Business Platforms – BPO meets Technology

Is incumbency an adverse factor in Outsourcing Contract Renegotiations?

Not long time ago most of the outsourcing contracts were viewed as a long term steady business with adequate stickiness - But not anymore. The general perception was - once service provider permeates into customer's organization and becomes its integral part as an extended organization coupled with inherent cost arbitrage, any chances of service discontinuity was unthinkable. This dependency in fact gets increased exponentially over the period of contract duration in the form of additional outsourcing work and collaboration. However the current slow recovery has taken its toll on this illusion also especially for the customers who have for long reaped the cost arbitrage benefits and are looking towards next avenues of cost savings.

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Posted by Gurjeet at 4:35 AM | Permalink | Comments (0) | TrackBacks (0)

Cloud based Crowdsourcing. Will it be the next paradigm?

State water control board in US has recently partnered with a cloud provider to improve water quality by monitoring thousands of miles of creeks and streams in their jurisdiction by watching water quality & problem alert data feed by community through a mobile application. This is an innovative way to involve community for monitoring the health and conservation of water without requiring any special skill and time. This is also a win-win situation by harnessing the crowdsourced data for a cause society really cares about.

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Have you considered disaster recovery in your cloud based service model?

An IT failure disrupted travel for 50,000 customers of airlines in Australia due to disruption of reservation and distribution software platform. The IT service provider in this case hosts the platform on its own server infrastructure at a data centre in Sydney on a cloud based model.

While there was a service agreement between Airlines and the IT provider, which requires the mission critical system outages to be remedied within shorter period of time, it didn't happen in this instance. This clearly demonstrates that merely having a contract and SLA's agreement in place don't protect any business against downtime in a cloud environment, and it's important to evaluate & construct a robust failover and disaster recovery mechanism in the NEW cloud environment. You need to clearly know that in such case of such eventuality what you need to do for resuming operations through another data centers? How much data you will you lose by the time you resume your operation? How long will it take to resume operation? What's the acceptable level of performance in such instance?

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Posted by Gurjeet at 4:34 PM | Permalink | Comments (0) | TrackBacks (0)

Are you able to balance between process efficiency and effectiveness in your supply chain shared services?

Recently I had an interesting discussion with Head of supply chain shared service center (incidentally was also an old acquaintance) of a global organization. While we had difference in thoughts towards captive model approach, I picked something very interesting from him on the approach towards supply chain shared service center. His view was - simplistically, most organizations take a holistic view on shared services around three fundamental parameters:

1. Optimal structuring by resizing the staff and align them to the changing business needs with improvised skills and knowledge. This provides a recurring savings depending on the maturity and efficiency of the current processes.

2. Optimal location by sourcing the staff from the right place or country which provide the right skills or talent at a lower price - basically labor arbitrage. This also provides a recurring savings depending on the cost of living. Of course other points of considerations are business friendliness, quality of life, infrastructure quality, and currency fluctuations.

3. Optimal tasking by introducing the right tools, process improvement, service metrics and governance. Over a period of time this provides sustainable savings with relatively less change management issues.

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Posted by Gurjeet at 4:53 PM | Permalink | Comments (0) | TrackBacks (0)

Are you able to identify VALUE for cloud in your business case?

One of the most common term perhaps, we often come across in our daily interaction with clients and prospects is 'VALUE' and this term becomes louder when you enter into final stages of sales negotiation. When you don't win a contract, how many times you hear from your customer..... we really liked your offering but don't see VALUE compared to your competition. I vaguely remember the definition taught by my professor in the school, which I still find it very relevant as 'Value = Quality/Cost' or in other words, if the customer's expectations are met or exceeded at what they considered to be reasonable price, the value is realized. Like in any other service offering, one of the biggest challenges faced by the cloud providers when it comes to selling, is establishing the value of the cloud services in the absence of a structured cost data on the client side, especially when there's huge sunk cost already made in on-premise technology. Interestingly, I also came across a situation where one of the cloud prospect did cost comparison for cloud application with just 'app support cost' & 'infra overhead cost', since he was budgeting for only these two cost elements for running his technology. In such cases where technology costs are hidden behind intricate departmental cost allocation, it's time consuming if not impossible to establish the value of cloud services.

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Posted by Gurjeet at 3:09 PM | Permalink | Comments (0) | TrackBacks (0)

Spend Analysis using cloud model?

