The Outsourcing Blog..."Horses for Sources"

Everything you need to know about Supply Management BPO (but never dared to ask)

Folks - we're staging a webinar entitled "Supply Management BPO: Why Business and Technology Transformation is Critical for Long-Term Success". 

Joining me will be Ruby Jivan, BP's Global Procurement Operations Director, who has a lifetime of experience with global procurement delivery and more recently with BPO; Mickey North-Rizza, AMR's supplier relationship management guru (who also has a lifetime's experience in procurement).

Date:  Wednesday 22nd July

Time:  12.00 EST, 5.00 PM GMT, 6.00 PM CET.  1 hour.

Speakers:  Ruby Jivan, Procurement Operations Director BP; Mickey North-Rizza, Research Director, Supply Chain Management, AMR; Phil Fersht, Research Director, Global Business Services & Outsourcing, AMR.

Register here

Abstract:  Phil Fersht and Mickey North-Rizza will discuss the latest market dynamics in supply management business process outsourcing, based on data from over 200 live engagements and multiple demand-side customer studies. They will discuss the challenges facing enterprises with supply management today as they tackle global delivery issues and whether outsourcing is a true option for them to provide access to new technology and process acumen. They will also touch-upon the service provider landscape and competitive dynamics fueling market growth. Ruby Jivan will talk to her own experiences with Supply Management BPO as head of global procurement operations for global energy magnate British Petroleum.

Attendees will be afforded time to pose questions after the webcast.

We look forward to hosting you on 22nd July.

It’s time for disruption, not stagnation

2009 is going to be remembered as the year of cost-containment. Most client discussions are not very sexy – it’s largely about cost, as opposed to innovation or revenue generation. McKinsey recently revealed 70% of its current client engagements are cost-reduction focused, only 30%focused on revenue-generation (the opposite of a year ago).

I strongly believe our businesses, while being diligent about cost-containment, must use this opportunity to make fundamental changes to their business operations in order to emerge more profitably in the future. Simply ripping away cost elements and failing to improve access to global corporate data and processes, is a massive wasted opportunity to be more competitive over the long-term.

I wrote recently about how the lay-off culture that has afflicted both the US and UK in recent years, where many firms treat their labor as a variable cost that can be scaled-up or down at will, depending on the next quarterly forecast. I cannot stress enough the damage this can cause to businesses as the economy recovers. One common theme that has dominated discussions with business leaders recently has been their surprise at the amount of visible cost they have been able to take out of their businesses as they move from a revenue-generation to cost-containment strategy.

It’s not solely the cost of labor that is highly visible – it’s the costs of technology, travel, infrastructure, real-estate etc. that can often be easily driven-down in a desperate business climate. Less visible are costs associated with poorly-integrated business processes and procedures, of dated analytical tools, of ERP systems incapable of supporting global process templates, and so on.

Outsourcing drivers in today's climate: large companies want to globalize, mid-sized companies seek expertise

I wanted to share some recent dynamics from our new survey of outsourcing adoption intentions in mid-2009.

While the onus on firms today is to drive out as much cost as they can from their businesses (close to four-fifths view cost-reduction as the primary driver for outsourcing), other factors are becoming crucial for companies’ planning as they evaluating outsourcing business models, notably globalizing their businesses more effectively, re-engineering business processes, and accessing expertise from service partners.

If there's one thing this recession taught us, it is how integrated global economies and markets are today, how businesses need to adapt to move in and out of diverse regional markets, and how they must make rapid decisions to invest or divest global service / product lines in order to prosper.  Read more over at Think Global...

Being Frank about Global Sourcing: An interview with Cognizant's CEO (Part II)

Since Part I of the Francisco D'Souza interview, I've been assured Frank has improved his golf handicap. Now he'll discuss his views on how ITO service providers can differentiate themselves, the convergence of IT and BPO solutions... and a few other tidbits...

PF: How can ITO providers differentiate themselves in today’s market? Is it by vertical focus, or other elements?

