Teleworking: Implications for firms

1. Teleworking: Implications for firms Information Society Colin Hazley

2. Teleworking – a broad definition • Use of new ICTs to provide products and/or services: • Call centres providing customer services to gen. public (Tax office) • Call centres providing customer support/services to public (insurance/travel) • Call centres providing customer support/services business-business (Esso) • Replacement of traditional brick & mortar services (banking) • Direct service channel between manuf and end users (Dell)

3. Implications for Firms: +ves • Greater networking - raise utility of existing capital stock • Lower entry barriers for electronic commerce (non-prop) • Greater efficiencies (reduced operating, inter-mediation, and procurement costs) • Reduced costs of storing, sharing, processing commun - info • Opportunity for new business strategies, new methods of orgn • Improved quality (convenience, customisation, reduced delays and increasing reliability) • Rapid generation, processing, sharing of customer information • Increased bargaining power of channels (more direct avenues)

4. Implications for Firms: +ves • Increased number of competitors > tougher rivalry than before • Reduced profitability > shifting power to customers (info) • Internet technologies reduce variable costs by tipping cost structures towards fixed cost > increasing pressure to engage in destructive price competition • Internet reduces the importance of location (increasing geographic scope) > it is more difficult for on-line companies to differentiate themselves • > As number of competitors selling undifferentiated products increases, the basis for competition shifts more towards price

5. Limitations with Internet = Teleworking? • Customers cannot physically examine or test products or get hands-on help • Knowledge transfer restricted to codified knowledge, sacrificing the judgement that skilled personnel can offer • Ability to learn from suppliers/customers is limited by lack of face-to-face contact • Lack of human contact with customer eliminates a powerful tool for encouraging purchases {trading off terms and conditions, providing advice and closing deals)

6. Limitations with Internet = teleworking? • Extra logistical costs are required to assemble, pack, and move small shipments • Companies are unable to take advantage of low-cost, non-transactional functions performed by sales forces, distribution channels and purchasing departments • Lack of physical facilities removes certain functions which reduces the ability to reinforce image • Attracting new customers is difficult given the sheer magnitude of available information and buying options

7. Words of Caution! • Benefits of new IT are only realised if companies also adopt new operating methods, new organisational structures, and new business strategies • Investment in information technology works best when it goes hand-and-hand with organisational change • ‘The danger lies in using IT purely as a way of doing more cheaply the same old things the same old ways: processing information more cheaply in the same departments, or automating an otherwise unchanged production line.’ (Operational effectiveness) • Is this what Teleworking amounts to???