Infrastructure forms the building block for the achievement of any business objectives. Rouse (2018) defines Infrastructure Management as the process of administering and controlling important and essential constituents of an organization’s operations and systems. Such components of operations that an organization needs to consider managing efficiently and effectively for a proper functioning of the organization would include but not limited to human resource, data, processes, policies, equipment, contacts among others. Rouse further identifies that IT infrastructure management performs other functions that contribute to the effective operation of an organization. Infrastructure management seeks to impose adherence to policies and regulations which in turn promotes adherence to the set organizational standards. Managing infrastructure is a means of ensuring enhanced information flow throughout the information system of the organization.
This report, therefore, seeks to identify different components of organizational infrastructure that contribute to the development of the organization and also to identify various means of infrastructure management that would enable such organization to operate effectively and efficiently. This report also seeks to address the theoretical frameworks of managing organizational infrastructure. The case study organization under critical review and analysis in this report is Telstra company. Telstra Cooperation is one of the largest telecommunication company in Australia whose main line of business is building and managing telecommunications networks while marketing mobile, internet, pay televisions, data hosting among other services and products.
Telstra has a number of different types of infrastructure at its disposal. Ranging from hard infrastructure to soft infrastructure which it commits to make its operations effective. Spacey (2017) identifies that hard infrastructure at Telstra’s disposal are those that support its Information Technology enabling it to provide basic and required services which are fundamental and essential in making its business operate effectively and efficiently. Soft infrastructure, on the other hand, Spacey (2017) points out that they include those operations standards, regulations, and institutions that make the quality of operations and service provision efficient. Such include proper governance, offering a healthy working environment, staff upgrades through training, efficient management of financial systems among others.
Vendor management is a critical role in any organization. Vendors form part of the greatest company’s stakeholders and hence should be treated with a lot of keenness. For this reason, therefore, vendors form part of a company’s infrastructure which must be managed efficiently and effectively for the success of an organization. Telstra Corporation is keen to this. In management of vendors, Telstra employs a number of strategies to ensure that it keeps the faith and trust between the organization and various stakeholders, get quality supply of required materials, manage costs of materials and to mitigate any associated risks therein.
Markstrom (2014) identifies six essential steps that Telstra uses to manage its vendors as a piece of infrastructure in its possession. First, Telstra has mastered the art of evaluating the process of vendor contracting. The organization takes into account proper vetting and evaluation of whatever it needs to outsource and the desired output of the process and weigh them against the costs involved. This evaluation approach enables Telstra to come up with strategic, appropriate and meaningful performance metrics.
Secondly, Telstra has mastered the art of self-evaluation of the need to outsource and the capability of using what is an insource. Outsourcing vendors comes with associated risks such as exposure of confidential information of the organization to external sourcing which can learn your strategies and use them to beat you in the business. For this reason, therefore, it is paramount to the organization to weigh up the need of contracting a vendor against using what it has in-house. The central focus is developing skills in-house and using such skills later in offering a service it requires rather than sourcing outside for a skill that is already groomed within.
Thirdly, to manage vendors effectively, Telstra is keen to vendor selection, it considers the cost of sourcing a vendor and the whole process. Apart from the cost, Telstra keeps in mind the cultural fit of the organization it seeks business with. For example, when outsourcing say IBM’s supply chain management platform, Telstra considers the relevance of the organization in line providing the service it seeks by asking for example how long the organization is experienced in offering the service it seeks.
Fourthly, Telstra considers contract development and then negotiation. In this step, Telstra brings on board relevant team such as its vibrant and empowered procurement department. It is vital that most of top management of the procurement department be involved in the early stages of sourcing vendors rather than having the vendors to be managed by low level managers during the delivery of the service. It is critical that the operational team at Telstra carries out performance evaluation and spells out adequately the roles to be performed by the vendor so that every aspect of the service delivery goes on as expected without deviations.
After sourcing a vendor, Telstra is keen to manage a positive working relationship with the vendor partner. This step is very vital because it involves building a collaborative working relationship that would ensure that each team is adequately administering its duty to each other. This includes communication of the goals, missions and visions of the organization so that the vendor works in line with the organizational goals. Also to mention, is the evaluation of the performance of the vendor which involves process monitoring, metrics tracking, result capturing and generating feedback.
Finally, it is important that an organization evaluates the results against the expectations. Telstra management is result oriented and driven. Evaluation of the vendor’s performance therefore forms a core business at Telstra whose focus is on the results measured against the set deliverables at the beginning of the project.
