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Application
Service Provider (ASP)
is a company that offers individuals or enterprises access
over the Internet to applications and related services
that would otherwise have to be located in their own personal
or enterprise computers.
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Backsourcing
is the expiration or termination of an outsourcing arrangement
and the recapture in-house of the outsourced function.
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Baseline
is the starting point for defining your needs. As with
any metrics, the art of outsourcing comes from defining
the relevant parameters.
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Benchmarking
is a method of comparing contract services to market services
or other independent standards.
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Best
Practices
are those practices and procedures, followed regularly,
that reflect the wisdom and experience at leading-edge
companies. The collection, interpretation and assembly,
and re-definition and updating of best practices has been
historically performed by management consultants from
working in many industries and analyzing common threads.
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Best
of Breed
denotes the service provider that is best in its class
of services. In contrast, a service provider might not
be best of breed but, by reason of superior integration
of inter-operating services and infrastructures, provide
more valuable services in a suite. In selection of a vendor,
therefore, the question of whether a best of breed vendor
is better than an integrated vendor depends on the customer's
actual needs and history as well as on the degree to which
the best of breed vendor partners with others in related
or complementary fields.
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Business-to-Business
(B2B)
is the exchange of products, services, or information
between businesses rather than between businesses and
consumers.
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Business-to-Consumer
(B2C)
is the retailing aspect of e-commerce on the Internet.
It is often contrasted to B2B or business-to-business
e-commerce.
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Business-to-Employee
(B2E)
Internal communications among employees and between different
departments provides valuable savings to employees by
cutting the cost of printing policy manuals, production
manuals, retirement plans, statements of account and other
internal processes. B2E processes may be customized to
the enterprise's unique business environment (such as
a combination of compliance manuals in a highly regulated
industry). But B2E can be very generic, involving normal
compliance with the "plain vanilla" requirements
of pension and profit sharing plans, 401(k) plans, vacation
planning, "hotelling" of office space for transient
home-based workers, and other emerging business trends.
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Business
Process
Means a sequence of defined steps necessary to achieve
a business objective. Business objectives can include
any business operation, including product design, marketing,
sales, finance, accounting, manufacturing, logistics,
supply chain management, customer relationship management
and other special business relationships.
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Business
Process Outsourcing (or BPO)
is the procurement of particular services that involve
ongoing outsourcing of specific business processes. In
certain industries, design, manufacturing, inspection,
and logistics may be outsourced. More recently, BPO has
come to include internal, "back-office" functions
such as internal audit, finance, billing, accounting and
other operations support. BPO "front office"
functions may include customer relationship management,
with sales, call centers and fulfillment services.
"Business process" means a sequence of defined
steps necessary to achieve a business objective. Business
objectives can include any business operation, including
product design, marketing, sales, finance, accounting,
manufacturing, logistics, supply chain management, customer
relationship management and other special business relationships.
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Business
Process Re-engineering
represents planned changed in the manner of conducting
a business funciton, such as information collection and
reporting, manufacturing, finance, compliance or administration.
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Change
Control or Change Management
is the set of structures, procedures and rules governing
the adoption and implementation of changes in the commercial
or financial relationship between the customer and the
service provider.
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Common
Objects
Models of representations of data that are exchanged among
different software applications. Such data are any categories
that are capable of being defined by category and by related
metadata. For example, a common object may include a customer
name, order number, or product ("stock keeping unit,"
or "SKU"). While Microsoft applications use
"common object brokering" tools to allow the
interchange of such common objects using "cut and
paste" tools, the emergence of "XML" (extensible
hypertext markup language) expands the portability of
common objects across incompatible software applications.
The use of XML-based data bases extends the utility of
Web-based communication between business partners.
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Competitive
Insourcing
involves a process where internal employees may engage
in bidding to compete with competitive, third-party bidders
for a defined scope of work.
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Control
Without Ownership
(otherwise known as magic) can result from well-planned
arrangements in which the customer obtains effective use
of the resources of the external services provider.
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Consequential
Damages
are those elements of damages arising from a breach of
contract that are measured by loss of income or lost business
opportunities.
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Co-Sourcing
is a term used by one external services provider to trademark
its brand of outsourcing services. See also, smartsourcing
and outsourcing.
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CRM
(Customer Relationship Management)
A marketing and fulfillment system that usually includes
a call center, data bases, software and marketing strategy.
Like ERP, CRM initiatives are complex, involve redesign
of internal business process and retraining. Successful
contracting for CRM outsourcing requires attention to
business as well as technology and legal issues.
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End-to-end
Process
means the completion of a business process from beginning
to end, including all intermediate steps of data capture,
processing, analysis, generation of outputs and, in some
cases, implementation of tasks specified by the logic
(algorithm) that defines the business process.
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Enforceability
means the conditions under which the terms, conditions
and obligations of the parties under an agreement will
be adopted and confirmed by a court of competent jurisdiction.
(The Law, according to Ambrose Bierce's Devil's Dictionary,
is what a judge of competent jurisdiction says it is.)
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ERP
(Enterprise Resource Planning)
software integrates the various functions of an enterprise
based on sharing of data in common database that, when
processed, generates relevant management information for
purchasing departments, manufacturing, sales, delivery
and related internal processes (such as human resources
and accounting). In principle, ERP software is capable
of running the enterprise (and multiple enterprises) as
an integrated operation.
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Exchanges
Exchanges utilize the Internet to allow qualified and
registered users to look for buyers or sellers of goods
and services. Depending on the approach, buyers or sellers
may specify prices or invite bids. Transactions can be
initiated and completed, and ongoing purchases may qualify
customers for volume discounts or special offers.