FD: Given the extraordinary pressure that clients are under, I think that the key to differentiation is to focus on how to make clients’ businesses stronger. Rather than focusing on technology, process or methodology, I think providers need to really understand a client’s business drivers and then sell and deliver solutions that further those business objectives. As I said before, clients are facing both cyclical and secular pressures. As a result, depending on the client, their objectives of outsourcing will be very different. Some clients seek to improve efficiency or effectiveness. Others are looking to use outsourcing as a enabler of innovation. Still others are looking at outsourcing as a tool to gain access to the best talent in the world – regardless of where that talent is located. And of course, given the significant secular changes we are seeing, many clients are looking to outsource as a way to enable agility and transformation within the organization.

Being Frank about Global Sourcing: An interview with Cognizant's CEO (Part I)

Observing the rise of the new wave of service providers over the last few years, the one that has scared the living daylights out of all of the incumbents is Cognizant. 

Now a $3bn company with deep footprints in the world'slargest global financial institutions, consumer businesses, manufacturing and healthcare organizations, Cognizant can no longer be considered an upstart.  It's now part of the industry elite; quietly and cleverly aligning its value proposition to the post-recession era.  As CEO Francisco D'Souza points out,  we're in a time of not only cyclical change, but also secular change.

I've had the pleasure of talking with Frank a few times over the last couple of years and have been impressed by his high-energy, thoughtful and common-sensical approach. I was even more surprised when I received emails from an "FDSouza" on the Horses... took a couple of times for me to realize who this guy was.  To cut to the chase, Frank is one of the youngest IT and BPO industry leaders of the modern age, having risen through the management ranks of Cognizant to assume the role of President and CEO at the beginning of 2007 when the company was announcing its landmark Kimberly-Clark engagement.  And when Frank isn't busy hacking his way around the local golf course, or playing with his kids, he managed to find some time to share some of his views of the global sourcing industry with us...

Remote Infrastructure Management anyone?

Can 6-sigma really help execute an effective sourcing process?

One major service provider that has quietly - and very effectively - grown its US presence over the last couple of years is HCL.  And behind the scenes is a very classy guy, Debashish Sinha, who pulls the strings across its US sales, marketing and operations units. 

Anyone dealing with HCL these days is always glad to have Debashish around (despite the fact he organized their last industry event in Orlando).  Prior to HCL, Deb has consulted for both Conscient Partners and NeoIT, in addition to being Gartner Group's principle analyst for IT services and sourcing.  And when he's not comparing the subtle nuances of Malbecs or flying planes (not simultaneously, I assure you), he has some excellent views on the effectiveness of 6-sigma methodology in a sourcing environment.  Over to you Deb...

About four hundred years ago, Galileo Galilei noted that “We must measure what can be measured, and make measurable what cannot be measured,” a philosophy now embodied in the well-tested axiom “You can’t manage what you can’t measure”.

So how about managing the Sourcing cycle? How do you actually measure Risk, or Internal Readiness, or even effective Governance?

One potential option could be to use Planning for Six Sigma tools to “make measurable what can’t be measured”. After all, it’s still one of the most prominent approaches for managing by measurement.

Join the Horses on LinkedIn

Yes, there is such a thing as a free lunch... Horses For Sources' official LinkedIn Group, the aptly-named "BPO and Offshoring Best Practices Forum" now has 5,700 members. This is a forum for leading sourcing practitioners to share their experiences, views, opinions, best practices and lessons learned in the worlds of IT outsourcing, Business Process Outsourcing, Shared Services and Offshoring. You also get a free subscription to the Horses Digest. And it's FREE FREE FREE. Am I the most charitable person you know?

SIGN UP HERE

Hear the great Hags on global finance transformation

I never knew that one day I would get to co-host a webcast with the great John Hagerty, but tune in on June 18th at 2.00pm ET to hear about Transforming the Global Finance Function in Today's Economy.  Click here for full details, or register directly here.  And like everything else here, it's FREE FREE FREE.

John is a true legend in the analyst world, where he delivers insights in the world of finance transformation, performance management and corporate governance. He could also convince Newt Gingrich to vote for the communist party in 2012.  In addition to the great "Hags" and myself, you'll also get to hear from Joe Spears, senior finance executive at eBay, and Dominick DiPaolo, BlackLine Systems.

