Good to Great: Why Some (Offshoring) Companies Make the Leap... and Others Don't
A colleague forwarded a recent article in SDA where, Jeremy Lock, IT Manager at British Energy Power & Energy Trading (BEPET) was quoted saying “Infosys opened our eyes to what was possible and what are the implications of an SOA environment.” On a similar thread, a few weeks ago, I was exchanging notes with Prashanth, who had blogged about “IT Vendor of the Year - Infosys , By Wachovia.” He mailed me back on my comment stating there is a bigger story behind such awards in the media; there is a lot of 'blood and sweat' that goes behind the scenes prior to such accolades coming one's way. His question was thought provoking … to which I still don’t have an answer. He asked:
But here is a thought, lot of teams / orgs have teams that work hard but what or how is an award winning distinguished?
Let's not mention generic factors like process etc, let's try to be more specific, your thoughts?
Of course, to reflect on such a topic would require a detailed analysis of the ‘business of software services’ and/or ‘business of offshoring,’ which I don’t intend to do in this blog. [Recall my earlier blog with debates on ‘domain knowledge’?] The reason I borrowed the title for this blog from Jim Collins’s best seller is not because it was required reading when I was in B-school; I was hoping to refresh my memory on the theme of the book that may give some clues.
However, the Million $/Euro or Rupee question remains : Is it the processes, the people, the ‘business environment,’ technical edge or a combination of these that takes one from being Good ... to Great?
Footnote: It must be the awards season; not just for Infosys … even for other top offshore vendors [Wipro BPO Sweeps IQPC's 2007 Global Excellence Awards]
Comments
In the past couple of years, the definition of outsourcing has changed dramatically in response to the changing competitive landscape. Today outsourcing is no longer just a cost cutting mechanism for cost cutting companies; instead IT has become a core component of business strategy and how well companies compete in the global marketplace.
At a Strategic level (commitment to outsourcing) what differentiates the good companies from the great could be
Market Leadership of the company, business strategy and how IT will interact; Are they under financial stress, or looking to expand into new markets?
Are they looking for growth in their core business, or are they seeking to grow through mergers and acquisitions
Companies motivation for outsourcing Are they looking to cut costs? Do they want more operational support or better performance?
The customer's internal IT organization, For example, is there a CIO or are responsibilities dispersed in a more collaborative arrangement, structure of various organizations like ( ERP COE , IMS , IT-Business etc )
As an IT function within an organization, various factors could enable outsourcing
• Internal COE’s for say SAP Coe etc
• IT and Business alignment - If you don't do this step right, a company will be fighting an uphill battle the rest of the way.
• Does a Governance model exist? - The Executive Steering Team, PMO Group (Program Management), Support Services Team
• Functions and Roles , when and why to reach to external vendors
• Strong IT design , implementation , testing and support strategies
• Project mgt
• Robust Processes and methodologies-Incident mgt etc etc
• Business support
• Internal Marketing of - Offshore
• Information management
• Workflow Management , information mgt , Project Mgt software’s etc
• Change Management
• Change control process
• Right resource eco-system – ability to define work packages , metrics , sla etc
• Identified offshore champions – if any
The more robust the above said points are implemented, the easier it is for a company to outsource. If not implemented, then it is up to the vendor to guide the CIO/IT director so as to stimulate the thought process for kick-starting off shoring plans
Posted by: Chetan Bhor | April 11, 2007 03:36 AM
Chetan,
Thanks for the detailed comment. Your endnote is especially pertinent “If not implemented, then it is up to the vendor to guide the CIO/IT director so as to stimulate the thought process for kick-starting.” I couldn’t agree more; and this is perhaps what sets the leaders apart, helping them move from 'Good to Great'.
Ps: I see that in your note you have used outsourcing and ‘off shoring’ interchangeably; a point to which I don’t wholly subscribe. Ref my Computerworld article from about a year ago. :-)
Posted by: Mohan | April 11, 2007 05:50 PM
Today, offshore outsourcing is not just about cost savings. Offshore Outsourcing has to be perceived as any other strategic initiative by an organisation. Like an ERP implementation, you cannot expect ROI from day one. But like implementing the right fit ERP for your organisation, if you have the right Offshore Outsourcing Strategies, you will succeed. Today companies whose management is committed to Offshore Outsourcing are looking at this as long term strategy have shown great results.
I think for a company to be a great offshoring company, the company should strike a perfect balance on managing the following what I call as the 4 Cs and 4 Rs:
1) Culture
2) Communication
3) Controls
4) Cost
5) Relationships
6) Rewards
7) Resources
8) Risks
Also Great Offshoring Companies don't look at offshore service providers as mere vendors. They treat the service providers as their partners. For any relationship to succeed, it has to be a win-win situation for all the parties involved.
Posted by: Akshay S Upadhye | April 16, 2007 02:44 PM