One of the risks for Globshop is the potential loss of key system and process information when transferring it from the IT personnel to ISS’s personnel when they visited on-site. As IT staff were going to receive massive layoffs, user resistance arising from dissatisfaction of teaching their replacements would need to be managed in order for their vital knowledge of Globshop to be extracted. To resolve this issue, Globshop first were honest in announcing the layoffs and the staff although disgruntled appreciated being told the truth. Globshop then offered severance payments and significant bonuses in order to encourage IT personnel transfer their expert knowledge to ISS staff, thus managing resistance via these incentives which would thereby minimise the risk of information loss during the transfer.
Power of the vendor and the vendors’ ability to deliver are a set of risks that complimented each other in Globshop’s case. Globshop needed to ensure the vendor would be able to deliver (and be focused on delivering) on Globshop’s IT needs without being held hostage contractually. To manage these two risks, Globshop first decided to choose the medium sized ISS over tier 1 vendors to ensure they would be a main focus as opposed to being “just another client”. Once ISS was chosen, a focus on developing a partnership was emphasised. Using open communication channels to negotiate with ISS, as well as using communities of practices where experts from both companies convened, Interdependence was developed between the two companies. The open negotiations resulted in Globshop agreeing to invest IT initiatives with ISS who would bring the cost and strategic benefits (productivity, speed , agility etc) back from the initiative, creating a iterative benefit process. The communities of practice focused on bringing personnel from both companies together, and ensure ISS is completely infused into Globshop, making it essentially an extension to Globshop. The interdependence from these two tactics ensure that the power of the vendor is in balance with Globshop as both rely upon each other to financially and strategically survive, which furthermore would give ISS huge incentives to deliver its service to Globshop so they can mutually benefit.
Finally the risk of power of vendor comes back during the conclusion, where it states ISS has grown larger; taking additional clients and the shifts in its staff has distanced itself from what the relationship with Globshop once were. Thus with ISS being less dependent upon Globshop, it is suggested Globshop do the same by seeking additional vendors so it has more flexibility in negotiating and dealing with its vendors (as more vendors means Globshop can pit them against each other to make bids to suit Globshop’s benefit).
Another risk that was briefly discussed in the article was the risk of data security. This was touched on briefly, with the choice of an Indian Vendor over a Chinese due to more transparent and enforceable intellectual property laws and over Eastern Europe due to the compatible stability of the regions.
Culture is a risk that was also briefly touched. With different cultures come different work and social ethics. This will mean confusing may arise as different meaning of phrases, colloquialism and accents may create confusing between Globshop and ISS. Therefore, specific training sessions were set up to teach the different cultural values for both sides, minimising any culture risks arising between the two companies.
One of the main risks of Globshop's outsourcing strategy is that they can place far too much reliance on their outsourced company, ISS. This may mean that if changes in ISS occur, such as choosing to drop many of their best employees from Globshop as they have far larger clients, then Globshop will be at a huge risk. Another risk, that links with being too reliant, is if they eventually reduce their I.T. department completely internally and place their tasks into ISS. This may mean that many core comptencies of the business are outsourced, giving them a limited amount of flexibility for future potential expansion if ISS has to be aligned with what Globshop needs. This is extremely risky, especially if they continue to become more reliant. Globshop has appreciated the risks, and has looked into alternatives such as finding other vendors to put more tasks into, as well as being aware that large projects (such as the EDI project) would likely be too critical to outsource. While it is positive that Globshop appreciates their weaknesses, they need to act on mitigating these risks, as ISS is only getting bigger, meaning that ISS will potentially only treat Globshop increasingly less significant with time.
I believe that they had several risks that Globshop took to offshore their clash of cultural and language difference and reliance towards ISS. It is first necessary to explain their culture and language difference due to the fact that their union with ISS is their greatest achievement thus any dispute or difference within their relationship is considered crucial. With this in mind, we can see Globshop had some misunderstanding with ISS such as “the on-site resources were not as effective working with our business partners as we are hoped” as illustrated in the quotation, we see that such mistakes has cost Globshop time and money due to miscommunication between them. However, it is evident that the Globshop anticipated such risk and they were able to take immediate action and conducted training session. Though they were able to manage it, there will still be confusion and difference not only in culture but in value and ways to accomplish tasks. With this, there is a possible user resistance emerging if they are unable to make this transition as easier as it can be. Secondly, Reliance towards ISS is another risk that Globshop will face in their outsourcing strategy. As stated in the case, “the company has become critically dependent on ISS for many of IT operations” due to this, I question the manager’s origin decision, which is: Is outsourcing to one particular offshore vendor a best cause of action? Is it really worth it? I believe reliance to one vendor is a huge risk especially to an offshore vendor as there is a geopolitical risk which Jocelyn talked about in the Strategic information system management. Let’s presume, India has another hail storm or flooding, all their merchandise and IT work will be gone. Thus, were they able to manage this risk? No they didn't. However as far as what I think on this issue, I think that Globshop has come so far and in order for them to prosper I would propose they concur with Neal Parker claim that they shouldn't put all their eggs in one basket.
As Rory has said, one of the main risks that Globshop face is the risk of being too reliant on ISS, their outsourcing company. This is a risk as Globshop could face the consequences from any decisions that ISS make in the future about changing their policies or business processes. If ISS do change anything, Globshop will not be in a good position as they have outsourced so much of their IT function to ISS. As ISS are becoming bigger, they have shifted their key employees to more important clients, away from Globshop. This has put Globshop on guard as they now believe that ISS have grown so big that their relationship with Globshop is insignificant compared to before and ISS do not care for Globshops' needs as they did before. Seeing this risk, they are considering shifting their IT outsourcing to multiple vendors instead of 'placing all their eggs in one basket'. Doing so can make Globshop have greater control over IT function as it's all no longer reliant on one company, but multiple companies, meaning a change with one company would not affect Globshop as much.
