.7 What do we mean by rightshoring?

Social

Against◦ Impact on UK jobs◦ Decreased rates of pay

For◦ Improved living standards across the world◦ Global markets become larger

Ethical

For◦ Valued local employment

Against◦ Exploitation◦ Poor working conditions◦ Long hours for low pay

12.8 What social and ethical issues arise with offshoring?

Benefits◦ Labour and facilities may be cheaper abroad, resulting in cost savings◦ Specialist skills more readily available, again at lower cost◦ Some countries offer financial incentives to encourage new business◦ Jobs and investment may be extremely valuable to the local economy◦ Assists the global economy by providing work to less wealthy areas of

the world

Limitations◦ Language and cultural differences may cause difficulties◦ Communications costs may be higher◦ Legislation may be different abroad so it is important rights are not

breached◦ Security risks may be increased as the organisation moves away from

local control

12.9 What are the overall benefits and limitations of offshoring?

Buying Contracting Leasing

12.10 There are a number of different ways in which organisations can obtain external services from suppliers or service companies. State these 3 ways.

CONTRACTING

BUYING

LEASINGFACILITIES

SERVICE / STAFF

Specific period of time for an agreed cost

A network manager to cover maternity- Paid more- No benefits

Data Warehouse to backup data

Specific period of time for an agreed cost

Disaster manager strategy:- Office space

EQUIPMENT

SOFTWARE

COMMUNI-CATIONS

EQUIPMENT

Once contract paid the goods are owned

NEVER owned but:- initial investment is low- usually includes support, upgrades etc.

Buying Equipment or Hardware can be done through contracting

SOFTWARE

EQUIPMENTHARDWARE

Once bought you own:- High level of initial

investment- Items bought are assets of

the company- support & maintenance

are extra costs

What is Buying?◦ When payments are received for ownership of a product or

service

What is contracting?◦ Making an agreement with a supplier to provide a specific service

for a specific period of time at an agreed cost◦ An agreement between supplier and customer for purchasing of

equipment with costs spread over time. Once full payment is reached, goods are owned by the customer.

What is leasing?◦ Making an agreement with a supplier for the rent of something

for a specific period of time at an agreed cost. However, whatever is leased is never owned

Difference between

Benefits◦ Initial investment over time will work out less than

contracting or leasing (e.g. no interest)◦ The items purchased become assets of the company

Limitations◦ High level of initial investment◦ Limited resale value◦ Requires arrangements for support, servicing and

maintenance◦ If money has to be borrowed to finance initial costs,

interest charges need to be considered

12.11 What are the company benefits and drawbacks of buying hardware, software and equipment?

Benefits◦ Staff can be contracted to support short term projects (paid

more but not entitled to benefits)◦ Companies can contract space and equipment for the same

reason (short term project)◦ Can be an important part of a company’s disaster

management strategy e.g. contracting hot sites◦ Spreading costs over time so no high initial investment

Limitations◦ Potential of being over reliant on the contracting of work

space◦ If services are outsourced there is a lack of control◦ Interest rates to consider

12.12 What are the company benefits and drawbacks of contracting staff, facilities and equipment?

Benefits◦ Initial investment not as high as buying◦ Usually additional support services included as well as regular

upgrades◦ Makes financial planning easier (no single substantial

investments needed to keep abreast of new releases)◦ Many companies lease dedicated communication lines to

establish their own WAN More secure connection than a shared line Better data transfer speeds

Limitations◦ Company does not own what is leased e.g. hardware/software

(unable to modify)◦ Overall cost higher but spread out

12.13 What are the company benefits and drawbacks of leasing software, communication links and equipment?

People Hardware Software Communication Consumables Facilities & Power

12.14 What 6 internal resources need to be managed by organisations?

HR will be largely responsible for the management of the people◦ New appointments◦ Staff development◦ Pastoral care◦ Disciplinary procedures

Contracts outlining◦ job description◦ Responsibility◦ Chain of command◦ Disciplinary measures

Policies◦ Impact on security and acceptable use policies (and any other policies/procedures

employee must follow)

Training and Staff Development◦ Major impact on staff loyalty and retention

HR Management software can be used to support this

12.15 What issues should be considered with regards to People (as a resource)?

Procurement policies

Asset Registers◦ Database to store details of each piece of hardware,

location and technical specification◦ Log faults, repairs and updates◦ Helps with budgeting

Network operating system can monitor hardware

Backup power supplies

12.16 What issues should be considered with regards to Hardware (as a resource)?

Asset Management software◦ Records software installed on each machine

License Management software◦ Monitors software installed, versions and suitable licenses etc.◦ Important tool for compliance with Copyright and Patents Act

Network installations / Client workstation installations

Cloning software to push out software installations from the server

Anti Virus Applications

12.17 What issues should be considered with regards to Software (as a resource)?

Network management software◦ Creates reports on network traffic

Filtering software◦ Restrict access to certain websites

Conserve bandwidth Block sites that are inappropriate

Setting up a proxy server◦ Protects internal communication system

Sits between users and internet Only IP address visible to web server is that of the proxy (less use

to hackers than individual machine IPs) Proxy caches common web pages also making them quicker to

load

12.18 What issues should be considered with regards to Communication (as a resource)?

Network management software can control which users have access to which peripherals e.g. printers, scanners etc.

Print accounting software can control amount of printing done

Ordering and distribution of consumables must also be managed (audit log)

A support desk might be used to request supplies

A good relationship with suppliers helps ease purchasing and control stock

12.19 What issues should be considered with regards to Consumables (as a resource)?

Facilities◦ Owned or leased

◦ Health and safety legislation will impact: Design of room (AC, Cabling, spacing etc.) Furniture (adjustable swivel chairs etc.) Equipment (adjustable monitors etc.)

Power◦ Procurement policy will investigate consideration of suitable ‘green

computing’

◦ Training and Acceptable use policy should ensure that staff are aware of what they can do to reduce energy consumption (e.g. switch off machines)

◦ System settings can be configured to enable power saving options (sleep)

12.20 What issues should be considered with regards to Facilities and Power (as resources)?

Past Paper Questions

Past Paper Questions

Past Paper Questions

Past Paper Questions