This is a research paper addressing the financial advantage of properly leveraging IT products and staffing strategies for reducing operating costs. David Bustin

1. Running head: BUSINESS IT AND LABOR STRATEGY 1
Business IT and Labor Strategy: Infrastructure Enhancements to Achieve Corporate Goals
David D. Bustin
December 15, 2017
MGT. 5154

2. BUSINESS IT AND LABOR STRATEGY 2
Abstract
This paper explores technical and business strategies for a business unit to increase the efficiency
in their IT infrastructure and business processes. The purpose is to provide solutions for the
branch manager to achieve goals in increasing revenue and staff, reduce overhead labor costs,
increase staff head count, and build external revenue. Research was conducted through digital
libraries, online searches, and course textbook. Results of the study suggest the use of enterprise
resource planning (ERP) enables companies to streamline business processes, ultimately saving
time and money. Further research suggest that businesses employ part-time staff, outsource IT
infrastructure, deploy automation tools, incorporate social business intelligence, collaborate with
other organizations, and manage data for additional revenue. Through social media platforms,
organizations can now reach customers that they were previously unable to advertise to. For
companies to further reduce their labor costs, bring-your-own-device (BYOD) and telework
methods also provide value to employees by reducing stress and increasing productivity.

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Business IT and Labor Strategy: Infrastructure Enhancements to Achieve Corporate Goals
Throughout the history and modern times of business, the ultimate goal of many
corporations is to earn a profit. It is commonly achieved through sales and lowering the
associated costs of providing the end product or service. Although objectives, strategies,
methods, approaches, and their tools have evolved, goals have remained relatively consistent.
Expanding into new markets while simultaneously retaining the current customer base is a
simple concept with complex strategies. These strategies become complex when entering the
global marketplace by competing with foreign companies and complying with multiple national
or international laws, rules, regulations, ethics, cultures, and standards. Establishing and
operating an international presence increases the costs of labor, marketing, advertising, supply,
and distribution. Adding to the complexity of competing globally, the pace of business and
changes in consumer trends compound the challenges of meeting market demands. To overcome
these challenges and gain or maintain a competitive position, companies have embedded
technology and information systems into their core business processes. The integration of
advanced technology has become a common tool and the level of leverage that technology
provides is partially dependent on the configuration of the systems infrastructure and partially on
staff expertise for supporting the systems. Advances in software and hardware have automated
many of the traditional manual tasks, thus lowering the need for a large staff to support the
networks. Progressively, technology has become cheaper while labor costs have risen, which
makes shifting more of the balance toward technology an attractive approach. An even more
cost-effective approach is for companies to completely outsource their infrastructure to a third-
party provider through a subscription known as Infrastructure-as-a-Service (IaaS). Other
advanced technological innovations, big data and data analysis tools, provide more granular

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results for analyzing market trends and help companies in competing with today’s pace of
commerce, traditionally recognized as major challenges of entering the global marketplace. As
companies expand to offer products and services across the globe, the social business challenges
of brand recognition and building customer relations is addressed through developing a presence
on internet platforms described as social media. This is a method to advertise and market very
cheaply to anyone, anywhere, and anytime. The on-demand access further strengthens rapport
with customers.
The basis for this paper is an analysis of a scenario consisting of a branch manager with
the responsibility of accomplishing five objectives that support two goals from the corporate
headquarters. The objectives are intended to improve the efficiency of the corporation’s
information technology infrastructure and global systems to support business efforts. The
corporate goals are to expand business into new markets without losing any current customers
and increase their bottom line by reducing overhead labor percentages. The branch manager’s
objectives to support these goals are to improve infrastructure efficiency to reduce overhead
labor, grow the external customer base, increase branch staff by two personnel, reduce the
branch’s overhead labor to 7.5% or less, and increase external revenue by a minimum of 2%
direct labor.
Enterprise Applications to Reduce Overhead
Enterprise Resource Planning (ERP) enable corporations to gain an advantage or
maintain their market competitiveness through multiple performance dimensions. “One reason
that many firms choose to implement ERP is in order to achieve competitive advantage over
other firms in the same industry” Jafarnedjad, Ansari, Youshanlouei, and Mood’s article (as cited
in Balint, 2015). The branch manager in the scenario can benefit in many ways by implementing

