Focus strategies that seek to leverage company skills, capabilities and resources have become a dominant paradigm in business strategy planning and implementation. As a consequence, firms increasingly seek to reduce investments in non-core business processes and functions while freeing up resources and management attention for core competency development to achieve competitive advantage and provide unique value for customers. Activities for which companies do not have critical strategic needs or special capabilities are considered for external sourcing. Combining the two approaches can yield significant benefits. Outsourcing business processes can give access to provider economies of scale and learning thereby reducing operating costs and enhancing the quality of the activities outputs. The expected value of an outsourcing initiative is constituted by the aggregate projected benefits – both efficiency and effectiveness gains within the externalised process and strategic rewards – that flow from the exercise of the option. Strategic fit of the sourcing strategy with the current competency profile of the firm plays a key role in securing the success of vertical dis-integration policies and to obtain the highest value contribution from outsourcing initiatives. Corporate planners who are involved in firm boundary and competitive business policy decisions have to understand the market and service characteristics of outsourcing service provision, the relevant strategic linkages between non-core and core processes as well as the various types of interaction and governance models that are available to fulfil the needs of the organisation. Empirical evidence suggests that corporate planning procedures and externalisation strategies could be integrated more comprehensively.
KEYWORDS
Outsourcing, value contribution, corporate planning, core competencies, make-or-buy decision, interaction costs, business process re-engineering, interconnected value system, information technology, activity costs, standardisation, relative cost differentials, strategic sourcing, total cost of ownership
Inhaltsverzeichnis (Table of Contents)
- INTRODUCTION
- THEORETICAL CONSIDERATIONS AND PROJECT METHODOLOGY
- Literature review
- Project methodology
- A BRIEF HISTORY OF OUTSOURCING
- THE FOUNDATION: THE CORE COMPETENCY PARADIGM
- OUTSOURCING: INDUSTRY STRUCTURE
- Service provision and cost structures
- Outsourcing industry growth and trends
- THEORETICAL CONSIDERATIONS AND PROJECT METHODOLOGY
- DISAGGREGATING THE VALUE CHAIN – BUSINESS PROCESS OUTSOURCING
- OUTSOURCING OF BUSINESS FUNCTIONS
- THE ROLE OF INFORMATION TECHNOLOGY
- BUSINESS PROCESS OUTSOURCING AND CORPORATE TRANSFORMATION
- MODES OF COLLABORATION AND CONTROL BETWEEN SERVICE PROVIDERS AND CORPORATIONS
- LINKS BETWEEN COMPANY PERFORMANCE AND OUTSOURCING
- OUTSOURCING STRATEGY: COSTS AND BENEFITS OF OUTSOURCING
- GETTING STARTED: RESOURCES AND CAPABILITIES
- EXPERIENCE CURVES IN MAKE-OR-BUY DECISIONS
- DECISION CRITERIA
- Financial considerations
- Process and quality improvements
- Business risks and risk management
- STRATEGIC ISSUES
- Monitoring strategic alignment
- Maintaining strategic flexibility
- Termination and continuation decisions
- KEY SUCCESS FACTORS
- Strategic alignment - option identification, selection and choice
- Relationship management - value creation and learning
- Performance management - operational excellence
- OUTSOURCING STRATEGY IMPLEMENTATION
- GOVERNANCE: STRUCTURE, SYSTEMS AND CONTROL
- PRELIMINARY PHASE
- Vendor selection
- Contract design
- OPERATIONAL PHASE
- Service level management: measuring performance and managing scope
- VALUE EXPECTATIONS AND LEVELS OF SATISFACTION
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This project explores the strategic contribution of business process outsourcing to corporate planning. The goal is to analyze the value creation potential and the various strategic considerations involved in outsourcing non-core business processes. The project examines the role of outsourcing in supporting companies in achieving their strategic goals, particularly within the context of the core competency paradigm. The study delves into the relationship between outsourcing, corporate transformation, and value chain disaggregation, highlighting key factors like industry structure, service provision, and information technology.
- Strategic importance of outsourcing in corporate planning
- The role of core competencies and value chain disaggregation in outsourcing decisions
- Factors influencing the success of outsourcing initiatives, such as cost considerations, risk management, and performance management
- Different governance models and interaction patterns between corporations and service providers
- The impact of outsourcing on organizational structure, systems, and control mechanisms
Zusammenfassung der Kapitel (Chapter Summaries)
The report commences with an introduction outlining the theoretical considerations and project methodology, followed by a brief history of outsourcing. It then delves into the core competency paradigm, examining how outsourcing aligns with the strategy of focusing on core competencies and leveraging external resources for non-core processes. The subsequent chapter examines the industry structure of outsourcing, focusing on service provision and cost structures, as well as industry growth and trends.
The report then dives deeper into business process outsourcing, analyzing the outsourcing of specific business functions and the role of information technology. This chapter explores the potential for corporate transformation through outsourcing and delves into different modes of collaboration and control between service providers and corporations.
Chapter 3 focuses on outsourcing strategy, analyzing the costs and benefits of outsourcing, including financial considerations, process and quality improvements, and risk management. The strategic implications of outsourcing are discussed, examining aspects such as strategic alignment, flexibility, and decision-making processes.
The final chapters focus on the implementation of outsourcing strategies, covering governance structures, vendor selection, contract design, service level management, and performance measurement. The report concludes by discussing value expectations and levels of satisfaction associated with outsourcing initiatives.
Schlüsselwörter (Keywords)
The research focuses on strategic sourcing, business process outsourcing, core competencies, value chain analysis, make-or-buy decisions, corporate planning, and governance models. The study emphasizes the critical role of information technology and examines the impact of outsourcing on organizational structure, cost management, and performance measurement.
- Quote paper
- Goetz Erhardt (Author), 2003, The Strategic Contribution of Business Process Outsourcing to Corporate Planning, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/39554
