An outsourced offshore information processing model for Japanese finance sector multinationals
Green, Michael Allan
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The complexity and pace of technology, combined with the strategic importance of technology, has created a dilemma for most organisations. The requirement is to be able to take advantage of the latest technology and state-of-the-art practices. So, instead of trying to be experts in both their core business and technology, executives focus their attention on the core business and rely on others to provide the technology expertise. Healthy and profitable Japanese companies are beginning to view outsourcing as an essential part of their business strategy. They are looking for outsourcers to deliver key components of data processing, supply-chain management, warehousing, logistics, human resources, accounting, and other vital components of their business. By divesting themselves of these non-core activities, companies are realising they can focus their energy on areas where they have the competitive advantage, differentiate themselves from their competitors, and take advantage of the cost-savings from the outsourced functions. Outsourcing relationships, however, demand the same care and attention to sound management principles and practices as in-house operations. Managed well, continuous improvement, increasing value, and constant innovation can be expected. Managed poorly, the services and overall relationship deteriorates resulting In higher costs, operational disruption and lost business opportunities. The dramatic structural and economic changes in the Japanese finance sector over the past decade have created opportunities for multinational corporations to leverage their best practices and economic value creation into the market. Japanese multinational information technology executives in this e-business economy must thus deliver information technology services and systems as seen in an environment of changing business opportunities and challenges, accelerating technologies, short product delivery cycles and ever-growing business demands for e-business, ecommerce, ERP, ASP and other applications. Like no other time in Japanese history, outsourcing strategies and practices, and effective relationship management are critical to business success. Properly crafted and managed, an outsourcing relationship can increase flexibility, improve performance and permit a better focus on core competencies. To bridge the gap between the ideal state and the present state as determined by the empirical study, a SG offshore information processing outsourcing model is proposed. The SG model and principles deliver a framework and structure for outsourced offshore information processing services to the Japanese finance sector multinationals. The SG model supports three different roles within an organisation, namely as a support to business strategy, as the implementer of business strategy, and as the driver of business strategy.