In the effective management of vendors, organizations face a number of issues that in one way or another would break or build the organization. In the event that an organization fails to effectively manage such issues, they could prove detrimental to the operations of the organization likely leading to unprecedented losses.
The process of sourcing vendors should consider sourcing avenues that can standardize and streamline processes in its businesses and to channel funds in driving the business into financially stable position of low costs of operation. Among the issues to consider while managing vendors include but not limited to; Cost management, Risk mitigation, Customer service, ethics and integrity of the vendor, existing relationships with the organization among others.
Cost management refers to the aspect of planning and controlling an organization’s budget. It enables organizations to plan ahead by predicting possible expenditures ahead to help control and reduce any further possibility of over budgeting (Rouse, 2018). Telstra applies an Integrated Expense Management strategy in managing its costs of acquiring vendor services. This strategy was developed by Telstra in order to manage its costs of operations effectively and also applies the same in managing the costs of acquiring vendors and/or suppliers. Renner (2016) identifies a number of approaches used by Telstra to manage vendor acquisition costs effectively in its Integrated Expense Management strategy. The strategy is developed in such a way that it focuses on challenging the specifications and design of services that variety if vendors can offer. This approach gives room for systematic service analysis without necessarily setting out your expectations with a specific vendor in mind already. Secondly, it establishes a base for challenging existing contracts for price competitiveness rather than sourcing new contracts which are likely to come with higher prices. Existing contracts are likely to offer competitive prices relatively lower than new contractors (Niekerk, 2016).
Shaporda (2018) identifies that outsourcing vendors comes with a much of benefits but also a risky venture. Telstra continues to outsource services from third party companies with which they get into a contract to supply a given IT system. For instance, most recently Telstra got into an outsourcing deal with IBM to supply it with supply chain management systems (IBM, 2007). Despite this move seen as a better way of stakeholder management strategy, outsourcing comes with a number of risks which Telstra will have to deal with efficiently (Deloitte, 2018). Such risks include operations and transactions risks which tend to increase when a company outsources its services. Secondly, is the risk associated with information confidentiality. Telstra runs the risk of exposure to its strategic approaches especially to the longtime competitors as a result of outsourcing its IT systems through IBM for example. Thirdly, there is the risk of business continuity. Outsourcing exposes the business to main rivals once a major infrastructure is partly run by a third party. Finally, there is the risk of compliance. Telstra runs the risk of compliance and keeping up with the regulations and standards. Outsourcing It experts to run a system within Telstra exposes the company to low standards of operation in the event of incompetent partner. To manage these ills brought about vendor outsourcing, Tecnopedia.com (2018) outlines that there should be a strategic outline of business relationship between an organization and a third party, Telstra uses this approach to manage vendor risks by instituting a three-line defense strategy against risky vendors as outlined in its annual report (Telstra Annual Report, 2013).
Good customer service is central to business at Telstra. Telstra values its stakeholders and is determined to keep good workable relationship with its major stakeholders such as suppliers. It is coherent therefore, that Telstra seeks vendors of high reputation when it comes to customer service so that upholds integrity and ethical code of conduct in business.
Contracting with companies of high integrity and ethical standards is a basic requirement at Telstra while sourcing suppliers of a service or product. This keeps its integrity and par in the service provision arena. Contracting with a company that has a dented image would definitely result into a damaged relationship of Telstra with its core stakeholders.
Hawkins (2001) identifies reasons why managing infrastructure proves a hard tussle to businesses. The complexity of infrastructure management culminates from the advancement of the business environment. Business environments have become so complex bearing in mind the flooded markets of rivals providing the same services in the IT market. In so doing, this move makes the operation of businesses so complex such that individual organizations have to come up with strategies to overcome the flooding and to operate efficiently. This move of overcoming the complexity of the business environments also comes with the complexity of managing infrastructure in order for such organizations to operate on the bare minimum costs.
Therefore, the complexity of the infrastructure management is as a result of factors such as many technologies and protocols. The migration from mainframe technologies to the use of individually customized desktop of users in computer business for example, has resulted into a decentralized management of a company’s IT infrastructure where an organization has to run the expense of managing various units of its production externally rather than having a centralized unit for a company’s data management for example.
