Sorry a bit late with this but welcome to 2011

I was in to check the statistics and am surprised that my inactive blogg is getting some traffic which of course inspired me to take up blogging again.

Welcome readers and Rita again

Offshoring IT Services, on behalf of an Indian company, is looking for Regional Manager for the Nordic region.

Job Title: Regional Manager
Education: BE /MCA + MBA
Experience: 7+Yrs
Job Location: Sweden
Necessary: The candidate should be based in SWEDEN currently or has the right to work in SWEDEN.

 Skills:
- Business development manager with 7+ years of experience in dealing with Swedish suppliers of automation / automotive/ media / wireless Industry
- Experience in dealing with companies from other Nordic countries(Finland, Denmark & Norway) would be an added advantage
- Should have good understanding in Embedded system
- Should be able to understand customer requirements, interface with the engineering team in making Techno-Commercial Proposals
- Should have a strong sales acumen, leadership, entrepreneurial, negotiation and analytical skills.
- Burning desire to grow and develop the business
- Excellent communication skills across all media ( both written and verbal)

 Description of position Responsibilities:
- To catalyze the business development in Sweden market along with other
Nordic countires, by identifying the prospective clients for the Organization
in technology companies.
- Primary contact for any business development/sales activity in Nordic region.
- Study various verticals; identify potential customers and generate leads.
- Carry out marketing research, do sales forecasting, promotional planning and brand promotion.
- Track against targets and budget.
- Meet the profitability revenue goals, grow the market share, and provide customer satisfaction.
- Send regular updates to the management and actively participate in the decision making process.

Contact me at infoatoffshoring.se for more information.

Recently posted a question on the various “offshoring/Sourcing” groups at LinkedIn.
1) With multi suppliers how should the non-core areas/blocks be divided? Should for e.g. 2 suppliers get application development and support while infrastructure/operations be given to 2 different suppliers? OR 2-3 suppliers get application/infra/operations? How should the multi-sourcing set-up be defined & divided?
2) What are the pros- and cons with the different set-ups?

Replies from The BPO and Offshoring Best Practices Forum

Comment 1: 1. Yes your are right the services should be outsourced to different vendors.

i.e. Application Development/Support. – This is to maintain healthy competition between the parties and also that they will try to perform well because of competition in terms of Cost, Quality Deliverables and SLAs.

Also one should have the signed contract between both the parties including Service Definition Document, Third Part Service Contract (Contract should also contain clauses for non-performance of the service by the provider with respective penalties.)

Also One thing should be made clear i.e. work areas for the providers other wise they will start blaming each other to save their shoe/SLA target time.

Comment 2: A multi vendor approach can have several drivers – healthy competetion keeping the vendors on their toes, evaluation of performance in absence of benchmarks, business continuity, best practices from several sources etc. Actual implementation could be decisioned by several factors again – opportunity scale, linkages between the different areas to be sourced, vendor competency in specific areas, amount of time and effort that could be made available for vendor management, past experience and capability for doing this, existing relationships etc. Circumstances permitting and with the above in mind it would be ideal to reduce dependency on one vendor and get the best from several worlds. For this to happen one would tend to split one service across two different vendors and the second one among the same set of vendors or different ones.

Comment 3: While multi-sourcing has obvious potential benefits, the critical success factor is not the specific demarcation of service partitions, nor is it the number of service providers involved, because there are many ‘right’ answers to both questions. The number one indicator for success is what I define as the service integration challenge: how well will your organization perform in assembling, collating and managing a portfolio of service providers over an extended period of time, as operating conditions, business requirements and environmental factors combine to stress these service relationships.

For some more thoughts on this topic, please see the deck that I presented at the recently HCL Global Conference: http://slidesha.re/cxMgkN .

Comment 4: On the pros, cost reduction through competitive jockeying (negotiation, benchmarking); availability of skills with a single provider; concentration risk management;

Not a panacea though. Think of governance costs; hand-offs that create inefficiencies; and the loss of process adjacency. The buyer, the vendor community, the IT side over time lose sight of the overall process and look for local optimization of their fragment. The ability to quickly change, transform, scale are dramatically reduced through fragmentation.

Use a holistic framework to determine what the objective is (it has to be cost, plus what?). Map the process against a some key dimensions – competitive advantage vis a vis value addition; rate of change vis a vis criticality to business; importance of linkages vis a vis bargaining power at the process and application level to determine the advantages of cost vs the cost of fragmented processes.

Comment 5: I agree with Mark that governance is critical for multisourcing success in the long run, and with Shammik that you need a holistic framework.

That holistic context, that single integrated view of the enterprise – owned by the business and in the language of the business – provides the essential framework for sustainable success in multisourcing, and for continuous performance improvement.

All of the stakeholders – process owners as well as folks in organisational change, sourcing strategy, risk management, IT, knowledge management, relationship management, etc – are then working from a common reference point and within a single enterprise-wide governance framework.