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an ERP. The objective was to reduce overhead labor costs. “This continued popularity of ERP
has been attributed to its ability to process transaction information faster, track product orders
and inventory, automate orders and payment, lower setup costs, reduce order cycle time, reduce
administrative overhead expenditures, improve cash management, avoid data duplication, and
integrate business processes throughout the entire supply chain” Davenport, Trott, and Hoecht
(as cited by Hwang and Min, 2015). It is very important to note that for organizations to receive
the full value of their return on investment, caution should be taken when customizing the
software. “Packaged software vendors, anecdotal evidence, and practitioner-oriented research all
recommend that businesses should customize software as little as possible, and instead adapt
their processes to meet the “best practices” of the software” (Balint, 2015). Suboptimal
configuration cause unnecessary processes to operate less than intended, often resulting in
counter-productive efforts in time and cost. Customization is not alone when impacting the
software’s effectiveness. The organizational culture must accept the implementation and
understand how to operate it. Given the corporate goals in the scenario, upper management
needs to understand the benefits in order to support the integration. An ERP system improves
the cross-functional tasks, a big benefit for large, global firms with many different business units.
“The notion is that by following the business processes prescribed by the functionality and
structure of the ERP system, business units (BU’s) within a firm will be collectively more
efficient because they will be able to share data effortlessly” Ravasan and Rouhani (as cited by
Balint, 2015).
Strategy for Hiring Staff and Reducing Overhead Labor
The costs of labor are often the largest expenditure for a company to produce products
and services. In a time when cutbacks are needed, reducing the workforce is one of the first

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approaches. However, in the long term of labor costs, rehiring and training staff is more
expensive. There are alternatives to retaining and hiring additional staff while simultaneously
reducing overall labor costs. Brand (2017) list methods for reducing labor costs as cost reduction
by design, eliminate overscheduling, lean production, standardization, and utilizing part-time
labor. Cost reduction by design involves product development cost and concept and program
architecture cost which are the majority of overall production cost. This involves considerations
for reducing associated expenses in raw materials, secondary processes, and packaging. He
mentions eliminating rework by improving product quality design. The project manager should
be cautious in scheduling to avoid overscheduling, a major expenditure of labor cost. A method
which doubles labor productivity, reduces inventory, and lowers production time is achieved
through lean production. Automation through standardization enables production continuously
and eliminates costs associated with holidays, hourly wages, or time off for illness. Hiring part-
time labor saves on labor cost by eliminating benefits. An alternative option is to hire
freelancers for peak production periods. This eliminates the cost for retaining staff during times
that demand is low and avoids the process of firing. Hiring a freelancer allows the hiring
manager to shop for the most suitable candidate.
Social Business to Grow Customer Base
The branch managers third goal is to increase the external customer base. Little doubt
exists as to the added business value of a social media presence. Businesses also benefit from
collaboration. Laudon and Laudon (2015) define social business as, “the use of social
networking platforms, including facebook, twitter, and internal corporate social tools – to engage
their employees, customers, and suppliers. The goal of social business is to deepen interactions
with groups inside and outside the firm to expedite and enhance information-sharing, innovation,

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and decision making.” Social media options for the branch manager to interact and grow the
customer base extend beyond social networks. Social business applications also include
crowdsourcing, blogging, social commerce, and online community forums. Many business
websites include instant messaging for immediate assistance and provide contact information on
their site. Increasingly, companies are utilizing social media to promote their brand and interact
with consumers to broaden their customer base, in addition to, strengthen their existing customer
loyalty. Prior to widespread availability digital marketing and advertising, organizations utilized
more resources for outbound marketing on signs, radio and television air time, billboards, and
magazine advertisements. Since the innovation of the internet, inbound marketing creates the
opportunity for marketing departments to extend their advertisements to anyone at any time in
any location they can access the internet. More companies are subscribing to this method of
social business. “Before, it might have been weird for businesses to be active on social media,
now it’s not only commonplace, but necessary” (Prangley, 2017). “Social media intelligence (the
combination of social media and business intelligence (BI) allows them to reach a greater audience,with
more effective targeting and greater cost savings” (Dutot and Mosconi, 2016). The branch manager from
the scenario can increase the corporation’s customer base by emphasizing investments in the company’s
online marketing strategy by developing social media intelligence within the branch’s marketing
department. Through social media, they can share content and interact with social communities that were
previously unreachable in nearly every location. The only limitations are those locations without internet
connectivity or cellular service for mobile digital devices. Ketonen-Oksi, Jussila, and Karkkainen (2016)
describe through social media, both the corporation and customers experience value added benefits
through activities termed value co-creation.
IT Infrastructure Solutions to Lower Overhead Labor
Total cost of ownership for information technology can be expensive but lower overall

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operating expenses. Companies that choose to invest in networks can select from many options
to substitute processes or increase efficiency of production. Dholakiya (2015) mentions four
approaches to IT infrastructure that the branch manager can take for reducing indirect labor
costs. The first recommendation is to automate wherever possible. He mentions that software-
as-a-service (SaaS) can automate many of the routine tasks traditionally conducted by
employees. The second option for the branch manager to lower overhead labor cost through IT
infrastructure improvements is migrating their current infrastructure to the cloud. This reduces
the needed support where the subscription to a service provider includes technical support.
There are cloud platforms such as GoDaddy, HostGator, Microsoft Azure, or Amazon Web
Services. Another advantage is that as the corporation’s processing and storage needs grow, they
can upgrade their subscription without the expense of purchasing new hardware and employing
support staff. The third option is to utilize free applications and tools. This option can be used
with cloud services to extend operational savings. Google Analytics is a free service that
provides marketing analysis for companies to understand their customers. Combined with
google analytics, Salesforce customer relationship management (CRM) system stores and
manages customer information in a central location. Dholakiya’s fourth recommendation is to
invest in green technology. Through life cycle replacement, the branch manager can replace
components with eco-friendly devices.
Businesses with strict budgets and in dire need of cost-cutting strategies, can encourage
their employees to bring your own device (BYOD) and telework. Both of these approaches shift
the cost of utilities, equipment, and fee-based services to the employee. The United States Equal
Employment Opportunity Commission’s 2005 Final Report list major cost savings categories
from telework as information technology and internet access, telecommunication, technology