John Hagerty (pictured) is Vice President and Research Fellow for AMR Research. He is the recognized worldwide authority in business intelligence and enterprise performance management.  This picture also reveals the wear and tear of the analyst life -:)

Supply Management BPO - short-term body shopping trumps business transformation

It's easy to get excited with high-growth markets, but supply management BPO's different. 

While the market has grown exponentially, and a 30% increased expenditure last year is eye-opening, the nature of these engagements doesn't give me confidence that this market will sustain its growth trajectory unless customers think beyond short-term labor arbitrage, and service providers introduce significant process and technology enhancements to the early adopters to help them optimize their delivery.  This "lift and shift" model could well result in customers losing more than they save.  Read more at Think Global.

Executive ADD: The disruptive scourge of social networks in the services industry

When you try and quantify the impact social media is having on industry, it's actually quite alarming how dangerous this medium can be on our lives and our careers. 

We discussed the impact of blog culture over a year ago, but the speed by which social media has crept into our daily activities, already dates many of the opinions expressed back then. The information world has altered radically, and this economic environment is accelerating the speed of change.

As an analyst in global services industries, my job is to get across insight and opinion to as wide an audience as possible.  A couple of years' ago, if I'd produced an article or report, I'd probably send it out to about 100 people... that was the extent of the audience with which you would typically deal, and you'd rely on your firm's marketing department to disseminate press releases and media advisories to drive more eyeballs to your craft. 

The Campbell chronicles: an exclusive interview

If the Queen was handing out honours for outsourcing, then "arise Sir Kevin" would be a likely outcome.  However, unless Accenture can grant him a British passport, even their PR heavyweights may struggle to pull that one off.  

Kevin Campbell is a legend in the outsourcing business (I refrained from saying "the Tiger Woods"...), having begun his career with the old Andersen Consulting business in the 90's before making his name as the COO of Exult, the protagonist of HR BPO, where he because synonymous with many of the early multi-process BPO deals for clients such as BP, Bank of America and International Paper. 

Upon Exult's sale to Hewitt in 2005, Kevin found himself returning to his roots with Accenture, where he how has been elevated to overseeing the firm's entire $9.2 billion global outsourcing business, when he's not watching re-runs of the Packers and terrorizing his kids. 

I managed to catch-up with Kevin recently, and was surprised to hear he's a regular visitor here, so convinced him to share some of his views on the industry with us...

Shaping your career in this sourcing industry

There's one character in the sourcing business those "in the know" know... Larry Janis.  When senior management look to hire or poach key talent, Larry is known as the discreet man with the black book.  He's also a great guy, and agreed to post a few suggestions on what sourcing executives should be doing to shape their careers in this environment.  No-one in the business knows the hiring dynamics of buyers, consultants and service providers as well as Larry...

PF: Larry – you’ve been a lead search consultant in the sourcing industry for many years. In terms of roles and openings both buyers and service providers are looking for, what’s changed today?

LJ: The stress in the global economy has certainly changed in the outsourcing provider space. Add to this, HP/EDS merger/acquisition, the Satyam scandal and staff reductions at several of the major providers. As a result, both the

Innovation: creativity within financial constraints is the key

So with all the talk about falling conference attendances, it's clear that people are still game for good events, but are simply being more selective about which ones they choose to attend this year.  After the success of the recent Shared Services & Outsourcing Network show in Budapest, I had the good fortune to be at AMR Research's Supply Chain Conference in Scottsdale AZ this week, which attracted 650 senior-level supply chain, finance, operations and IT executives, many of whom wanted to talk about sourcing issues.   

The one opportunity I did have to escape the analyst meeting room was to see former Disney CEO Micheal Eisner's keynote speech (pictured), where he talked about creativity under financial constraints being the key to success today. 

In order to demonstrate this, he played us the now infamous "sword" scene from Raiders of the Lost Ark:

According to Michael Eisner, Harrison Ford was having a few stomach issues on that day of filming and kept rushing back to the hotel, and with the sun setting, the crew were concerned that they would have to wait until the following day to complete the scene.  With production costs running at $100K a day (not chump-change in those days), Harrison just got out his gun and shot the guy... now that's innovation ;)

Always happy to hear any more examples of creativity that saved the day...

