Virtual Organization
Definition
A virtual organization or company is one whose
members are geographically apart, usually working
by computer e-mail and groupware while appearing
to others to be a single, unified organization with a
real physical location.
A flexible network of independent entities linked by
information technology to share skills, knowledge
and access to others' expertise in nontraditional
ways.
Definition
A form of cooperation involving companies,
institutions and/or individuals delivering a
product or service on the basis of a common
business understanding. The units participate in
the collaboration and present themselves as a
unified organization.
Virtual organizations do not need to have all of
the people, or sometimes any of the people, in
one place to deliver their service. The
organization exists but you cannot see it. It is a
network, not an office.
Different types of virtual organizations are
created depending upon the length of time
spent in virtual work, types of projects, the
range of involvement and the number of
personnel involved. Four types of virtual
organizations:
Permanent virtual Organization
Temporary virtual organizations
Virtual Teams
Virtual Projects
Types of virtual organizations
VT VP TVO PVO
Range of
Involvement
Internal to an
organization or
deptt
Across
functions and
organizations
Across
organizations
Across
organizations
Membership Small, local Indeterminate Typically larger Typically
smaller but
scalable.
Mission Teams on
specific
ongoing
projects
Multiple org.
representatives
working on
specific
projects
Multiple
function
responding to
market
opportunity
All functions
and full
functionality as
a working org.
Length of
project
Membership
varies but form
is permanent
Temporary Temporary Permanent
Contd...........................
Attributes of Virtual Organizations
A dispersed network of skills and capabilities--The
structure of a VO is distributed among multiple locations
resulting in the capacity of bringing in a wider pool of
skills and capabilities.
The use of telecommunications and computing
technologies--These technologies serve as the enabler
that makes a VO exist. One could argue that VOs have
always existed--traveling sales staff, outsourced staff and
staff working at home. However, what is new is that
technology has made it much easier to support
distributed work teams. Barriers of distance and time
have been overcome by technology.
Attributes of Virtual Organizations
Flexible, dynamic, restless--Organizations no longer are
constrained by traditional barriers of place and time. VOs
support dynamic changes to the organization including
employee work environments and processing structures.
Restlessness refers to the attitude to willingly change products
and services, geographic dispersion, communication patterns.
This has the potential of leading toward higher levels of
innovation and creativity.
Integration--When different individuals, groups and
organizations get together in a VO, they need to interact
collectively to achieve success. This implies greater levels of
collaboration, cooperation and trust. Integration leverages the
synergy of individuals.
Why go Virtual
A need for process innovation--This is often motivated
by competitive pressures, stakeholder demands and
other factors to achieve increased productivity and
quality. There is typically a 30 to 50 percent increase in
productivity as result of implementing VOs.
Sharing of core competencies-- VOs help address the
voids in an organization resulting from starting up,
turnover and retirements.
Globalization--Many organizations are finally realizing
there is a vast pool of untapped skills, knowledge and
abilities throughout the world.
Why go Virtual
Mobile workers--VO concepts can help the
numerous companies employing mobile
workers such as auditors, consultants,
salespersons and service technicians
Cost reduction--Improving efficiency often
means reducing overhead, such as physical
assets used to support traditional work
environments or redistributing costs over
several physical locations.
Why go virtual
Changes in employee values and attitudes toward
work Quality of life is a major factor particularly in
attracting and retaining quality employees. Employers
have realized that a balance of work and personal life,
family requirements, personal fulfillment and flexibility
are important considerations among employees.
Costs and problems of traveling VOs address
transportation issues, such as unproductive commute
time, traffic hassles, the cost of fuel and environmental
impact of commuting vehicles.
Approaches in Implementing VOs
Telecommuting-- Employees work at a location away from
the usual workplace, but not necessarily at home.
Computers and telecommunications equipment are used to
maintain contact between the telecommuter and the home
office.
Telecenters-- These satellite offices typically are located in
communities outside of major cities and provide space and
equipment for employees commonly not available in the
telecommuter's home.
Mobile working--This refers to the working environment of
mobile workers who require tools such as cell phones, e-
mail wireless devices, pagers and laptops.
Approaches in Implementing VOs
Hot desking-- This arrangement is for offices in which
staff members spend a significant amount of time on
customer premises. It involves the removal of
permanently assigned desks to all or some of the
employees. When they arrive, they are assigned a
computer workstation where they can access their
documents, files, applications and e-mail.
Hoteling--This is when the client provides a hot desk
for the VO's employees.
Virtual teams--Employees collaborate from remote
locations using e-mail, groupware, the Intranet and/or
video conferencing.
Technologies
Basic technologies supporting VOs include the
Internet and the World Wide Web,
telecommunications, electronic mail,
groupware such as Lotus Notes, video
conferencing and knowledge management
that support VOs.