Another risk Globshop face is losing key IT staff without being able to extract their knowledge of the IT structure and processes for other employees to use. This is a risk as after these key employees leave, their jobs could not be done by anyone else due to the difference in knowledge. To transfer this knowledge from their IT staff to other staff, Globshop have offered them hefty bonuses to make sure that the knowledge remains within their company and so the IT function can continue as before without problems.
It’s interesting to analyze the risks of GlobShop’s outsourcing strategy since I got a feeling that their biggest risk is connected to their greatest asset. As mentioned earlier there is a major risk in getting over-reliant on ISS. However, it is the closeness in the collaboration that, for instance, has enabled the “COPs” initiative that can be a critical component in the search for new IT opportunities that can provide a way to attain and sustain a competitive advantage. Although, how far can GlobShop let ISS in? Where do they draw the line, and protect information and processes and not expose it to potential risks… I think GlobShop must analyze its own IS capabilities and value and determine if it’s worth to outsource or insource. If large projects such as the EDI project is something that they can build competitive advantage on in the future maybe it’s wise to not outsource… but on the other hand maybe ISS can provide solutions that makes the project excel. The answer depends on how critical the EDI is for GlobShop.
Globshop understands that there are a number of risks they will encounter when outsourcing IT components to ISS. One such risk is the possibility that, when continuing to broaden the projects outsourced to ISS, Globshop may become over-dependent on the single overseas vendor. To mitigate this risk, Roger and his team have decided to explore the possibility of using multiple vendors so that not all their eggs are in one basket. And other risk for Globshop is that there is a risk of removing or drastically reducing the IT function too much, with the increase in outsourcing spurred on by attractive cost-cutting possibilities promised. This is a risk, both when Globshop is using one or multiple vendors, as it could mean less flexibility of change of business processes due to IT-Business alignment delays and not-ideal communication. One option Globshop has considered in order to reduce this risk is to keep some business-critical projects and functions in-house. Another obvious risk is the possibility of less-than-ideal communication between Globshop and overseas vendors such as ISS. This would be caused by asynchronous communication caused by very different timezones, language and culture barriers. Not much can be done to mitigate this risk and Globshop does not seem to have a significant plan in place to reduce it.
Majority are favour with too much reliance with ISS. Other main risks that I found for Globshop's outsourcing strategy are mainly, reduction and transition of resources as seen as cost saving approach and also, ISS capability of managing expanding huge business (ISS side).
In reduction and transition of (human) resources, this means that through cost-reduction efforts, the business processes will be integrate and standardise to improve business efficiency. The reason why reduction and transition of resources is one of the main risks because it puts the whole business at stake. The case was mentioned that "to transform the way we run our business". Reduction and transition of resources involves radical changes in the business strategy. Through these changes, issues arise in organisation. These are increasing resistance, staff reduction and losing valuable employees and cultural barriers. The risk managed by providing support or "severance pay" for those terminated employees. Globshop also provided training sessions and workshops for offshore staff and global IT team to avoid cultural and social differences.
In ISS capability of managing expanding huge business, the case was also mentioned that when time Globshop choosing the right partner, "At that time, ISS was a medium-sized, yet growing company". When we go back to the Globshop main objective, "our main task is to focus on improving our retail business". Also, "Globshop was willing to move newer IT projects offshore". Through the offshoring experienced that Globshop had, it made them more competitive and strive to improve their business. However, the question is, is it possible for ISS to handle a growing business? what if, ISS failed to do the so? This will possibly have an impact to business's performance. Also, Roger wondered that "if Globshop would continue to receive the 'special treatment' it got from ISS". The risk managed by "mulling over using multiple offshore vendors". The top level management still deciding on using multiple offshore vendors.
Like what others have said above I also believe that the main risk of Globshop’s ourtsourcing strategy was their over reliance on one vendor (ISS). Also their over reliance on ISS Project managers like Rahul Sharma who had developed great relationships with Globshop. This is a big risk in that there is potential in outsourcing too many responsibilities and end up in the situation they are in where they are questioning their relationship with the one vendor and dealing with the loss of their star ISS employees like Rahul who have been promoted to work with other companies. “The company has become critically dependent on ISS for many of its IT operations.” In mitigating this risk they have and are looking for other vendors which is clearly explained by one of Globshop’s employees, “we don’t want all our eggs in one basket Also from the very beginning Globshop was very cautious in not being too dependent on one vendor and to not give out mission critical IT tasks. They also restrained from outsourcing mission critical tasks.
In taking a more aggressive outsourcing approach than initially anticipated it was risky that they made decisions so fast. Especially when they reduced a significant amount of Globshop’s IT workforce. This was made worse by how “Globshop did not have a good documentation of its IT systems and applications.” Resulting with knowledge transfer becoming a big concern as a lot of knowledge was in the workers heads. Also with the fast transition in Globshop having to work with offshore staff, cultural and social differences arose. To help manage the risk of losing IT knowledge from those that were laid off Globshop put in place retention pay and assisted with career transition. This and the open communication between Globshop and those losing their jobs helped immensely in reducing any resistance in trying to retain and transfer IT knowledge. In dealing with cultural and social differences Globshop provided training sessions/ workshops.