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support, training, and real estate. Their cost model analyzed five years starting in 2008 through
2012 for annual net savings which resulted in a cumulative net savings of $5,315,000.00 for
allowing some employees to frequently telework, two or more days per week. Qualitative
benefits are less stressed and more productive employees, even when they are sick. The report
includes telework benefits in three categories, business costs and productivity, environmental,
and quality of life.
Business Strategy for Increasing External Revenue
External revenue is achieved through activities from outside of the organization.
External growth of an organization is a strategy for sustaining increased revenue accomplished
through a “focus on strategic mergers or acquisitions, increasing the number of mutual
relationships through third parties, and may even include franchising the business model”
(Miller, 2017). Through partnering with other businesses, the volume of data shared increases.
Data has become a valuable, marketable asset in recent years. According to Lewis and McKone
(2016), “Today, companies in almost every industry are generating another valuable byproduct:
data.” Companies should focus on other companies in a related industry that are not direct
competitors to share, buy, or sell information. The data is analyzed and helps to determine their
product’s level of effectiveness, performance, or way the product is used. Selling data for profit
is still a new source of revenue with enormous earnings in the near future. “In 2015, the digital
universe contained 4.4 zettabytes. And that already unfathomable store will increase ten times
over by 2020, thanks to millions of devices sharing information in the Internet of Things. But
only five percent of that data is being analyzed today. The rest is waiting to be exploited” (Lewis
and McKone, 2016). By using Google Analytics, the branch manager can capture customer
information and use it to improve processes both at the branch office and share with the

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corporate headquarters for distribution among other business units. The data stored in their
Salesforce CRM database is then sold for additional revenue.
Strategic Approach for Accomplishing Goals
The objectives for achieving the goals are to reduce labor costs, increase efficiency in the
IT infrastructure, and expand the customer base. The total cost of ownership is often
miscalculated by only factoring sticker price for hardware, software, and technical support. It
should include maintenance, administration, and end user operations. Corporations with tight
budgets looking further to reduce operating costs, often consider downsizing staff as a first step
approach. Additional inefficiencies in resource utilization include hoarding valuable data,
overscheduling employees, improperly configuring systems, and avoiding or failing to maximize
social media to promote their brand. Following are recommendations for the branch manager to
improve IT infrastructure efficiency, reduce overhead labor, and increase staff and external
revenue.
High performing businesses make business process improvement a priority. Continually
seeking improvements ensures the survivability of a company. As a global company, building
centers of excellence at key locations ensures business units are operating at maximum
efficiency. To improve the efficiency in the IT infrastructure, SAP supply chain management
systems ensure networking, planning, and coordination with suppliers. On a global scale, the
logistics of ordering, processing, and distribution becomes complex. A standardized and well-
known supply chain management system helps ensure processing is well coordinated. For
enterprise resource planning, Oracle NetSuite offers rapid scalability to allow seamless,
uninterrupted growth. It easily integrates e-commerce with other enterprise applications. As
mentioned earlier in this paper, the customer relationship management system, Salesforce, is

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recommended for extreme compatibility with Google Analytics, which is used for analyzing
customer trends and data. Social media sites, Facebook, Twitter, Pinterest, Instagram, Snapchat,
and YouTube are used to strengthen current customer relations and increase the customer base.
Website management should be outsourced to HostGator. Indirect labor costs can be reduced
through focusing marketing and advertising on social media and less on traditional, expensive
methods. Selling data that has been collected will increase revenue. Hiring part time employees
and freelancers fulfills corporate requirements for increasing direct labor.
Conclusion
Labor costs and investments in technology are two of the biggest expenses for
companies. The recommendations I made in this paper reduce those costs, expand the business,
and increase the customer base while retaining the current customer loyalty. Cloud-based
services offer companies the opportunity to lower required support staff, eliminate replacing
aging hardware, technical support, and eliminate maintenance. Companies further save on
operational costs through allowing employees the opportunity to BYOD and telework.
Traditional corporate networks consume a lot of energy, expensive to maintain, and require
additional staff to fully manage. The lighter, faster, more powerful and mobile, and scalable
infrastructure is the solution for the hyper-connected and fast pace of today’s business world.
The array of online platforms that offer companies the ability to interact with anyone and
anywhere on-demand is vital for maintaining a competitive position in the marketplace where
companies failing to adapt to the shift are inefficient.

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data-sell-it

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