ITM 309   Change Management  and Outsourcing Dr. Frederick Rodammer Michigan State University Eli Broad College of Busines...
Today’s Learning Objectives <ul><li>Explain change management and how an organization can prepare for change </li></ul><ul...
OPENING CASE QUESTIONS Change at Toyota <ul><li>Why are project management, change management, and risk management critica...
WHAT IS CHANGE MANAGEMENT? <ul><li>The process of building the  capacity ,  capability , and  will  of an organization… </...
Preparing for Change   <ul><li>Three important guidelines fore effectively dealing with change management </li></ul><ul><u...
End User Resistance  and Involvement <ul><li>Change can generate  fear  and  resistance  to change </li></ul><ul><li>Keys ...
POSITIVELY VIEWED CHANGE <ul><li>Change viewed as an  opportunity . </li></ul><ul><li>Transition requires managing expecta...
NEGATIVELY VIEWED CHANGE <ul><li>Change viewed with  fear ,  anger . </li></ul><ul><li>Negative perceptions cause disrupti...
Change Management <ul><li>People  are a major focus of organizational change management </li></ul><ul><ul><li>Developing i...
Change Management Process <ul><ul><li>Create a change  vision </li></ul></ul><ul><ul><li>Define a change strategy </li></u...
OUTSOURCING <ul><li>Outsourcing  – an arrangement by which one organization provides a service or services for another org...
OUTSOURCING
OUTSOURCING <ul><li>Reasons companies outsource </li></ul>
THE OUTSOURCING  PHENOMENON <ul><li>Outsourcing growth drivers </li></ul><ul><ul><li>Globalization </li></ul></ul><ul><ul>...
OUTSOURCING <ul><li>Factors driving outsourcing growth include: </li></ul><ul><ul><li>Core competencies </li></ul></ul><ul...
TEAMS, PARTNERSHIPS,  AND ALLIANCES <ul><li>Organizations form alliances and partnerships with other organizations based o...
Outsourcing Benefits <ul><li>Outsourcing benefits include: </li></ul><ul><ul><li>Increased quality and efficiency  </li></...
THE CHALLENGES OF OUTSOURCING <ul><li>Outsourcing challenges include: </li></ul><ul><ul><li>Contract length </li></ul></ul...
FUTURE OUTSOURCING  TRENDS <ul><li>Outsourcing is becoming less of a cost-saving strategy and more an overall context for ...
ITM 309 Homework <ul><li>Exam 3 Review Session on Wednesday  </li></ul><ul><li>Check ANGEL Gradebook for accuracy  </li></...
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Lecture Slides 12 01 08