With Globshop and Outsourcing Management I see the main risks of Globshop’s outsourcing strategy as being too reliant on the company they are using for outsourcing which is the ISS. As ISS is in particular demand there is a chance that they may decide not to take on Globshop an therby would be leaving Globshop in the lurch. This would mean that Globshop would have to find a new outsourcing company which could take weeks or months to find. In my opinion their reliance on the outsourcing company ISS is their biggest risk as they are in a way also loosing control over their own business. so far from what I can see Glob shop have managed this risks so far by looking at alternative methods to outsource as stated in the case that they have realised that they have become too dependant on the ISS and as they fear that their dependence has reached a critical level. They are now looking to manage the risk by looking at splitting their outsourcing work to multiple vendors therby giving them the approach that they would be less likely at risk as the outsourcing would be spread out. As stated by many people already in the Blog that by ISS getting bigger by the day it leaves Globshop as a potential risk that the ISS will treat Globshop less significant over the time.
Risk 1: Being over dependent on Indo-Systems Solutions (ISS), many of the profits from projects they reinvest back into IT for ISS to generate more revenue for them. Solution 1: They managed this risk by investigating other offshore vendors.
Risk 2: Loosing key knowledge from employees Solution 2: GlobShop has a moral “open communication is very important” before the layoffs GlobShop management were very picking in maintaining the right people and extracting “critical knowledge from affected workers to other staff and the vendor”. The managed this risk by letting the workers know of every phase of the redundancy process, by having them in the loop allowed them to understand it better and actually accept the change and continue helping the change not halt it. The key – honesty.
Risk 3: Cultural and social differences, both India and the US are very different and knowledge of both countries and what they are like and how they act is important to keep organisation objectives in line and to keep projects from failing. Solution 3: Roger implemented specific training sessions and workshops for vendor and GlobShop to align together in understanding each other’s culture and values.
Multiple risks arise with Globshop’s outsourcing strategy however I also agree that the main risk for the company is that they are heavily reliant on ISS (the outsourced company). Globshop have found they are critically dependent on ISS for many of its IT operations. Even some managers at Globshop believe it’s too risky for the company to work with just a single offshore vendor as they prefer to spread the work to multiple vendors. The Manager at the Global Data Center, Larry Katz, said when the company initially started working with ISS, Globshop wanted to be able to pull out of the relationship at any time. However the current situation is that Globshop have become too dependent on the outsourcer, ISS. There is fear that the company’s dependence has reached a critical level as ISS have grown big and could do without their account. ISS would want to focus on their clients that are more valuable to them. This is risky as it possible Globshop could not live without them due to having outsourced many IT operations.
If Globshop worked with a few vendors, the risk would be spread. Multiple vendors are possible due the significant growth on the offshore market; some others are more competent whist cheaper also. Globshop have investigated into this and looked at alternative vendors to outsource smaller tasks to. There is also apprehension about giving the offshore partner their entire project (such as the advance EDI linkages). Due to ISS constantly growing, Globshop need to find ways to reduce the risk as ISS will not see Globshop as an important client, they will focus on clients that matter most to them.
It is evident that one of the main risks of Globshop’s outsourcing strategy is failing to maintain a strong relationship with the vendor. The vendor, in this case Indo-Systems Solutions (ISS), is responsible for meeting their client, Globshop’s needs. ISS must understand the culture and values in place at Globshop as well as their products and their process. If they fail to do so, they would have provided a service which did not meet the expectations of Globshop. Globshop had created a strong relationship between the two parties by adopting a “partnership approach”. ISS became more of a strategic partner rather than a service provider. When ISS was given the responsibility of production support for core merchandising systems, ISS sent it’s personal to each region. They spent several weeks on-site, learning and documenting the processes systems and related issues. In addition Globshop’s IT staff worked closely with ISS’s personal this lead to easy knowledge transfer and transition. In addition creation of the ‘communities of practise’ teams by CIO Roger Deen created a tighter partnership and allowed ISS to play a more proactive role in providing value-added services. These teams consisted of core project participants and staff from the offshore vendor.
Another risk is that Globshop’s outsourcing strategy is becoming highly dependent on ISS for IT operations. Originally Globshop chose ISS as the vendor as they were a medium-sized, growing company, in which the firm could be a meaningful client and could get all the attention and resourced needed. Globshop also entered into short-term agreements with ISS giving them the option to release themselves from the relationship early if needed. Over time as they saw ISS to be reliable they extended their outsourcing relationship with ISS. A problem occurred when ISS grew as a firm and became one of the leading offshore vendors in India. The attention that Globshop was previously given was now diminishing. Globshop felt that ISS were diverting there ‘star employees’ and resources to more prestigious clients. Therefore Globshop are managing this risk by contemplating whether to shift their IT outsourcing to multiple vendors instead of being dependent on one vendor.
I would have to agree with my fellow students in this blog who identified one of the main risks of GlobShop’s outsourcing strategy is that they placed too much reliance on their outsourced company ISS. This could potentially mean that if changes in ISS occur, such as choosing to drop many of their best employees from GlobShop as they have more fortune 1000 firms, then GlobShop will be at a huge risk. This did take place in the case as Rahul Sharma and two of ISS’s on-site project managers were promoted and transferred to other clients. This caused issues for GlobShop and they actually had to request a change in managers at a point in time. Another risk, that follows on from the previous risk is being too reliant. If Globshop eventually reduce their entire IT department internally and place all task with ISS, this will mean core competencies of the business are outsourced. This will limit the amount of flexibility for future growth and expansion if it requires ISS to always be aligned with Globshop needs. GlobShop has identified the risks, and has begun looking into finding alternative vendors to put more business tasks into, to reduce the level of risk they have with ISS. It is the company’s belief despite the success of offshore projects, entrusting the responsibility of critical projects like supply chain initiatives to an offshore vendor is ‘too risky’. Thus GlobShop need to act on minimising these risks as ISS has grown to become one of the leading offshore vendors in India. Meaning that with every client added to ISS, it will potentially mean treating GlobShop with less significance.
