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Outsourcing relationship management (ORM) is the business discipline widely adopted by companies and public institutions to manage one or more external service providers as part of an outsourcing strategy. ORM is a broadly used term that encompasses elements of organizational structure, management strategy and information technology infrastructure.
Outsourcing gained prominence as a business strategy in the early to mid-1980s, and was originally driven by the desire to reduce costs in labor-intensive business processes.[ citation needed ]
Outsourcing relationship management appeared as a specific management discipline in 1999 after an industry consortium, the Sourcing Interests Group, [1] began developing guidelines for its member companies. Following this introduction, the theories of outsourcing relationship management have been developed by numerous global industry groups, universities, consulting/advisory firms and software companies[ which? ].
ORM is complementary to other established enterprise management strategies in its relationship to established enterprise resource planning (ERP) tools and the linkage to important business constituents.
In his 2004 book "The Outsourcing Revolution", [2] author Michael Corbett discusses the challenges of integrating two separate business entities (the client and the external service provider) across the different organizational boundaries and differing motivations and objectives. More recently[ when? ], Gartner has launched an outsourcing specialty which has conducted research in this area.
In a 2006 study, IBM identified business model innovation as the most important success factor cited by the 765 global CEOs surveyed. The survey noted that "fully 65 percent of chief executives and other leaders say they will have to make fundamental changes in their businesses over the next two years. New products and services remain a priority, but they’re placing increasing emphasis on differentiating themselves through innovation in the basics of their business models. They believe that external collaboration across their business ecosystems will yield a multitude of innovative ideas." [3]
There are three aspects of ORM which companies typically pursue as part of their outsourcing strategy:
A 2002 Computerworld article [4] documented the need for managers skilled in ORM for managing IT outsourcing. A 2007 article in DM Review [5] pointed out that there was still a need for specialized outsourcing relationship managers and cited this as a career opportunity.
Carnegie Mellon University developed a Sourcing Capability Model to measure the maturity and skills required for effective outsourcing relationship management. [6] The University of Michigan sponsors research and events [7] focused on the challenges and management strategies for successful outsourcing.
In early 2007, a CIO Magazine article [8] explores this trend.
One study by Vantage Partners (Boston, MA) found that at least 15 percent of the total outsourcing contract value is at stake if outsourcing governance is not managed well. [9] In the book, "Multisourcing," Gartner analysts point out that successful outsourcing is built on "a network of relationships, not transactions," and outsourcing governance is the most important factor in determining the success of an outsourcing engagement. [10] Gartner found that fewer than 30 percent of enterprises have formal sourcing strategies and appropriate outsourcing governance mechanisms in place. In a 2004 survey of 130 CIOs, 42 percent said they were dissatisfied with their outsourcing relationships, according to outsourcing advisory company EquaTerra, primarily due to poorly developed, underbudgeted and undersourced governance models.[ citation needed ]
Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information.
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage, and interpret data from many business activities. ERP Systems can be local based or Cloud-based. Cloud-based applications have grown in recent years due to information being readily available from any location with internet access.
In commerce, supply chain management (SCM), the management of the flow of goods and services, between businesses and locations, and includes the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.
Chief information officer (CIO), chief digital information officer (CDIO) or information technology (IT) director, is a job title commonly given to the most senior executive in an enterprise who works with information technology and computer systems, in order to support enterprise goals.
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another.
A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization. The study of the management information systems involves people, processes and technology in an organizational context.
SAP SE is a German multinational software corporation based in Walldorf, Baden-Württemberg that develops enterprise software to manage business operations and customer relations. The company is especially known for its enterprise resource planning (ERP) software. SAP is the largest non-American software company by revenue, the world's third-largest publicly-traded software company by revenue, and the largest German company by market capitalization. Apart from ERP software the company also sells database software and technology, cloud engineered systems, and enterprise software products, such as human capital management (HCM) software, customer relationship management (CRM) software, enterprise performance management (EPM) software, product lifecycle management (PLM) software, supplier relationship management (SRM) software, and supply chain management (SCM) software.