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  • Lecture Slides 12 01 08

    1. 1. ITM 309 Change Management and Outsourcing Dr. Frederick Rodammer Michigan State University Eli Broad College of Business [email_address] December 1, 2008
    2. 2. Today’s Learning Objectives <ul><li>Explain change management and how an organization can prepare for change </li></ul><ul><li>Explain the business benefits of outsourcing </li></ul><ul><li>Assess the reasons for developing strategic outsourcing partnerships </li></ul><ul><li>Discuss Insights from Toyota Case </li></ul>
    3. 3. OPENING CASE QUESTIONS Change at Toyota <ul><li>Why are project management, change management, and risk management critical to a global company such as Toyota? </li></ul><ul><li>How could Toyota benefit from outsourcing? </li></ul><ul><li>What types of ethical and/or security issues might Toyota encounter when considering outsourcing ? </li></ul>
    4. 4. WHAT IS CHANGE MANAGEMENT? <ul><li>The process of building the capacity , capability , and will of an organization… </li></ul><ul><li>To move from an entrenched current state to a unfamiliar future state… </li></ul><ul><li>Then leading them through and sustaining them in that change. </li></ul>
    5. 5. Preparing for Change <ul><li>Three important guidelines fore effectively dealing with change management </li></ul><ul><ul><li>Institute change management polices </li></ul></ul><ul><ul><li>Anticipate change </li></ul></ul><ul><ul><li>Seek change </li></ul></ul>
    6. 6. End User Resistance and Involvement <ul><li>Change can generate fear and resistance to change </li></ul><ul><li>Keys to countering end user resistance: </li></ul><ul><ul><li>Proper education and training </li></ul></ul><ul><ul><li>End user involvement in organizational changes </li></ul></ul><ul><li>End user involvement in the development of new information systems </li></ul><ul><li>Involvement and commitment of top management and all business stakeholders </li></ul>
    7. 7. POSITIVELY VIEWED CHANGE <ul><li>Change viewed as an opportunity . </li></ul><ul><li>Transition requires managing expectations and minimizing pessimism. </li></ul><ul><li>Need to manage public and private “checking out”. </li></ul><ul><li>You still need to deal with some negative implications of positive change. </li></ul>High Low Confidence Public Checking Out Private Checking Out Informed Optimism Informed Pessimism Informed Doubt Uniformed Optimism Hopeful Realism Time
    8. 8. NEGATIVELY VIEWED CHANGE <ul><li>Change viewed with fear , anger . </li></ul><ul><li>Negative perceptions cause disruptive transition. </li></ul><ul><li>Transition requires managing active resistance and motivating passive participants. </li></ul>Time Resistance Past Orientation Future Orientation Immobilization Denial Anger Bargaining Depression Exploration Acceptance
    9. 9. Change Management <ul><li>People are a major focus of organizational change management </li></ul><ul><ul><li>Developing innovative ways to measure, motivate , and reward performance </li></ul></ul><ul><ul><li>Designing programs to recruit and train employees in the core competencies </li></ul></ul><ul><li>Also involves analyzing and defining all changes facing the organization </li></ul>
    10. 10. Change Management Process <ul><ul><li>Create a change vision </li></ul></ul><ul><ul><li>Define a change strategy </li></ul></ul><ul><ul><li>Develop leadership </li></ul></ul><ul><ul><li>Build commitment </li></ul></ul><ul><ul><li>Manage people performance </li></ul></ul><ul><ul><li>Deliver business benefits </li></ul></ul><ul><ul><li>Develop culture </li></ul></ul><ul><ul><li>Design organization </li></ul></ul>
    11. 11. OUTSOURCING <ul><li>Outsourcing – an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house </li></ul>
    12. 12. OUTSOURCING
    13. 13. OUTSOURCING <ul><li>Reasons companies outsource </li></ul>
    14. 14. THE OUTSOURCING PHENOMENON <ul><li>Outsourcing growth drivers </li></ul><ul><ul><li>Globalization </li></ul></ul><ul><ul><li>The Internet </li></ul></ul><ul><ul><li>Growing economy and low unemployment rate </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Deregulation </li></ul></ul>
    15. 15. OUTSOURCING <ul><li>Factors driving outsourcing growth include: </li></ul><ul><ul><li>Core competencies </li></ul></ul><ul><ul><li>Financial savings </li></ul></ul><ul><ul><li>Rapid growth </li></ul></ul><ul><ul><li>Industry changes </li></ul></ul><ul><ul><li>The Internet </li></ul></ul><ul><ul><li>Globalization </li></ul></ul>
    16. 16. TEAMS, PARTNERSHIPS, AND ALLIANCES <ul><li>Organizations form alliances and partnerships with other organizations based on their core competency </li></ul><ul><ul><li>Core competency – an organization’s key strength, a business function that it does better than any of its competitors </li></ul></ul><ul><ul><li>Core competency strategy – organization chooses to focus specifically on its core competency and forms partnerships with other organizations to handle nonstrategic business processes </li></ul></ul>
    17. 17. Outsourcing Benefits <ul><li>Outsourcing benefits include: </li></ul><ul><ul><li>Increased quality and efficiency </li></ul></ul><ul><ul><li>Reduced operating expenses </li></ul></ul><ul><ul><li>Outsourcing non-core processes allows focus on core competencies </li></ul></ul><ul><ul><li>Reduced exposure to risk </li></ul></ul><ul><ul><li>Service providers economies of scale, expertise, and best practices </li></ul></ul><ul><ul><li>Access to advanced technologies </li></ul></ul><ul><ul><li>Increased flexibility </li></ul></ul><ul><ul><li>Avoid costly outlay of capital funds </li></ul></ul><ul><ul><li>Reduced headcount and associated overhead expense </li></ul></ul><ul><ul><li>Reduced frustrations and expense related to hiring/retaining employees </li></ul></ul><ul><ul><li>Reduced time to market for products or services </li></ul></ul>
    18. 18. THE CHALLENGES OF OUTSOURCING <ul><li>Outsourcing challenges include: </li></ul><ul><ul><li>Contract length </li></ul></ul><ul><ul><ul><li>Difficulties in getting out of a contract </li></ul></ul></ul><ul><ul><ul><li>Problems in foreseeing future needs </li></ul></ul></ul><ul><ul><ul><li>Problems in reforming an internal IT department after the contract is finished </li></ul></ul></ul><ul><ul><li>Competitive edge </li></ul></ul><ul><ul><li>Confidentiality </li></ul></ul><ul><ul><li>Scope definition </li></ul></ul>
    19. 19. FUTURE OUTSOURCING TRENDS <ul><li>Outsourcing is becoming less of a cost-saving strategy and more an overall context for business </li></ul><ul><li>Outsourcing is approaching commodity status </li></ul><ul><li>Companies should look for value-based pricing rather than the lowest possible price </li></ul><ul><li>Multisourcing – a combination of professional services, mission-critical support, remote management, and hosting services that are offered to customers </li></ul>
    20. 20. ITM 309 Homework <ul><li>Exam 3 Review Session on Wednesday </li></ul><ul><li>Check ANGEL Gradebook for accuracy </li></ul><ul><li>Complete Part II of Assignment #6 in Recitation this Week </li></ul>

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