The main risks confronting Globshop’s outsourcing strategy were knowledge transfer, and becoming too dependent on ISS. The speed at which the handover of IT services the handover had to occur further strengthened the risks, with 9 months being a very short period to transfer the full knowledge of a range of different systems to an external organisation. Knowledge transfer was a huge risk to Globshop. They planned on losing 4/5 staff, and with them the extensive knowledge of their systems that had been built up, in some cases over 25 years. Globshop did not have good documentation of their systems so a large amount of documentation had to be created from the current staff. They mitigated the risk of staff resistance by communicating the process very openly. Staff were aware of what was going on with the merge and the likelihood of losing their employment. This was combined with bonuses for staff who stayed for a time period to productively transfer the knowledge they had. This allowed a successful management of the risk associated with moving knowledge to the offshore vendor. Becoming too dependent of ISS for IT services is another major risk. Moving the majority of IT services offshore introduces a situation where the in-depth knowledge of your systems is held by an external organisation, meaning that if the vendor is changed the knowledge can potentially be lost. The other issue that it introduces is a heavy reliance on relationship management. If a good working relationship is not maintained, knowledge can be held at ransom. Changing suppliers becomes very difficult as breaking away has such a large upfront cost. This puts the vendor in a position where they can charge more and more for their services. Globshop managed this risk by entering a partnership relationship with ISS. They aligned their goals to benefit both parties. Globshop made sure their staff were cooperative and offered full support during the transfer of knowledge. This allowed for ISS staff to work onshore until they had solidified their knowledge enough to move back offshore. Having staff onshore further strengthened the relationship between the two organisations.
I agree with my classmates and think that the main risk of GlobShop's outsourcing strategy is the dependency they now have on ISS. With outsourcing so many IT processes they lose control of these and are reliant on the external vendor. ISS is now a big part of their company and they rely on them heavily. In contrast, GlobShop is just one of many clients that ISS has and their relationship isn’t very important to the success of their business. GlobShop has tried to manage this risk by not outsourcing too many of their functions. They have also spread the risk of something occurring in one of the outsourcing locations by having multiple locations they outsource to. They also have a good relationship with ISS which has been developed to ensure they get a good personal service.
I found the biggest from the company’s outsourcing strategy is its dependency on ISS to take over projects and provides supports that are critical to company’s competitiveness. The point about company was being reliant on its overseas vendor has been discussed earlier by other colleagues. I think Globshop’s strategy may be very advantageous for short-term goal, which is to minimize operation cost in respond to the dynamic market but not for long-term objectives. Cost saving and seeking for the right expertise outside the company might be the strongest driver for offshore outsourcing. However neglecting to invest in its own IT capabilities such as structure and people can also put company at a greater risks. As a result, company may lack in IT capabilities which will make itself more fragile to risks because they don’t have a backup if unexpected event occur.
During the 3 years outsourcing contract Globshop has successfully built a healthy relationship with vendors, which shows the company’s effort to anticipate potential risks for outsourcing. The success of its outsourcing experience derived from its capabilities implementing Global IS vendor management and change management. For successful vendor management, prior to outsourcing decision, it conducted offshore screening to choose the right region for outsourcing. The responsibilities and expectation from both vendors and Globshop are documented on the MSA (master service agreement). In terms of IS change management, the company provided supports and training and clear communication with its employees to anticipate major resistance.
The main risk that I see of Globshop’s outsourcing strategy is the extent of the company’s reliance on ISS, where the company has become critically dependent on ISS for many of its IT operations. This is seen as a risk because by placing heavy reliance on their outsourcing vendor, it means they are giving up its IT functions and makes the company give up any real potential to develop them for competitive advantage. This is shown when the company has become critically dependent on ISS for many of its IT operations. Some of the Globshop managers felt it was risky to work with one single offshore vendor. When ownership is shared with ISS, then the advantage may become available to the outsourcing providers other clients. There is also the chance of Globshop it leaves little recourse in terms of terminating troublesome vendor relationships.
Globshop has managed this risk by considering to “…spread the work to multiple vendors”. This is so it ensures that Globshop doesn’t place all its outsourcing processes to one company as the offshore market as it has grown, offering the potential to work with other vendors, who may be competent as well as cheaper. By implementing an aggressive offshore strategy, it reduces the significant portion of the IT workforce. Roger wanted to forge a tighter partnership so that ISS could play a more proactive role in providing value-added service as well as identifying newer IT opportunities. By changing the informal relationship and develop a more formal structure for working together they created teams called ‘communities of practice’ (COPs).
I do agree with the others. One significant risk facing Globshop is their reliance or potential reliance on ISS. While in the beginning they choose specifically a company who weren’t so big, so Globshop could ensure the partnership between them and their vendor would be important to the outsourcing company, things had changed. However, ISS have grown and become more successful reducing their need to work or do business with Globshop. This means they could pull out whenever they desire, and won’t be affected by such actions. On the other hand, Globshop, have become, or are becoming very reliant on ISS. A concerned Rogers expressed was their critical reliance on ISS. This is an issue, because if ISS decide to cancel their outsourcing contracts with Globshop, it could significantly harm them. Initially, Globspot wanted to have the ability to enter into this outsourcing agreement, and pull out freely and easily if ever a time required them to do so. Now, it will be hard for them to work without IS, they will struggle to continue running their business as well as they once did when ISS worked for them.
Like Alisha said, one way in managing this risk is by splitting the different vendors. This way there won't be a risk losing one vendor and losing all your capabilities or ability to carry out your normal work. Instead only a small amount will be disadvantaged but the business will still be able to function as normal since there are many other vendors still working for Globshop.
One of the risks for Globshop is the potential loss of key system and process information when transferring it from the IT personnel to ISS’s personnel when they visited on-site. As IT staff were going to receive massive layoffs, user resistance arising from dissatisfaction of teaching their replacements would need to be managed in order for their vital knowledge of Globshop to be extracted.