The Kraft of Outsourcing: Learnings from Lee Coulter (Part III)

And finally… the last tranche of our three-part interview with Kraft’s Lee Coulter. Here’s Lee’s take on attributes service providers need to demonstrate, and some advice for budding sourcing executives today…

PF: Lee, when evaluating outsourcing service providers today, what attributes should companies look for? What should they try to avoid?

LC: That is a really big question and not one I am sure I can answer in less than ten pages. Every engagement is different, and the basic dimensions of suitability are: service scope, service quality, service cost, cultural match, the leadership teams, partnership capability, and risk. Assuming that you have providers capable of doing the job and meeting the objectives, then it is about the team and the commitment to true partnership (a topic for another day). These two things lead to a measure I use… confidence. So you would score the providers

Talent Management vs. HRO – it’s not an “either or” proposition

If you've ever ventured into the brave world of HR Outsourcing (and you need to be brave...) the chances are you'll hear the views of Ceridian's Keith Strodtman. 

Keith has been a constant at the global $1.6 billion HR services and store-card solutions giant for many years now, and when he's not coaching his twin girls' fastpitch softball team (that's "rounders" for any Brits on here), he's been running Ceridian's global HRO practice.  He is also widely recognized as HRO's smoothest man, with a constant smile, never a raised word, and never a hair out of place. 

Keith has some excellent views on how companies can use third-party managed services to take on their administrative work and focus their HR executives on what they should be doing:  helping develop their organizations' talent.  Over you Keith...

I’m not sure about you, but I don’t get why some analysts and bloggers

Why the lay-off culture is far more damaging than offshoring

Ever since President Obama proposed to change the IRS tax code that regulates how US corporations declare income from international activities, I've been thinking about other measures governments can take to slow the recession and help businesses become less myopic with how they navigate these rough waters. 

Reading between the lines, he appears to be targeting a revenue grab, while making political overtones against companies which use offshore resources.  However, he's simply penalizing firms from being more productive with their exports.  Sure, there are issues with tax fraud from havens such as Bermuda or the Caymens, but this is primarily an issue with individuals, not large enterprises. 

Why penalize a US conglomerate for manufacturing diapers in Brazil for the

Going green with sourcing...

Folks - if you happen to be drifting around New York City on 3rd June, swing by the Philippine Cultural Center to hear some interesting discussions, including my friend and colleage Dr Stephen Stokes (pictured), author of the infamous piece "The Green Transformation of Indian Outsourcing: Heading for the Clouds, But Doing So on a Low-Cost and Carbon Budget".   

The event entitled "Global Sourcing After the Meltdown: In Search of Sustainability" is being organized by my good friends Christine Bullen and Wanda Lopuch at the Global Sorcing Council.  For more information click here.  You can also contact Wanda directly here.

Talk tracks for the day are as follows:

How to get two whales in a mini...

When I got a call from the Shared Services & Outsourcing Network crew back last Fall (Autumn) to run a session at their European Shared Services Week in Budapest this month, my immediate response was "how the expletives are you going to convince operations executives under severe cost restrictions to show up at a 3-day boonie in Budapest in the midst of the worst recession since Harold got clipped by an arrow in Hastings in 1066?"

One of my favorite jokes (and I do have a rather strange sense of humor), is "How can you get two whales into a Mini"... and the punchline is "Along the M4 Motorway and across the Severn Bridge".   If you don't understand this joke, click here.  I am going to add to that one:

"How do you get 400 senior operations executives, 200 of whom lead shared services operations, to show up in Budapest in the middle of the worst recession in post-biblical times?"

Yes, they managed to defy gravity, common sense and many other undefiable factors

The Kraft of Outsourcing: Learnings from Lee Coulter (Part II)

During  Part I of Lee's interview, he talked about the development of the global sourcing industry and how companies were now approaching sourcing strategy in today's economic climate.  In more Blackberry-smashing style, Lee goes on to discuss his theory of "innovation" within outsourcing relationships, and delivers some tips on how operations leaders can improve the performance of their service providers (without resorting to baseball-bats, water-boarding or enforced transition workshops at Epcott).