Recently I had an interesting discussion with a subject matter expert in Spend Analytics and this was in the backdrop of query by one of our customer who was exploring spend analytics solution on a cloud model and wanted us to revert back with recommendation. The customer didn't want to invest any CAPEX and clearly wanted the solution and services to be delivered on OPEX model. This requirement was quite unique in the sense that while there are established cloud model in the sourcing and operational procurement space, not much of thought process has really gone into niche area like spend analytics in isolation. Further, most of the best-of-breed spend analytics vendors with whom we have interacted doesn't believe entirely in the new model from long term perspective and so don't have any firm cloud based strategy. The general opinion is that while industry has adopted the outsourcing of spend analytics services like data cleansing, enrichment and classification over the years but when it comes to running the real time analysis of data, most of the organization are still wary of doing this on the cloud because of data privacy and security issues.

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Posted by Gurjeet at 6:48 PM | Permalink | Comments (0) | TrackBacks (0)

Are you able to realize the elusive savings?

Cost reduction has invariably gained maximum consideration as part of any strategic or tactical initiatives during last few years. One customer lamented during review meeting that in spite of fantastic effort put in by the team amidst excellent visibility, the top management in the end was not impressed with the savings realized. Last few years have also witnessed a surge in cost reduction initiatives which was pervasive across entire supply chain and 'savings realization' has probably been the single most important aspect which decided the final fate of these initiatives. Interestingly 'savings realization' has also been the weakest link and now when the moments of cost cutting frenzy is easing out there's spotlight on the execution mechanism to achieve the value delivered. It is also noted that the most prominent area where most of the cost reduction initiatives were attempted was SG&A where it is difficult to put these execution mechanism in place. Taking a cue from execution challenges it can be concluded that the realization of any large saving potential is challenging and requires a good mix of process management, upfront investment and agreement across internal stakeholder (finance being most important). The savings definition, measure and enforcement are crucial which would decide the success and failure any initiative undertaken by the supply chain leader in this challenging environment.

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Posted by Gurjeet at 4:47 AM | Permalink | Comments (0) | TrackBacks (0)

Outsourcing or Automation? with cloud adaption

With the surge in cloud computing supply leaders are facing yet another dilemma -"whether to structure their business processes around cloud model for increased efficiency or achieve cost reductions through outsourcing in a traditional way". It is a known fact that once you outsource your processes it's extremely difficult to introduce changes in the process embedded into underlying technology and in all probability you will be registering only a small incremental benefits through offshore enablers and productivity tools. On the other hand cloud services on a building block of standardization expect organizations to fundamentally change their processes especially in the non-core area eventually resulting into extremely low TCO due to multi-tenancy effect. While this omnipresent impasse of 'standardization' vs 'flexibility' is not new to the supply leaders, the challenge is aggravated due to cost efficiency pressure on a long term basis and so most product vendors have launched or are launching cloud services at a fraction of traditional cost (as an OPEX pay-as-you-go cost) with committed business outcome.

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Can you apply auctions for the 'auction services'?

During our discussion with CPO of Energy & Gas client we were asked to share best practices on auctions. Though the company experienced quick and significant savings from the recent auction projects, there was widespread resistance from his own team as well as supplier community. And the most prominent feedback was due to auctions there's perceived supplier relationship deterioration due to inconsistent, non-standardized auction processes & tools. So it became one of the top priorities of CPO to institutionalize standard auctions process in line with best practices. The CPO was also contemplating whether to opt for SaaS or in-house implementation of auction tool. During our intense discussion the CPO in a lighter mood commented - in view of various alternatives why they can't we should do auction for the 'auction services'. It immediately struck me then while we consider auction as one of the essential negotiation strategy how tempting it is to fall for auctions in most of the negotiation situation.

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Posted by Gurjeet at 11:48 AM | Permalink | Comments (0) | TrackBacks (0)

What you should look into while considering cloud services?

The interim verdict on cloud services enthuse lots of promise and almost every organization is invariably contemplating 'cloud' vigorously as part of its process and technology road map. While there's still no common view on pace of cloud adoption CXO's are increasingly considering it as a mandatory option due to its ability to provide faster return on its new money and negligible upfront investment. Though there's considerable confusion as well as opportunity associated with cloud services there's no doubt that this pervasive breakthrough will eventually affect all aspects of current supply chain in a positive way. Before taking a plunge into cloud services one must evaluate the business ramification from all sides.

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