ReplyDeleteTo resolve this issue, Globshop first were honest in announcing the layoffs and the staff although disgruntled appreciated being told the truth. Globshop then offered severance payments and significant bonuses in order to encourage IT personnel transfer their expert knowledge to ISS staff, thus managing resistance via these incentives which would thereby minimise the risk of information loss during the transfer.
Power of the vendor and the vendors’ ability to deliver are a set of risks that complimented each other in Globshop’s case. Globshop needed to ensure the vendor would be able to deliver (and be focused on delivering) on Globshop’s IT needs without being held hostage contractually.
To manage these two risks, Globshop first decided to choose the medium sized ISS over tier 1 vendors to ensure they would be a main focus as opposed to being “just another client”. Once ISS was chosen, a focus on developing a partnership was emphasised. Using open communication channels to negotiate with ISS, as well as using communities of practices where experts from both companies convened, Interdependence was developed between the two companies.
The open negotiations resulted in Globshop agreeing to invest IT initiatives with ISS who would bring the cost and strategic benefits (productivity, speed , agility etc) back from the initiative, creating a iterative benefit process.
The communities of practice focused on bringing personnel from both companies together, and ensure ISS is completely infused into Globshop, making it essentially an extension to Globshop.
The interdependence from these two tactics ensure that the power of the vendor is in balance with Globshop as both rely upon each other to financially and strategically survive, which furthermore would give ISS huge incentives to deliver its service to Globshop so they can mutually benefit.
Finally the risk of power of vendor comes back during the conclusion, where it states ISS has grown larger; taking additional clients and the shifts in its staff has distanced itself from what the relationship with Globshop once were. Thus with ISS being less dependent upon Globshop, it is suggested Globshop do the same by seeking additional vendors so it has more flexibility in negotiating and dealing with its vendors (as more vendors means Globshop can pit them against each other to make bids to suit Globshop’s benefit).
Another risk that was briefly discussed in the article was the risk of data security. This was touched on briefly, with the choice of an Indian Vendor over a Chinese due to more transparent and enforceable intellectual property laws and over Eastern Europe due to the compatible stability of the regions.
Culture is a risk that was also briefly touched. With different cultures come different work and social ethics. This will mean confusing may arise as different meaning of phrases, colloquialism and accents may create confusing between Globshop and ISS. Therefore, specific training sessions were set up to teach the different cultural values for both sides, minimising any culture risks arising between the two companies.
One of the main risks of Globshop's outsourcing strategy is that they can place far too much reliance on their outsourced company, ISS. This may mean that if changes in ISS occur, such as choosing to drop many of their best employees from Globshop as they have far larger clients, then Globshop will be at a huge risk. Another risk, that links with being too reliant, is if they eventually reduce their I.T. department completely internally and place their tasks into ISS. This may mean that many core comptencies of the business are outsourced, giving them a limited amount of flexibility for future potential expansion if ISS has to be aligned with what Globshop needs. This is extremely risky, especially if they continue to become more reliant.
ReplyDeleteGlobshop has appreciated the risks, and has looked into alternatives such as finding other vendors to put more tasks into, as well as being aware that large projects (such as the EDI project) would likely be too critical to outsource. While it is positive that Globshop appreciates their weaknesses, they need to act on mitigating these risks, as ISS is only getting bigger, meaning that ISS will potentially only treat Globshop increasingly less significant with time.
I believe that they had several risks that Globshop took to offshore their clash of cultural and language difference and reliance towards ISS. It is first necessary to explain their culture and language difference due to the fact that their union with ISS is their greatest achievement thus any dispute or difference within their relationship is considered crucial. With this in mind, we can see Globshop had some misunderstanding with ISS such as “the on-site resources were not as effective working with our business partners as we are hoped” as illustrated in the quotation, we see that such mistakes has cost Globshop time and money due to miscommunication between them. However, it is evident that the Globshop anticipated such risk and they were able to take immediate action and conducted training session. Though they were able to manage it, there will still be confusion and difference not only in culture but in value and ways to accomplish tasks. With this, there is a possible user resistance emerging if they are unable to make this transition as easier as it can be. Secondly, Reliance towards ISS is another risk that Globshop will face in their outsourcing strategy. As stated in the case, “the company has become critically dependent on ISS for many of IT operations” due to this, I question the manager’s origin decision, which is: Is outsourcing to one particular offshore vendor a best cause of action? Is it really worth it? I believe reliance to one vendor is a huge risk especially to an offshore vendor as there is a geopolitical risk which Jocelyn talked about in the Strategic information system management. Let’s presume, India has another hail storm or flooding, all their merchandise and IT work will be gone. Thus, were they able to manage this risk? No they didn't. However as far as what I think on this issue, I think that Globshop has come so far and in order for them to prosper I would propose they concur with Neal Parker claim that they shouldn't put all their eggs in one basket.
ReplyDeleteAs Rory has said, one of the main risks that Globshop face is the risk of being too reliant on ISS, their outsourcing company. This is a risk as Globshop could face the consequences from any decisions that ISS make in the future about changing their policies or business processes. If ISS do change anything, Globshop will not be in a good position as they have outsourced so much of their IT function to ISS. As ISS are becoming bigger, they have shifted their key employees to more important clients, away from Globshop. This has put Globshop on guard as they now believe that ISS have grown so big that their relationship with Globshop is insignificant compared to before and ISS do not care for Globshops' needs as they did before. Seeing this risk, they are considering shifting their IT outsourcing to multiple vendors instead of 'placing all their eggs in one basket'. Doing so can make Globshop have greater control over IT function as it's all no longer reliant on one company, but multiple companies, meaning a change with one company would not affect Globshop as much.