More on this here if you are interested http://bit.ly/bxMaUg

Comment 6: Mike, saw your blog, and am glad we share the same views. Here’s what I am grappling with. Folks, your views are very welcome. Rita, no intention of hijacking the question.

What do we do about the existing deals that are already outsourced to multi vendor relationships (some “vendors” being owned captives) from a process, application, hosting perspective. No vendor in this case has the holistic picture, and arguably, neither does the service buyer, any more. Now that the cost savings are passe, how does one start to create the integrated information and framework necessary for “transformation”? I know the definition of the term also varies between the vendors (”IT led”, “Process led”, “Quality led”) and the buyers. Does this mean transformation is stillborn because of the earlier chase on cost as the sole driver?

Comment 7: Shammik – I can’t see how any organization can manage the outsourced environment without visibility and ownership of its end-to-end business processes. Any buyer that loses intellectual control of outsourced activities will pay a very high price – that’s my experience.

Feedback from Outsourcing & Offshoring

Comment 8: A multi vendor strategy is a good way to go to get the best performance from your vendors. Divide your RFP into different blocks and get all your proposed vendors to provide separate pricing for each block. Based on capabilites of each vendor, strategic business objectives and pricing, select the top 2 or 3 vendors to be your service provider for each area. If processes and delivery has dependencies, it should stay with one vendor to ensure effecient delivery and accountability.

Comment 9: To begin with, you would have to clearly scope out the areas that you are planning to outsource. Once you do this, tag the areas being critical and non-critical (from a business standpoint). From here-on, you can take a two-forked approach.

1. For those areas that you deem critical, go for only one vendor. Perform a complete due diligence, asking for case studies from vendors and if possible (strongly advised) talk to the companies that the vendors quote in their case studies to understand how exactly the vendor worked with them. Choose the best vendor that matches your skill set requirement, budget and response times.
Bottom-line: You do not want a setup in which vendors are blaming each other for things going wrong. Only one vendor who owns up is the best choice for critical areas.

2. For non-critical areas, you can opt for more than one vendor in the same area. Vendor relationships are seldom a one-time affair and evolve with time. Non-critical areas are the best for you to try options and identify vendors that suit your company’s business in the medium and long run. This is also the place where you could negotiate rates without being bothered too much about quality directly impacting the business (and also observe which vendor gives the best value for your money e.g. acceptable quality at an affordable rate (vs) ‘more than needed’ quality at a high rate). A best practice here is to club areas across business units and use the volume business to negotiate rates rather than using a piece-meal approach (vendors equally love visibility of business as much as they love big money).

Thank you!

There is a need for “make-or-buy analysis” on a strategic level. Found a good document about “Process for Conducting a Make/Buy Analysis“. Have modified it to include CORE and NON-CORE concept.

How should the strategic value and core competencies be assessed? Many a times there is no common agreement due to subjective evaluation. Specially in an IT company, it is difficult to assess core.

Gartner provides some high level guidance as to the selection and assessment approach for a selective outsourcing.

This can then be used to provide a graded view to facilitate selective sourcing.

I am hung up on VMO just now and have been looking for articles to understand the concept. Found this great white papper from Alsbridge Inc. at Outsourcing Leadership.

VMO should include following components:

• Relationship Management
• Performance Management
• Financial Management
• Contract Management
• IT Service Management

For the whole article check out Alsbridge-WP-Blueprinting-Your-VMO-1

Thank you for taking the time to read my blog. 

Currently have readers from Sweden, United States, India, Canada, Philippines, United Kingdom, Singapore, Australia, Japan, Netherlands, Russia, Brazil, Germany, Poland, United Arab Emirates, Brunei, Norway, Czech Republic, Denmark, Bahrain, Iran, Finland, Mexico and Italy.

Thank you

Have been recently working, as my previous articles in this blog give an indication, with managed services and often on-demand. Found an interesting article by Owen McCall ”Insource, Outsource, Everything As a Service“ which explains everything my project is going through.

The article mentions some key areas:
- Is the process or functionality being discussed strategic and/or a source of competitive advantage for my organisation? (If NO then)
- Can the provider meet the service levels that I need?
- Are your services cheaper than what I can provide myself for the required level of service?
- Is the provider prepared to share my risk?

I would like to add, ‘If you only need milk , would you buy a cow ?’ . Found this interesting analogy related to cloud computing. My apologies if I have offended anyone.
- Would I like to manage the provider’s resources? 
- Would I like to own the hardware and infrastructure?
- Would I like to own the software? (If for e.g. CRM?)
- How would I like the commercial part of the agreement to be met? If I do not want to own then I need to buy it as a service.

Owen McCall ends his article with: So, how do you decide? What will you have to pay in order to meet the required level of service?

I would like to add, “How would you like to pay in order to meet the required level of service?”. Are providers and customers mature for a partnership from owning (HW, infrastructure etc.) to where everything is bought as a service?