Enterprise architecture (EA) is an analytical discipline that provides methods to comprehensively define, organize, standardize, and document an organization’s structure and interrelationships in terms of certain critical business domains characterizing the entity under analysis. The goal of EA is to create an effective representation of the business enterprise that may be used at all levels of stewardship to guide, optimize, and transform the business as it responds to real-world conditions. EA serves to capture the relationships and interactions between domain elements as described by their processes, functions, applications, events, data, and employed technologies.
Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions, ostensibly for the purpose of improved operations and reduced budgetary expenditures through the reduction of directly-employed staff. It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done.
Enterprise relationship management or ERM is a business method in relationship management beyond customer relationship management.
ERM - Enterprise Relationship Management is basically a business strategy for value creation that is not based on cost containment, but rather on the leveraging of network-enabled processes and activities to transform the relationships between the organization and all its internal and external constituencies in order to maximize current and future opportunities.
Software as a service is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software.
Enterprise software, also known as enterprise application software (EAS), is computer software used to satisfy the needs of an organization rather than individual users. Such organizations include businesses, schools, interest-based user groups, clubs, charities, and governments. Enterprise software is an integral part of a (computer-based) information system; a collection of such software is called an enterprise system. These systems handle a chunk of operations in an organization to enhance the business and management reporting tasks. The systems must process the information at a relatively high speed and can be deployed across a variety of networks.
On-demand outsourcing is a trend in outsourcing wherein major internal operations processes of a company are being shifted to a provider that is paid for by the number of transactions involved. The business transferring the services pays for the quality, special skills and the competence of the service provider's employees. There has been an expansion of the outsourcing concept to include on-demand outsourcing. This refers to the process undertaken by business managers to adopt an outsourcing policy that ensures that the specific business and supplies including technical manpower are accessed as the need arises. It focuses a business strategy to improve its goods and services and to drive a business towards quality improvement.
Epicor Software Corporation is a business software company based in Austin, Texas founded in 1972. Its products are aimed at the manufacturing, distribution, retail and services industries.
Samsung SDS Co., Ltd., established in 1985 as a subsidiary of Samsung Group, is a provider of information technology (IT) services, including consulting services, technical services, and outsourcing services. SDS is also active in research and development of emerging IT technologies such as artificial intelligence (AI), blockchain, Internet of things (IoT) and engineering outsourcing. In 2019, Samsung SDS reported a net profit of 750.4 billion won, an increase of 17.5 percent year-on-year. The company is estimated to have the 11th most valuable brand among global IT service companies, at US$3.7 billion as of January 2020. Samsung SDS has headquarters in South Korea and eight overseas subsidiaries, in America, Asia-Pacific, China, Europe, Latin America, Middle East, India, and Vietnam.
Business Relationship Management (BRM) is viewed as a philosophy, a capability, a discipline, and a role to evolve culture, build partnerships, drive value, and satisfy purpose.
The Digital Firm is a kind of organization that has enabled core business relationships through digital networks In these digital networks are supported by enterprise class technology platforms that have been leveraged within an organization to support critical business functions and services. Some examples of these technology platforms are Customer Relationship Management (CRM), Supply Chain Management (SCM), Enterprise Resource Planning (ERP), Knowledge Management System (KMS), Enterprise Content Management (ECM), and Warehouse Management System (WMS) among others. The purpose of these technology platforms is to digitally enable seamless integration and information exchange within the organization to employees and outside the organization to customers, suppliers, and other business partners.
Service Integration and Management (SIAM) is an approach to managing multiple suppliers of services and integrating them to provide a single business-facing IT organization. It aims at seamlessly integrating interdependent services from various internal and external service providers into end-to-end services in order to meet business requirements.
Data center management is the collection of tasks performed by those responsible for managing ongoing operation of a data center This includes Business service management and planning for the future.