ReplyDeleteAnother risk Globshop face is losing key IT staff without being able to extract their knowledge of the IT structure and processes for other employees to use. This is a risk as after these key employees leave, their jobs could not be done by anyone else due to the difference in knowledge. To transfer this knowledge from their IT staff to other staff, Globshop have offered them hefty bonuses to make sure that the knowledge remains within their company and so the IT function can continue as before without problems.
It’s interesting to analyze the risks of GlobShop’s outsourcing strategy since I got a feeling that their biggest risk is connected to their greatest asset. As mentioned earlier there is a major risk in getting over-reliant on ISS. However, it is the closeness in the collaboration that, for instance, has enabled the “COPs” initiative that can be a critical component in the search for new IT opportunities that can provide a way to attain and sustain a competitive advantage. Although, how far can GlobShop let ISS in? Where do they draw the line, and protect information and processes and not expose it to potential risks… I think GlobShop must analyze its own IS capabilities and value and determine if it’s worth to outsource or insource. If large projects such as the EDI project is something that they can build competitive advantage on in the future maybe it’s wise to not outsource… but on the other hand maybe ISS can provide solutions that makes the project excel. The answer depends on how critical the EDI is for GlobShop.
ReplyDeleteGlobshop understands that there are a number of risks they will encounter when outsourcing IT components to ISS. One such risk is the possibility that, when continuing to broaden the projects outsourced to ISS, Globshop may become over-dependent on the single overseas vendor. To mitigate this risk, Roger and his team have decided to explore the possibility of using multiple vendors so that not all their eggs are in one basket. And other risk for Globshop is that there is a risk of removing or drastically reducing the IT function too much, with the increase in outsourcing spurred on by attractive cost-cutting possibilities promised. This is a risk, both when Globshop is using one or multiple vendors, as it could mean less flexibility of change of business processes due to IT-Business alignment delays and not-ideal communication. One option Globshop has considered in order to reduce this risk is to keep some business-critical projects and functions in-house. Another obvious risk is the possibility of less-than-ideal communication between Globshop and overseas vendors such as ISS. This would be caused by asynchronous communication caused by very different timezones, language and culture barriers. Not much can be done to mitigate this risk and Globshop does not seem to have a significant plan in place to reduce it.
ReplyDeleteMajority are favour with too much reliance with ISS. Other main risks that I found for Globshop's outsourcing strategy are mainly, reduction and transition of resources as seen as cost saving approach and also, ISS capability of managing expanding huge business (ISS side).
ReplyDeleteIn reduction and transition of (human) resources, this means that through cost-reduction efforts, the business processes will be integrate and standardise to improve business efficiency. The reason why reduction and transition of resources is one of the main risks because it puts the whole business at stake. The case was mentioned that "to transform the way we run our business". Reduction and transition of resources involves radical changes in the business strategy. Through these changes, issues arise in organisation. These are increasing resistance, staff reduction and losing valuable employees and cultural barriers. The risk managed by providing support or "severance pay" for those terminated employees. Globshop also provided training sessions and workshops for offshore staff and global IT team to avoid cultural and social differences.
In ISS capability of managing expanding huge business, the case was also mentioned that when time Globshop choosing the right partner, "At that time, ISS was a medium-sized, yet growing company". When we go back to the Globshop main objective, "our main task is to focus on improving our retail business". Also, "Globshop was willing to move newer IT projects offshore". Through the offshoring experienced that Globshop had, it made them more competitive and strive to improve their business. However, the question is, is it possible for ISS to handle a growing business? what if, ISS failed to do the so? This will possibly have an impact to business's performance. Also, Roger wondered that "if Globshop would continue to receive the 'special treatment' it got from ISS". The risk managed by "mulling over using multiple offshore vendors". The top level management still deciding on using multiple offshore vendors.
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ReplyDeleteLike what others have said above I also believe that the main risk of Globshop’s ourtsourcing strategy was their over reliance on one vendor (ISS). Also their over reliance on ISS Project managers like Rahul Sharma who had developed great relationships with Globshop. This is a big risk in that there is potential in outsourcing too many responsibilities and end up in the situation they are in where they are questioning their relationship with the one vendor and dealing with the loss of their star ISS employees like Rahul who have been promoted to work with other companies. “The company has become critically dependent on ISS for many of its IT operations.” In mitigating this risk they have and are looking for other vendors which is clearly explained by one of Globshop’s employees, “we don’t want all our eggs in one basket Also from the very beginning Globshop was very cautious in not being too dependent on one vendor and to not give out mission critical IT tasks. They also restrained from outsourcing mission critical tasks.
ReplyDeleteIn taking a more aggressive outsourcing approach than initially anticipated it was risky that they made decisions so fast. Especially when they reduced a significant amount of Globshop’s IT workforce. This was made worse by how “Globshop did not have a good documentation of its IT systems and applications.” Resulting with knowledge transfer becoming a big concern as a lot of knowledge was in the workers heads. Also with the fast transition in Globshop having to work with offshore staff, cultural and social differences arose. To help manage the risk of losing IT knowledge from those that were laid off Globshop put in place retention pay and assisted with career transition. This and the open communication between Globshop and those losing their jobs helped immensely in reducing any resistance in trying to retain and transfer IT knowledge. In dealing with cultural and social differences Globshop provided training sessions/ workshops.