PF: Lee, what is your theory of "innovation" within outsourcing relationships, and are we really seeing it in today’s engagements?

LC: I have a pretty simple theory of innovation. We aren’t seeing it today because most of the clients today didn’t buy it. Somehow we believed that

Happy 2nd birthday Horses for Sources...

306 posts, 1445 comments, 12,000 subscribers and 30,000 RSS-feeders later, "Horses" today makes it to 2 years' old.

There's never been much of a plan, just a platform for good discussion, sharing of ideas, and open debate on tough issues for the global sourcing industry - and all with a hint of cranky sarcasm.  And we try to keep it unbiased...

Drop me a note if you have any suggestions on what you would like to see more/less of on here - your input is always welcome.  And a special thank you to all of you who come here regularly and support this site (you know who you are).

Here are some favourite posts from the last 2 years:

Globalizing the business is the key to outsourcing today

As we discussed last week, it's clear that many companies will continue to move into outsourced business environments, despite the recession and political pressures to keep work onshore.  While some firms find it hard to make radical decisions in a downturn, others are clearly seeing how critical it is to operate as a global business. 

If there's one thing this recession taught us, it's how integrated global economies and markets are today, how businesses need to adapt to move in and out of diverse regional markets, and how they must make rapid decisions to invest or divest global service / product lines in order to prosper.  Outsourcing doesn't provide all the immediate answers, but it does help create the vehicle for clients to become more nimble and capable at a global level.  Check out our thoughts based on new survey data over at Think Global...

The Kraft of Outsourcing: Learnings from Lee Coulter (Part I)

There is only one Lee Coulter.  Service providers tremble at the very sound of his name, consultants run for the hills... practitioners flock for advice.  And when he isn't performing carpentry or attempting cordon bleu, Lee has the small task of being SVP for Kraft's shared services, where he is a key leader of the firm's corporate transformation program "Organize for Growth".  He is responsible for Kraft's IT services, global finance and HR shared service centers, in addition to the firm's BPO activities.  He even once threatened to smash up my blackberry.   

On a more serious note, Lee has a practical and experienced perspective on how enterprises today should approach global sourcing, and we have enjoyed his exuberance and candor in our buyers' group meetings.  Today, we are blessed with the first part of a lengthy interview with Lee, where he is discussing how practitioners should approach global sourcing in this economic climate, how to select and engage the right service partner and how to decipher and execute innovation (yes, I said it) in a global sourcing environment...

PF: Lee, we’ve been through some major developments in the world of global sourcing over the last decade. As a senior operations leader in one of the world’s largest multinationals, what, in your opinion, has worked, and what hasn’t?

LC: Let me start by saying that the global sourcing industry has proven its most basic value proposition, and that is a huge success. There are many skeptics of

Wipro and Oracle partner to blow-up the BPO delivery model

Folks - I can exclusively reveal to you today that Wipro BPO and Oracle are shortly going to announce a partnership dubbed "simPlify", whereby Wipro will deliver PeopleSoft HR to both mid-market and high-end clients via a hosted utility BPO service, that will cater for 20 major countries.  They will also partner with The Hackett Group as part of the arrangement to provide performance benchmarks for HR processes.

The mid-market play is a true move towards "one-to-many", whereas the enterprise play will be a more customized approach.  Clients will need to invest

Take part in our Budapest debate next week... from your front room

This Tuesday, we're holding a "World Exclusive", with a distinguished panel of Horses-readers being webstreamed live from the 9th Annual European Shared Services and Outsourcing Week in Budapest Hungary.  For those of you unable to make the conference, you will have a chance to take part in the debate via a live blog-cast streamed to a computer near you.  I do hope you can partake in the banter.

*World Exclusive* Horses For Sources - Live From Budapest

Deciphering The Business Value Of Tomorrow’s Sourcing Strategies In Today’s Economic Climate