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In this blog segment, we will explore the sourcing options that are available today to the enterprises for strengthening and scaling the ICC service capabilities. Many of the enterprises that might have the ICC organization/set up in some shape or form,  don't really leverage high-maturity sourcing models. Core thinking behind a strategic sourcing model is to find a sourcing arrangement that allows the enterprise to channel their investments and energies into driving business results while bulk of the ‘doing’ and ‘making it happen’ work is sourced from where it makes best sense.

If I were to look at the profile of today’s sourcing approaches, I could summarize it as follows:

• Sourcing decision need to be made from strong business thinking. Very often sourcing decision involve intense political mindsets and emotional stakes leading to decisions not being very ‘business outcome’ centric.
• Sourcing not be construed as ‘offshoring’ always. Offshoring is one of the strategies available within regime of sourcing model and enterprises finding it suitable for their business purpose can leverage it.
• Sourcing is highly ‘manage activity’ focused and not so much ‘manage business outcome’.
• Sourcing decisions are not closely tied to (in many cases, not all though) well defined ‘business metrics’ against which effectiveness of the sourcing is measured
• In many enterprises, ‘one size fit all’ model of sourcing is adopted to avoid the sourcing complications while reality is that sourcing of different classes of capabilities/work will demand different type of sourcing models/contracts. In my experience, organizations that have figured out comprehensively structured (mind you, not necessarily complicated) sourcing model have started seeing the benefits in terms of effort saved, values being created for business and finally generating long term sourcing partnership platforms.

So from next-generation direction perspective, ICCs have opportunity to adopt smart sourcing model to leverage the strengths of specialized vendors and drive the focus of in-house staff toward more value added contribution. This way, engagement model of sourcing will shift to 'outcome driven' and not 'activity-driven'. Let us quickly look at various sourcing options that are typically available for organizations to adopt:

Option 1 – Work augmentation sourcing where enterprises source job profiles/talents in individual capacity. Growing levels of maturity for this option can be classified as follows:
Level 1: FTE based – you pretty much get the resource at your disposal for certain number of work hours. There is no commitment of work output or specific activities. Similar to staff on the roll but typically has not been ‘value centric’.
Level 2: Activity based – here you source the services for specific set of activities, mostly scaling up requirements drive this coupled with specific skill set requirements.
Level 3: Deliverable based – you source the resources for specific deliverables. Here work is assigned to individually sourced profile(s) with accountability of individual deliverables. Typically seen for consulting and knowledge intensive work.

Option 2 – Project based sourcing where a well-defined piece of work is sourced from external vendors. Growing levels of maturity for this option can be classified as follows:
Level 1: Life-cycle work product factory based sourcing where a part of the project life-cycle is sourced from external vendor (for example testing factory, development factory etc.)
Level 2: End-to-end project solution based sourcing where whole project work is sourced from a vendor.

Option 3 – portfolio based sourcing where a well defined portfolio of programs is sourced from external vendors. Growing levels of maturity for this option can be classified as follows:
Level 1: Project-based portfolio model – in this case enterprises source the services for portfolio of projects where contracting is done once at portfolio level and subsequently all project work in the portfolio are sourced with the same sourcing model. This in general doesn’t include common shared services (like PMO, governance authorities,  quality management) that are with the enterprise
Level 2: Total managed services model – This is the highest maturity model of sourcing where client gets into long term partnership with external vendors where vendor completely manages the deliver of the outcomes of the services provided including common shared services. Enterprises typically will focus on the business effectiveness/business value administration while vendor is focused on delivering what is required for the business value accomplishment.

So bringing back the view of next-generation ICC. Last blog post in this series focused on differentiating between value added functions and operational functions. That’s a great clue in my mind for the organizations to see how they would like to align the sourcing strategies to the differentiated value added functions. In that way, enterprises can look at the managed services model of sourcing in order to channel their people (who has intense organizational knowledge and business context) to drive the outcome from the sourced work.