Technologies
(knowledge Management)
KM has been defined by the International
Center for Applied Studies in Information
Technology as "a conscious strategy of getting
the right knowledge to the right people at the
right time and helping people share and put
information into action in ways that strive to
improve organizational performance.
KM technologies
KM technologies supporting VOs include:
Collaborative technologies
Extensible markup language (XML)
Intranets and extranets
Personal devices
Wireless technologies
KM Technologies
Collaborative technologies are divided into two
groups
Synchronous-- Synchronous tools include virtual
meeting rooms (group support systems), shared
whiteboards, application sharing and video/audio
conferencing.
Asynchronous-- Asynchronous collaboration tools
include document sharing software, group
calendaring and newsgroups.
KM Technologies
An interesting combination of both can be found in what is
called integrated collaboration. An example is Collaborative
Virtual Workspace (CVW). To a user, a CVW is a building
divided into floors and rooms, where each room provides a
context for communication and document sharing. CVW
allows people to gather in rooms to talk through chat or
audio/video conferencing and to share text and URLs
(Uniform Resource Locator or Universal Resource Locator)
with one another. For privacy, users can lock rooms and
communicate privately within and between rooms. Rooms are
also used for document sharing. Users can place different
documents into a room, allowing anyone else in that room to
read the document.
KM Technologies
Extensible markup language (XML)- It is a set of rules for
encoding documents in machine readable form. The
design goals of XML emphasize simplicity, generality, and
usability over the Internet and is a textual data format,
whereas hypertext markup language (HTML) is for
displaying data and graphics over the web. XML is
evolving to be the common structure for data
interchange among disparate heterogeneous systems. It
will have a tremendous impact in the sharing of data and
for supporting increased functionality (e.g., searching for
information).
KM Technologies
Intranet-- It is a network of networks contained within an
enterprise and protected from outside intrusion through
firewalls. Intranets permit the sharing of company information
and computing resources among managers and employees.
Examples of intranet applications include manuals,
procedures, internal job offerings, documents, employee
information, schedules and calendars, databases and project
management.
Extranets They permit further accessibility. In an extranet,
the intranet is extended to external stakeholders such as
customers, suppliers and trading partners. Examples of
extranet applications include collaboration, data sharing,
project management, news and training.
KM Technologies
Personal devices-- These include personal digital assistants,
cell phones, e-mail wireless devices and Internet appliances.
These devices enable employees to have an office anywhere
and an expanded reach to both management and clients.
There is a growing trend toward a convergence of
functionalities onto one device.
Wireless technologies -- These include Bluetooth, which is a
computing and telecommunications specification that
describes how mobile phones, computers and personal digital
assistants can seamlessly connect with each other using a
short-range (10-meter) wireless connection via a radio
frequency. The technology requires that a low-cost
transceiver chip be included in each device.
Example of a Virtual Organization
Dell Computers (US)-- Most of the components in a Dell computer
are made by other companies while Dell focuses on its strengths--
marketing, customer support and integration of these components
into the final computer products. When buying a computer from
Dell, the virtual organization includes the Dell customer service rep,
assembly line and assembly crew, supply people for various
components, the UPS truck and driver who delivers the computer,
and people from MasterCard who pay for it. All of the inventory in
the system, regardless of location and ownership of the company,
can be viewed as a single system. Benefits may include overall
lower inventory levels in the whole system and better customer
service. For example, Dell tries to keep as little actual inventory on
hand as possible.
Technical Issues
The capability of the communications network--For example, the
potential limitations on bandwidth for transmission. This has the
impact of slowing down the necessary information flow and
interactivity between the entities in a VO. Related to this problem is
the reliability of the network and its servers. If the network is down
frequently, it can have profound effects on the productivity of a VO.
Hardware and software compatibility issues--For example, in a
telecommuting scenario, home computers range in the type of
hardware characteristics, such as processing power and memory.
These inconsistencies often result in common applications being
slow, difficult to use or even inoperative across the different
computers.
Technical Issues
Computer security--Due to the multiple
clients in a web-based architecture, there are
many points of possible intrusion into the
centralized applications and data sources of an
organization.
The dynamic nature of technology--This
makes managing hardware and software
upgrades a difficult task for any information
technology manager in a VO.
Managerial Issues
Potential abuse and wasted time--The lack of face-to-face
interaction may result in the employee focusing on non-work
activities.
Security--Organization resources may be open to intruders
and hackers.
Managing and controlling at a distance--Traditional managers
do not feel secure particularly in a crisis when their
employees are working remotely.
Ensuring employee self-motivation and self-discipline--
Keeping the employee focused on the job can be challenging
when there is limited managerial oversight.
Managerial Issues
Defining goals and limits of responsibility--
This must be done in a virtual team to prevent
duplicating an effort or missing a key job
requirement.
Loss of personal contact--Employees may miss
the camaraderie of a traditional office
environment