Managed services, which I have written previously about, is the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations. Here, the focus shifts from managing vendor and its resources to monitoring delivery, at an operational level. It is the vendors’ responsibility to manage its resources and part of the process that belongs to the vendors’ organisation.

Manage service can also be on-demand. When there is a high demand the vendor adds the needed resources and removes them when not needed.  Helps minimize team leadership responsibility from group/middle managers; this is a value-add from the vendor, saves cost & brings about flexibility in the organisation.

Operational governance model: This governance model is a set of best practices to be used in the processes at an operational level.

Agree on the the process principles described in “Operational IT governance”

• We apply policy to processes.
• We apply standards to processes.
• We enforce decision rights in processes.
• We measure and control processes.

Plan (set objectives): Start by defining the processes and its objectives that the operational governance is going to govern upon. For e.g. application maintenance & support process and its objectives.
Implement (design & deploy):
Intellectual Property (IP) issues: Knowledge capture document is often saved in the vendors’ knowledge repository. This is customer’s IP. If tools & templates belong to the vendor make sure that the terms and conditions for IP rights are covered in the Master Service agreement. 

Remember that the list below is best practices. Select the relevant areas, define them, follow up and improve upon as the process and organisation matures with this “way of working”.

It is important to
- define roles & responsibilities (in-house resources and vendor resources).
- define the process interfaces. Where does the customer’s process ends and the vendor takes over and vice versa? 
- define the tools to be used (incident & problem management, defect management tool, solution templates, Change request tools, etc.)
- define the infrastructure to be used
- define artifacts to produce and who is responsible for them. Review these artifacts.
- define monitoring tools such as KPI & SLA
- define communication methods such as telephone, video conference is the resources are spread out.
- define how often meetings need be held. On Operational level once a month? On strategically level twice per year?
- define often the resources need to travel onsite.
- define decision points so that no decisions are taken without the right people being involved.
- define escalations levels when a problem arises. Even escalation levels to give feedback.
- define and encourage risks management
Manage (control & monitor):
Agree upon the method to control and monitor.
- control that the objectives with managed services are fulfilled
- control that the selected best practices fulfil your objective
- monitor KPI and SLA
- control that the vendor contributes to proactive maintenance by applying solution templates and change management.
- control that the vendor is proactive and gives value-adds to the relationship
- control that the vendor resources flag risks in time before they become a problem.
Assess (evaluate & analyze):
Evaluate & analyze results to the overall objectives. This is an input for continuous improvement.

IST stands for Indian Standard Time but should be renamed to “Indian Stretchable Time“. When I am in Sweden it drives me crazy when deadlines are not met by Indians, be it guests that don’t show up on time for dinner or an expected delivery is pushed forward. It’s like the Indian word “kal” which means both yesterday and tomorrow. At least the Spanish word “mañana” means tomorrow.

At the same time the Indian flexi time is a great relief when I am in India on a private visit. I sort of get back to old habits and know that everything will be delayed and automatically adjust to it. On one occasion time played a vital role. It was on my wedding day. The priest threatened us that the church door will be locked if I do not arrive on time. This got my whole family in a frenzy to get me at the church in time

Remember that even the Indian Stretchable Time applies while doing business in India. When in Rome, do as the Romans do?

Firms establish a governance body across 3 layers: organisational, functional & operational.
- Organisational governance: ensures that the firm’s business case for globalisation is being established, monitored & achieved.
- Functional governance: enable coordination, communication and control between the various process owners and provides a mechanism for knowledge management and transfer.
- Operational governance: is the actual management of the individual outsourcing contract or internal service levels.

The focus here is on organisational & functional governance. “The Feeny and Willcocks Framework” identifies core IS capabilities  for successful IT sourcing such as leadership, informed buying, relationship building, making technology work, contract facilitation, contract monitoring, vendor development, business systems thinking, and architecture planning. 

The framework highlights leadership, informed buying and strategic management of risks and controls as core IS  capabilities that are necessary for outsourcing governance. Forrester reseach has published “Four stages of going offshore“ 
- Bystanders
- Experimenters
- Committeds
- Full exploiters

Risk connected to leadership are
- Loss of organizational capabilities/ competencies and
- Risk of business failure/uncertainties.

Risks connected to informed buying are
- Low awareness of offshore location/vendor capabilities and
- Wrong type of service outsourced/ offshored.

The  Offshore governance changes dramatically, as companies migrate through the four stages of the offshore journey. What starts as an administrative function evolves over three or more years into a program management and development discipline.
- Phase one: establishment. The strategic focus in this period is on developing and articulating the overall offshore strategy.
- Phase two: encouragement. Governance evolves to drive use.
- Phase three: upgrading IT processes and methodologies. The scope of vendor management also shifts from providing the supplier with a to-do list to pushing the vendor to deploy precious domain expertise and proactively offer up shared risk/reward-based projects.

It is an interesting journey and the ultimate goal ought to be sourcing governance with sourcing as main focus rather than just offshoring.