With Globshop and Outsourcing Management I see the main risks of Globshop’s outsourcing strategy as being too reliant on the company they are using for outsourcing which is the ISS. As ISS is in particular demand there is a chance that they may decide not to take on Globshop an therby would be leaving Globshop in the lurch. This would mean that Globshop would have to find a new outsourcing company which could take weeks or months to find. In my opinion their reliance on the outsourcing company ISS is their biggest risk as they are in a way also loosing control over their own business. so far from what I can see Glob shop have managed this risks so far by looking at alternative methods to outsource as stated in the case that they have realised that they have become too dependant on the ISS and as they fear that their dependence has reached a critical level. They are now looking to manage the risk by looking at splitting their outsourcing work to multiple vendors therby giving them the approach that they would be less likely at risk as the outsourcing would be spread out. As stated by many people already in the Blog that by ISS getting bigger by the day it leaves Globshop as a potential risk that the ISS will treat Globshop less significant over the time.
ReplyDeleteRisk 1: Being over dependent on Indo-Systems Solutions (ISS), many of the profits from projects they reinvest back into IT for ISS to generate more revenue for them.
ReplyDeleteSolution 1: They managed this risk by investigating other offshore vendors.
Risk 2: Loosing key knowledge from employees
Solution 2: GlobShop has a moral “open communication is very important” before the layoffs GlobShop management were very picking in maintaining the right people and extracting “critical knowledge from affected workers to other staff and the vendor”. The managed this risk by letting the workers know of every phase of the redundancy process, by having them in the loop allowed them to understand it better and actually accept the change and continue helping the change not halt it. The key – honesty.
Risk 3: Cultural and social differences, both India and the US are very different and knowledge of both countries and what they are like and how they act is important to keep organisation objectives in line and to keep projects from failing.
Solution 3: Roger implemented specific training sessions and workshops for vendor and GlobShop to align together in understanding each other’s culture and values.
Multiple risks arise with Globshop’s outsourcing strategy however I also agree that the main risk for the company is that they are heavily reliant on ISS (the outsourced company). Globshop have found they are critically dependent on ISS for many of its IT operations. Even some managers at Globshop believe it’s too risky for the company to work with just a single offshore vendor as they prefer to spread the work to multiple vendors. The Manager at the Global Data Center, Larry Katz, said when the company initially started working with ISS, Globshop wanted to be able to pull out of the relationship at any time. However the current situation is that Globshop have become too dependent on the outsourcer, ISS. There is fear that the company’s dependence has reached a critical level as ISS have grown big and could do without their account. ISS would want to focus on their clients that are more valuable to them. This is risky as it possible Globshop could not live without them due to having outsourced many IT operations.
ReplyDeleteIf Globshop worked with a few vendors, the risk would be spread. Multiple vendors are possible due the significant growth on the offshore market; some others are more competent whist cheaper also. Globshop have investigated into this and looked at alternative vendors to outsource smaller tasks to. There is also apprehension about giving the offshore partner their entire project (such as the advance EDI linkages). Due to ISS constantly growing, Globshop need to find ways to reduce the risk as ISS will not see Globshop as an important client, they will focus on clients that matter most to them.
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ReplyDeleteIt is evident that one of the main risks of Globshop’s outsourcing strategy is failing to maintain a strong relationship with the vendor. The vendor, in this case Indo-Systems Solutions (ISS), is responsible for meeting their client, Globshop’s needs. ISS must understand the culture and values in place at Globshop as well as their products and their process. If they fail to do so, they would have provided a service which did not meet the expectations of Globshop. Globshop had created a strong relationship between the two parties by adopting a “partnership approach”. ISS became more of a strategic partner rather than a service provider. When ISS was given the responsibility of production support for core merchandising systems, ISS sent it’s personal to each region. They spent several weeks on-site, learning and documenting the processes systems and related issues. In addition Globshop’s IT staff worked closely with ISS’s personal this lead to easy knowledge transfer and transition. In addition creation of the ‘communities of practise’ teams by CIO Roger Deen created a tighter partnership and allowed ISS to play a more proactive role in providing value-added services. These teams consisted of core project participants and staff from the offshore vendor.
ReplyDeleteAnother risk is that Globshop’s outsourcing strategy is becoming highly dependent on ISS for IT operations. Originally Globshop chose ISS as the vendor as they were a medium-sized, growing company, in which the firm could be a meaningful client and could get all the attention and resourced needed. Globshop also entered into short-term agreements with ISS giving them the option to release themselves from the relationship early if needed. Over time as they saw ISS to be reliable they extended their outsourcing relationship with ISS. A problem occurred when ISS grew as a firm and became one of the leading offshore vendors in India. The attention that Globshop was previously given was now diminishing. Globshop felt that ISS were diverting there ‘star employees’ and resources to more prestigious clients. Therefore Globshop are managing this risk by contemplating whether to shift their IT outsourcing to multiple vendors instead of being dependent on one vendor.
I would have to agree with my fellow students in this blog who identified one of the main risks of GlobShop’s outsourcing strategy is that they placed too much reliance on their outsourced company ISS. This could potentially mean that if changes in ISS occur, such as choosing to drop many of their best employees from GlobShop as they have more fortune 1000 firms, then GlobShop will be at a huge risk. This did take place in the case as Rahul Sharma and two of ISS’s on-site project managers were promoted and transferred to other clients. This caused issues for GlobShop and they actually had to request a change in managers at a point in time.
ReplyDeleteAnother risk, that follows on from the previous risk is being too reliant. If Globshop eventually reduce their entire IT department internally and place all task with ISS, this will mean core competencies of the business are outsourced. This will limit the amount of flexibility for future growth and expansion if it requires ISS to always be aligned with Globshop needs.
GlobShop has identified the risks, and has begun looking into finding alternative vendors to put more business tasks into, to reduce the level of risk they have with ISS. It is the company’s belief despite the success of offshore projects, entrusting the responsibility of critical projects like supply chain initiatives to an offshore vendor is ‘too risky’. Thus GlobShop need to act on minimising these risks as ISS has grown to become one of the leading offshore vendors in India. Meaning that with every client added to ISS, it will potentially mean treating GlobShop with less significance.