Another view-point of conflict that I have encountered from the clients in the context of ICC and sourcing is the  need of investment into ICC capabilities when lot of portfolio work is sourced from outside the enterprise. This view-point is based on the hypothesis that if most of the work is anyway being done by the vendor, why should the enterprise invest into building capabilities like ICC. Fair point. Concern is genuine and surely has some weight. However, I think perspective there is short sighted and is less likely to be helpful in long term. Reason why I say that is because in such scenario investment into ICC capability is like the life insurance policy. Enterprise must keep the ‘risk’ readiness in order to respond to situations that don’t comply with the ‘happy’ assumptions that are made when not investing into ICC kind of capabilities even in the heavy outsourced scenario. When these assumptions turn false, enterprises find themselves into deep trouble trying to come to terms with the new state of threat where invariably they are forced to make compromises to come out of the situation. Some examples to illustrate the point are as follows:

• Risk of vendor transition (Intellectual Property issues etc.
• Risk of loss of control over the strategic decisions to be made because enterprise is dependent on the vendor for the same
• Issue of redundancies and non-standardization when more than one vendors are involved in the sourcing model
• Inability to perform positive governance due to lack of abilities, focus and framework

So in essence, sourcing strategy is an area that I believe enterprises must look at with same seriousness as they will look into their business transformation. They should evaluate options based on the business effectiveness objective in mind and should tie it back to their sourcing decisions. Once the sourcing decision is made, enterprise must strive to use the sourcing model to create maximum value that can be generated for the scope of services being offered by ICC to the business stakeholders.

Being part of a service organization, it is slightly tricky for me to talk about a topic like sourcing. But I believe as a consultant, I have provided my perspective based on my experience. It will be great to hear the perspective from the other side of the fence as well. In the next blog, I will explore the next-generation knowledge management strategies for ICC.

Posted by Rakesh Mishra at 02:44 PM | Permalink | Comments (0) | TrackBacks (0)

 B2B or the collaborative business partnership is transforming. Most of it can be attributed to great deal of opportunities emerging owing to new business models and economic influences. So B2B as a space in the enterprise business eco-system is becoming the convergence point for Business and IT to jointly create best business value in the global market place.

This transformation (that is going on and will continue in the future) is what this blogging series is going to be focused on. And to make it little more interesting, I’m adding slight complexity here, bring ‘value’ perspective as the core. So net net, we will look into a structure thought process for creating value in B2B space as the transformation is taking place. I believe it will be of great help to senior executives of enterprises that are charged with the responsibility of taking their B2B capability to next level.

To start with, we will spend some time on building the appreciation of ‘value’ itself. As per the value realization model that we use for B2B space, there are 6 core value parameters. These value parameters are the ultimate drivers/needs that typically your enterprise might be after. These value parameters are the business case justifications with which your enterprise will be putting money into B2B programs. These 6 core value parameters are:

• Cost effectiveness of the business
• Ability to Seamlessly Scale to support the Business Growth
• Business Experience Quality for all Stakeholders
• De-risking of Business Continuity and Growth
• Lead-time to Deliver Business Value
• Quality of the business

I will introduce these value parameters briefly into initial few blogs and then I will talk about the 5 key enterprise eco-system platform that will enable the value creation for the enterprise in B2B space in their own capability areas. Subsequent blogs will touch upon the opportunities that each of the enterprise eco-system platforms are providing to create various values. Let me begin by introducing the first value parameter: Cost effectiveness.

Cost effectiveness of the business
Cost effectiveness is possibly one of the major drivers (if not the most important) why your enterprise is going to put money into B2B space. Cost effectiveness refers to minimization of the cost components of the business. Cost could be either a capital expense for new business capabilities or could be operational expenses for sustenance of the existing business eco-system. Cost effectiveness is also linked to ‘value for money’ in simple terms which means money being put into various aspects of business is seen as the worth the value/outcome it is able to generate for the enterprise. In the context of B2B, cost effectiveness equation will focus on bringing down the cost components for the enterprise but I think in the evolving context of business today, cost for the partners to do business with enterprise is also going to be a very important element.
As technology-enabled business collaboration is reaching new heights, it is getting very convenient for the enterprises to collaborate. Entire partner value chain has started big time to bring ‘value demand’ into negotiation considerations from partnership perspective. So essentially when potential business partners of an enterprise consider the partnership opporutnity, cost of doing business will play a very critical role for deciding the nature and scale of the partnership.