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Extranet
extends the Intranet (see below) to information users
from outside the enterprise. Extranets are used to provide
access to information that can be used by suppliers, customers,
banks and other financial institutions and others needing
access to an enterprise's data.
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Facilities
Management (en francais, infogerance)
means the solution by which the customer entrusts to an
external services provider the responsibility for operations
and software applications and for the management of the
associated instrumentatities (hardware, software, applications
programming personnel, etc.), while retaining the general
oversight and supervision of its information technology.
In broader terms, facilities management may apply to other
fields, such as applications maintenance, updating or
revision.
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Fraud
means an intentional deception, for unjust advantage,
that causes loss or inconvenience to the party relying
on the false or misleading statement. In contract matters,
a fraud is the cause of an error bearing on a material
part of the contract.
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Gain-Sharing
is a technique for sharing risk and reward on a long-term
basis. Euphemistically, gain-sharing is not labeled as
risk sharing, so care must be taken to identify what is
being shared and why.
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Insourcing
is the transfer of an outsourced function to an internal
department of the customer, to be managed entirely by
employees. (See backsourcing and competitive insourcing).
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Indemnification
is a method of shifting legal liability from one party
to another by contract.
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Intranet
is a network of computers and related digital files available
to all members of the intranet's owner. USers access the
files using an Internet Protocol rather than simple hard
wiring. When added to a VPN (see below), an Intranet can
become an Extranet.
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Local
Area Network (LAN)
is a group of computers and associated devices that share
a common communications line and typically share the resources
of a single processor or server within a small geographic
area (for example, within an office building). Usually,
the server has applications and data storage that are
shared in common by multiple computer users.
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Liability
is the legal obligation arising out of a failure to honor
one's legal liability to another party, such as by contract
or in tort.
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Managed
Security Services (MSS)
Managed security services provide in-depth analysis to
find intrusion threats and respond to security breaches.
MSS contains elements such as web-enabled, real-time security
information, best practice policies, in-depth monitoring,
safeguard management capabilities, and strong incident
response and computer forensic servicess.
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Massive
Outsourcing
refers to the process where a majority of the business
support processes are outsourced in one transaction or
a small number of related transactions. The purpose of
massive outsourcing is to drive shareholder value through
shifting to others the operational responsibility for
critical operations that do not deliver comparative advantage,
or in which the company chooses not to invest due to comparatively
low returns on investment.
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Near
Shore
Offshore outsourcing within nearby territory, and accessible
by short travel or telephone in the same or neighboring
time zone.
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Outsourcing
(or sourcing)
is the transfer (or delegation) to an external service
provider the operation and day-to-day management of a
business process. The customer receives a service that
performs a distinct business function that fits into the
customer's overall business operations. Sometimes the
process is one that historically has been performed by
a vertically integrated enterprise, such as data processing.
More recently, outsourcing defines the services sector
for those services that were not part of the vertically
integrated enterprise, such as telecommunications, Website
hosting, transportation services, logistics and professional
services of regulated professionals.
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Offsourcing
Offsourcing (a term we invented) refers to the restructuring
of a supply chain where one company relies on its supplier
for functions that were previously performed in-house.
The offsourced functional unit is able to generate greater
value as a part of the supplier's business than in the
customer's business. What makes "offsourcing"
so powerful is that the supply chain is tightened by the
improved functioning of the offsourced employees in the
new environment.
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Quality
of Service
is a concept that is used to differentiate one provider
from another. Typically, the outsourcing customer seeks
to enhance its own quality of service by obtaining quality
of service from its outsourcing suppliers.
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Request
for Information (or RFI)
is a document that requests prospective service providers
to provide general information on capabilities and their
overall business.
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Request
for Proposal (or RFP)
is a document that requests prospective service providers
to propose the term, conditions and other elements of
an agreement to deliver specified services.
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Renegotiation
means the process of evolution of an existing outsourcing
agreement. This process is facilitated through effective
design and implementation of contract management processes
from inception of the outsourcing relationship.
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Scope
identifies what is available for sourcing from external
service providers.
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Service
Level Agreements (or SLAs)
are specifications for services to be delivered. SLAs
define the type, value and conditions of the outsourcing
services to be provided. SLAs define the overall relationship
by establishing parameters for quality of service.
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Smartsourcing
is another euphemism for the basic challenge of outsourcing
as a management technique.
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Stalking
Horse
means a competitor who never had a meaningful opportunity
to win a contract. A "stalking horse" differs
from the losing competitor because the customer intended
only to use the "stalking horse" to generate
competitive price quotations, to challenge the preferred
provider (who ultimately wins the bidding) and is not
compensated for this function. Service providers caught
in this role will not succeed in business if they continue
to be just losing bidders in the role of a stalking horse.
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Storage
Area Network (SAN)
is a high-speed special-purpose network that interconnects
different kinds of data storage devices with associated
data servers on behalf of a larger network of users. Typically,
a storage area network is part of the overall network
of computing resources for an enterprise.
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Subcontractor
is a service provider that is responsible directly to
the general contractor and may not have privity of contractual
relationship with the outsourcing customer.
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Supply
Chain Management
is an integrated process for managing all levels of the
flow of information from an enterprise to its suppliers
and customers, incuding its own internal manufacturing
resources.
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Virtual
Private Network
is a network established using telephone lines and/or
Internet to transmit digital information between defined
receiving and transmitting stations, such as telephone,
computers and data routing equipment.
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Wide
Area Network (WAN)
is a geographically dispersed telecommunications network.
The term distinguishes a broader telecommunication structure
from a local area network (LAN). A wide area network may
be privately owned or rented, but the term usually connotes
the inclusion of public (shared user) networks