Business Platforms – BPO meets Technology

Is incumbency an adverse factor in Outsourcing Contract Renegotiations?

Mon, 13 Dec 2010 04:35:35 +0000

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.

Cloud based Crowdsourcing. Will it be the next paradigm?

Wed, 10 Nov 2010 04:05:45 +0000

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.

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

Mon, 08 Nov 2010 16:34:09 +0000

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?

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

Wed, 22 Sep 2010 16:53:23 +0000

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.

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

Thu, 16 Sep 2010 15:09:45 +0000

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.

Spend Analysis using cloud model?

Wed, 25 Aug 2010 18:48:23 +0000

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.

Are you able to realize the elusive savings?

Sun, 18 Jul 2010 04:47:15 +0000

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.

Outsourcing or Automation? with cloud adaption

Tue, 06 Jul 2010 13:02:45 +0000

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.

Can you apply auctions for the 'auction services'?

Mon, 21 Jun 2010 11:48:07 +0000

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.

What you should look into while considering cloud services?

Mon, 07 Jun 2010 13:52:32 +0000

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.

Look beyond traditional TCO approach while outsourcing Procurement

Fri, 28 May 2010 03:34:54 +0000

Recently we had an interesting discussion with CPO of one of the leading retailer in Europe. Like it happens in most of the outsourcing initiative the Procurement was part of Finance & Accounts outsourcing initiative, which was a big daddy in terms of contemplating overall direction and strategy. While CPO was clear that he needs to look outsource indirect procurement only and was well aware of apparent challenges like fragmented landscape, broken processes, maverick buying and extremely low spend visibility. And this is compounded by the fact that his company has grown rapidly over last few years riding on extremely aggressive acquisitions which has resulted into procurement gasping for basic stuff like standardized processes, enterprise wide contract & compliance, adequate sourcing team etc. Clearly the potential savings opportunity was immense but he also wnated first to put in place a common and centralized structure & processes to achieve the savings. This requirement of additional investment in procurement was in direct conflict with his peer team who wants to create the business case on a reduced TCO (Total Cost of Operation) to reap immediate benefit from outsourcing.

While SaaS is great .. have you taken care of integration?

Wed, 12 May 2010 03:22:05 +0000

Lately I had a chance of interacting with CXO of a leading UK retailer who was considering SaaS but was extremely wary of integrating SaaS with its disparate non-ERP systems in the supply chain space. It's worthwhile to note that supply chain solutions in most of the cases would fail to live up to expectations if it is not ingrained completely with other peripheral applications thereby limiting you to access much needed visibility in this fast paced economy. Though most of the product vendors provides basic framework for integration using standard touch points and may assuage you of integration concern, it's only when rubber hits the road you realize that the incompleteness of data or information will not actually allow you to take a fast intelligent business decisions.

'To Be' or 'Not to Be' in Business Platforms model

Mon, 19 Apr 2010 06:15:36 +0000

While in traditional lift and shift BPO, one of the key activities during any transition is to map the "As-is" processes and create the "To-be" process in an outsourced and/or off-shored model. The success of transition is largely driven by the level of detail in this activity. A Business Platforms based outsourced model presents a different scenario altogether. Here, the delivered functionality within the platform application is largely pre-defined. The "customized" component is a minor element in comparison to the delivered functionality.

What we therefore have is, essentially a "To-be" process which is mapped to the client business context. The "As-is" process has little or no relevance in a platform on-boarding model. What however assumes significance in a platform on-boarding is the change management at the Customer and Service Provider's ends. In a lift and shift transition, change management is more around communication, internal and external, employee strategy and risk management. In a Business Platforms on-boarding model, the change management is at the level of detail of the process or function transition as the 'To be' entity is an entirely new one for both parties.

Business Platform model - the New Normal !

Mon, 12 Apr 2010 13:55:59 +0000

As organizations get out of the long recession and start looking at the best possible ways to capture the early green shoots of opportunity - there is a New Normal compared to the Normal prior to the recession.

This New Normal indeed impacts multiple facets of Organization thinking , Behavior and Actions. Clearly, the New Normal has brought along with new focus and energy on alternative business models which are geared to deliver to the new reality. Business Platforms is one such model.

Outcome centric partnership for driving Innovation

Mon, 05 Apr 2010 06:33:19 +0000

In today’s business context it is imperative for organizations to focus on process simplification, standardization, compliance with green policies and leverage technology for automation across extended enterprise. The convergence of process and technology is bound to drive faster innovations and bring to life new ideas in product & services offerings. The bundled process and technology help in creating better customer experiences, developing better offerings and attract new customers. To achieve these organizations also need to simplify their technology landscape into homogeneous eco system, architect adaptive processes, encrypt green compliance and build value networks in creating smarter organizations – all of which is a huge challenge using internal resources and in-house competency alone and thus would necessarily need to be augmented through value partnership from the service provider, who as an innovation partner should not only provide adaptive service delivery model like ‘Business Platform’ but also help in altering organization’s fixed cost into variable cost structure and facilitate sustainable savings. The new business platform model will also complement the current landscape and be implemented effectively without disrupting ongoing operations with minimum upfront investment in this capital starved economic state.