Next blog in the series: “Ability to Seamlessly Scale to support the Business Growth”....

Posted by Rakesh Mishra at 04:33 AM | Permalink | Comments (0) | TrackBacks (0)

Another important shift that can be brought into ICC is the clear identification of the value added functions and 'operational' functions. This will help, one to automate, standardize and accelerate the operational functions; secondly, it will give opportunity to channel the investments into thought leadership and innovation effort more toward value added functions. One of the strongest feature of such ICC will be availability of 'self-service' capabilities in many facets of the ICC.

So here we are talking about various different changes coming in future:

1. Establishment of value added and operational functions – by means of this, we are separating out the value added activities of ICC and operational activities. Value added activities are the ones that directly add to value enhancement of what ICC is delivering to business while operational activities typically focus on managing the operational processes and maintaining the Integration eco-system. Establishment of two separately identified functions helps setting appropriate goals/KPIs for those functions which can drive the focused improvements in respective areas. For example, operations functions are more about operating with efficiency where focus will be to reduce the operational cost, improve the service levels and make the operational process systematic which can give greater predictability as well as  faster responsiveness for operational needs.
   
2. Automating, standardizing and accelerating the operational functions – concept is very clear. Here we are talking about reducing the time, money and effort spent on the mundane operational activities by streamlining, systematizing and orienting the  focus on the outcome of these activities. Idea is that the money spent on the operational activities is typically doesn’t contribute to business benefits but it still needs to be done. So by streamlining and systematizing, we have a opportunity to make the operational efficiency better (to add to benefit of service levels) and consequently channel the saved money into functional that contribute to business value creation. My observation has been that lot of enterprises ignore the operational functions from efficiency focus and try to address mostly the activities that are solution development life-cycle or support core program of work. This works fine when portfolio is small and nimble. However, as portfolio becomes large, focus of automation, systematization and operational efficiency has to go beyond those core and address many other operational processes that together add up to overall cost/throughput and lead-time perspective.
   
3. Diverting funds from ‘operational expense’ to ‘value added activities' – Now this is interesting. So far we mostly spoke of standard improvement kind of changes. Here is what matters a lot from budget innovation angle. As part of the competency center strategic financial management planning, ICC must use the efficiency improvement on the operational side to divert the money saved into more strategic or what we call ‘value added’ activities. This way, It has two fold advantage, first that ICC doesn’t need to put off its strategic improvement in the value added activities because of funding issue and secondly, for the funding, it doesn’t need to have too much dependency on the central corporate funding. So this becomes self-sustained funding model that ensures that the competency center is able to build strong base of value added capabilities.
   
4. “Self-service” capabilities of ICC – As core processes and operating capabilities of the portfolio mature, ICC will need to take them to next-level by making them self-serviceable. By having the self-service capability, lot of these functions/processes doesn’t need a large ‘subject matter expert’ layer between the process and end-user to make the output happen. For example. If Environment provisioning is self-service enabled (which possibly involves virtualization of the infrastructure, process/workflow-managed provisioning control etc.), environment users can generate their environment specifications online, request the environment availability for their work that gets provisioned like the same way as provisioning of services are done for the external customers. So in essence, ‘service orientation’ of the such internal focused processes gets at par with the external services orientation and that makes the ICC truly efficient and smart. This whole concept of self-serviceable eco-system is very powerful and has countless possibilities to bring sophistication into the ways how portfolio runs. It not only saves money for the enterprise but gives leapfrog jump to the overall service delivery capabilities of the portfolio. I will be dedicating a series of blogs later completely onto this self-service eco-system of the ICC.

So in nutshell, next generation ICC will be able to differentiate their funding models/operating standards and investments across operational functions and value added functions. Not only that, using self-service capabilities, ICC will be able to bring new dimensions of improvements and service levels with value added functions.

In the next blog, we will explore the ‘smart sourcing’ strategies for the next-generation ICCs. That has been an area of interest for lot of our clients and not many have realized how smart sourcing options can give them opportunity to ‘think Business’ and not get stuck with ‘delivery complexities’.

Posted by Rakesh Mishra at 05:13 AM | Permalink | Comments (0) | TrackBacks (0)