The main risks confronting Globshop’s outsourcing strategy were knowledge transfer, and becoming too dependent on ISS. The speed at which the handover of IT services the handover had to occur further strengthened the risks, with 9 months being a very short period to transfer the full knowledge of a range of different systems to an external organisation.
ReplyDeleteKnowledge transfer was a huge risk to Globshop. They planned on losing 4/5 staff, and with them the extensive knowledge of their systems that had been built up, in some cases over 25 years. Globshop did not have good documentation of their systems so a large amount of documentation had to be created from the current staff. They mitigated the risk of staff resistance by communicating the process very openly. Staff were aware of what was going on with the merge and the likelihood of losing their employment. This was combined with bonuses for staff who stayed for a time period to productively transfer the knowledge they had. This allowed a successful management of the risk associated with moving knowledge to the offshore vendor.
Becoming too dependent of ISS for IT services is another major risk. Moving the majority of IT services offshore introduces a situation where the in-depth knowledge of your systems is held by an external organisation, meaning that if the vendor is changed the knowledge can potentially be lost. The other issue that it introduces is a heavy reliance on relationship management. If a good working relationship is not maintained, knowledge can be held at ransom. Changing suppliers becomes very difficult as breaking away has such a large upfront cost. This puts the vendor in a position where they can charge more and more for their services. Globshop managed this risk by entering a partnership relationship with ISS. They aligned their goals to benefit both parties. Globshop made sure their staff were cooperative and offered full support during the transfer of knowledge. This allowed for ISS staff to work onshore until they had solidified their knowledge enough to move back offshore. Having staff onshore further strengthened the relationship between the two organisations.
I agree with my classmates and think that the main risk of GlobShop's outsourcing strategy is the dependency they now have on ISS. With outsourcing so many IT processes they lose control of these and are reliant on the external vendor. ISS is now a big part of their company and they rely on them heavily. In contrast, GlobShop is just one of many clients that ISS has and their relationship isn’t very important to the success of their business. GlobShop has tried to manage this risk by not outsourcing too many of their functions. They have also spread the risk of something occurring in one of the outsourcing locations by having multiple locations they outsource to. They also have a good relationship with ISS which has been developed to ensure they get a good personal service.
ReplyDeleteI found the biggest from the company’s outsourcing strategy is its dependency on ISS to take over projects and provides supports that are critical to company’s competitiveness. The point about company was being reliant on its overseas vendor has been discussed earlier by other colleagues. I think Globshop’s strategy may be very advantageous for short-term goal, which is to minimize operation cost in respond to the dynamic market but not for long-term objectives. Cost saving and seeking for the right expertise outside the company might be the strongest driver for offshore outsourcing. However neglecting to invest in its own IT capabilities such as structure and people can also put company at a greater risks. As a result, company may lack in IT capabilities which will make itself more fragile to risks because they don’t have a backup if unexpected event occur.
ReplyDeleteDuring the 3 years outsourcing contract Globshop has successfully built a healthy relationship with vendors, which shows the company’s effort to anticipate potential risks for outsourcing. The success of its outsourcing experience derived from its capabilities implementing Global IS vendor management and change management. For successful vendor management, prior to outsourcing decision, it conducted offshore screening to choose the right region for outsourcing. The responsibilities and expectation from both vendors and Globshop are documented on the MSA (master service agreement). In terms of IS change management, the company provided supports and training and clear communication with its employees to anticipate major resistance.
The main risk that I see of Globshop’s outsourcing strategy is the extent of the company’s reliance on ISS, where the company has become critically dependent on ISS for many of its IT operations. This is seen as a risk because by placing heavy reliance on their outsourcing vendor, it means they are giving up its IT functions and makes the company give up any real potential to develop them for competitive advantage. This is shown when the company has become critically dependent on ISS for many of its IT operations. Some of the Globshop managers felt it was risky to work with one single offshore vendor. When ownership is shared with ISS, then the advantage may become available to the outsourcing providers other clients. There is also the chance of Globshop it leaves little recourse in terms of terminating troublesome vendor relationships.
ReplyDeleteGlobshop has managed this risk by considering to “…spread the work to multiple vendors”. This is so it ensures that Globshop doesn’t place all its outsourcing processes to one company as the offshore market as it has grown, offering the potential to work with other vendors, who may be competent as well as cheaper. By implementing an aggressive offshore strategy, it reduces the significant portion of the IT workforce. Roger wanted to forge a tighter partnership so that ISS could play a more proactive role in providing value-added service as well as identifying newer IT opportunities. By changing the informal relationship and develop a more formal structure for working together they created teams called ‘communities of practice’ (COPs).
I do agree with the others. One significant risk facing Globshop is their reliance or potential reliance on ISS. While in the beginning they choose specifically a company who weren’t so big, so Globshop could ensure the partnership between them and their vendor would be important to the outsourcing company, things had changed. However, ISS have grown and become more successful reducing their need to work or do business with Globshop. This means they could pull out whenever they desire, and won’t be affected by such actions. On the other hand, Globshop, have become, or are becoming very reliant on ISS. A concerned Rogers expressed was their critical reliance on ISS. This is an issue, because if ISS decide to cancel their outsourcing contracts with Globshop, it could significantly harm them. Initially, Globspot wanted to have the ability to enter into this outsourcing agreement, and pull out freely and easily if ever a time required them to do so. Now, it will be hard for them to work without IS, they will struggle to continue running their business as well as they once did when ISS worked for them.
ReplyDeleteLike Alisha said, one way in managing this risk is by splitting the different vendors. This way there won't be a risk losing one vendor and losing all your capabilities or ability to carry out your normal work. Instead only a small amount will be disadvantaged but the business will still be able to function as normal since there are many other vendors still working for Globshop.