Secondly, infrastructure management has become more complex due to the availability of a variety of vendors. Hawkins (2001) identifies that the computer world has become so open in terms of dealing with suppliers and other vendors. The opening up of the vending process has made IT infrastructure management a menace since consumers can easily use the online platforms, for example, to acquire a service without necessarily having to go to the dealers.
Thirdly, the IT infrastructure management is becoming more and more complex due to a varied number of users of the computing service. Hawkins (2001) says that time has passed when consumers of a computing information had to rely on getting or submitting data to a central data point for processing but rather today, consumers of computing information have the ability to use or get information easily without necessarily relying on a central data point.
Voronkov (2018) identifies two approaches that organizations such as Telstra could use to overcome complexity in managing IT infrastructure. First, businesses could opt to manage all their business processes in-house without having to outsource. This eliminates the security risks associated with outsourcing and can make the business fully automated. Secondly, Voronkov (2018) suggests subcontracting of trusted external IT experts who are specialized in managing IT infrastructure. Despite the fact that this contracting approach is likely to be expensive in the long run, but such experts can always perform the task much better than internal management.
Conclusion:
In conclusion, therefore, IT infrastructure management is a critical role for IT companies because, in the event of poor management of a company’s IT infrastructure, the company runs the risk of inefficiency and ineffective operations which may result into great losses in the long run. Also, there is a dire need for companies to realize the need to eliminate complexities that are associated with managing IT infrastructure and to determine the best strategies to overcome such complexities so that a company can operate on a bare minimum cost but still ensure efficiency.
References:
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Hawkins, M. (2001). Complexity: The Main Obstacle to IT Infrastructure Management | Dependencies and Control | InformIT. [online] Informit.com. Available at: https://www.informit.com/articles/article.aspx?p=21842 [Accessed 2 Oct. 2018].
IBM, T. (2007). Telstra extends outsourcing deal with IBM. [online] Computerworld. Available at: https://www.computerworld.com.au/article/202011/telstra_extends_outsourcing_deal_ibm/ [Accessed 2 Oct. 2018].
Markstrom, L. (2014). 6 essential steps for managing vendors. [online] CIO. Available at: https://www.cio.com.au/article/555629/6-essential-steps-managing-vendors/ [Accessed 3 Oct. 2018].
Niekerk, B. (2016). 8 ways procurement can radically reduce costs – SmartProcurement.co.za – FREE on-line newsletter for purchasing and supply management professionals. [online] Smartprocurement.co.za. Available at: https://www.smartprocurement.co.za/8_ways_procurement_can_radically_reduce_costs.php#sthash.VOkSzhHq.dpbs [Accessed 3 Oct. 2018].
Renner, A. (2016). 5 Strategies to Reduce Costs in Procurement and Supplier Management. [online] The Informatica Blog – Perspectives for the Data Ready Enterprise. Available at: https://blogs.informatica.com/2016/06/24/5-strategies-reduce-cost-procurement-supplier-management/#fbid=pqVsd3aNTi4 [Accessed 3 Oct. 2018].
Rouse, M. (2018). What is cost management? – Definition from WhatIs.com. [online] WhatIs.com. Available at: https://whatis.techtarget.com/definition/cost-management [Accessed 2 Oct. 2018].
Rouse, M. (2018). What is infrastructure management (IM)? – Definition from WhatIs.com. [online] SearchCIO. Available at: https://searchcio.techtarget.com/definition/infrastructure-management [Accessed 1 Oct. 2018].
Shaporda, A. (2018). 6 Main Outsourcing Risks and Ways to Mitigate Them. [online] Django Stars Blog. Available at: https://djangostars.com/blog/outsourcing-risks-and-ways-to-mitigate-them/ [Accessed 2 Oct. 2018].
Spacey, J. (2017). Hard Infrastructure vs Soft Infrastructure. [online] Simplicable. Available at: https://simplicable.com/new/hard-infrastructure-vs-soft-infrastructure [Accessed 2 Oct. 2018].
Spacey, J. (2018). 12 Types of Information Infrastructure. [online] Simplicable. Available at: https://simplicable.com/new/information-infrastructure [Accessed 2 Oct. 2018].
Techopedia.com. (2018). What is Vendor Risk Management (VRM)? – Definition from Techopedia. [online] Available at: https://www.techopedia.com/definition/30379/vendor-risk-management-vrm [Accessed 3 Oct. 2018].
Telstra.com.au. (2018). Telstra – About procurement – Supplying to Telstra. [online] Available at: https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra/about-procurement [Accessed 2 Oct. 2018].
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