Managing Offshore IT

In my previous blog entry I began to explain the changing roles and expectations of Offshoring Program Managers. Before I elaborate on the thread, Radhakrishnan commented if I could explain “offshore programs.”  Without using an intricate definition of what offshore projects and programs are, an offshore program is a term I use simply to talk about  larger projects and programs with a strong offshore component. The program could be executed by an offshore service provider or at an Offshore Development Center belonging to the same organization/client.

Going back to my thread on the changing paradigm that I am noticing in the market:  clients and stakeholders are increasingly expecting vendors’ Program Managers to also manage niche aspects of IT Programs including aspects of contract administration, Relationship and Change Management (areas circled in the figure)

Figure source: my book

Now, I see this as an opportunity area for Project Managers at offshoring firms to scale up. Note: In this context, I am using the phrase opportunity area to take off from a common refrain that my boss, a former CTO, used to have “we don’t have challenges or issues here, only opportunity areas.”

Why do I say so? Because a majority of Project Managers at sourcing firms are really good at one thing: managing projects for their firms and ensuring deliverables to clients. Of course, there are complexities here too as Chetan Bhor points out in a comment:

• Organizational teamwork: Under the framework of such large contracts / complex programs, a company is typically required to provide integrated services including consulting, systems integration, application development, maintenance, BPO etc hence organizational teamwork is extremely important. Dedicated efforts of various COE’s within the company are required, e.g. Horizontal and vertical BU’s
• Strategic thought process – Program managers need to think long term on their Client relationships and get to the next level of strategic engagements
• Crisis management - The fact of the matter is that, in IT projects, mistakes develop into crises much faster than in other areas. Thus, mistakes tend to cost more

Besides the offshoring aspects, managing large and complex IT initiatives involves its unique challenges. Especially if the programs are managed for and with a client. [when I say for I mean done on behalf of the client for their stakeholders]  Such programs may:

• Span organization boundaries or even span organization. An example would be the rollout of “Check 21” initiatives by US banks (or an equivalent: TECP by Canadian financial institutions)… Access Service Request (ASR) rollout by several Telcos simultaneously
• Involve multi-vendor and multisourcing scenarios. In some cases, the ‘lead’ Program Manager may be seconded by one of the sourcing firms or could come from the sponsoring organization. Larger projects may also involve sourcing parts of the project to subcontractors and secondary vendors down the chain. 
• Complex product rollout: This could include scenarios where there are multiple products being integrated across technology platforms. The programs may involve vendor / product evaluation, product selection, hiring specialists/subcontractors and other configuration specialsists [complexities from the above two scenarios]
• Other scenarios and examples 

The challenge of managing complex IT programs, when work is also sent across the globe, includes offshoring challenges: In such ‘typical’ offshore programs, the dynamics are primarily around managing people and processes across time-and-space; and although I say ‘typical’ this is a vast area in itself as you may have observed in the variety of topics I pick for this blog.

There exists a vast body of knowledge when it comes to managing projects, and complex IT initiatives and there are several gurus with gray hair who have been-there-done-it. The know-how for managing offshored projects is also increasingly available in the industry. However, when it comes to offshoring large and complex programs …  Let’s just say: there is certainly an opportunity area staring at those who want to be the gurus with gray hair who have been-there-done-it

Posted by Mohan Babu K. at 01:15 PM | Permalink | Comments (0) | TrackBacks (0)

Last week there was an interesting news release about Tata Consultancy Services (TCS) and the Netherlands-based Nielsen Company inking a large sourcing deal, by some accounts, the largest sourcing/offshoring deal by an Indian services firm. Coming at a time when naysayers were beginning to question the sustainability of the model in light of challenges of rupee/currency fluctuations, questions on India/China etc, this is bound to provide fodder to strategists and deal consultants who are bound to analyze the intricacies for sometime to come.

While observing, pitching and participating in other such large deals, I have also been musing about a few key aspects of managing such large programs and initiatives. During a few meetings with client CxOs that I attended recently, Infosys had been invited to make a pitch on our value proposition. It is interesting to see clients increasingly ask us for our credentials in managing large IT programs.

And here, I am talking about managing large technology initiatives for the client and not just large sourcing initiatives where Infosys or other technology vendors also happen to participate. Obviously, Infosys, like many tier-1 global software services firms has excellent credentials in managing IT projects with clients. This said, there is an opportunity area that seems to be presenting itself in the market as clients ask about capabilities in managing end-to-end initiatives and programs for them. To illustrate, here is an extension of a model I had briefly explored in my book, Offshoring IT Services, while talking about program management functions.

I will not elaborate on these aspects, but it should be apparent that they cover a vast area that Program Managers need to be addressing, especially while managing large, complex programs. A few of you had already brought out similar points when I had blogged about such a thread sometime ago [Ref: What’s the big deal about big sourcing deals?]. For instance, Chetan Bhor said
At a sales/account or program mgt level , larger outsourcing deals could get complex with respect to delivering the desired cost savings , best practices , governance ,security & risk compliance , the growing web of SLA’s , program management etc. And Manik Patil talks about how Large deals imply lesser number of vendors and hence, lesser TTCs or Throats to Choke.

In the traditional model, ‘clients’ - sourcing organization’s leaders, Line of business executives and other stakeholders  - typically expected managers from sourcing organizations to manage their people, budget and tasks .... and in some complex, multi-vendor scenarios, appoint Program Managers to oversee aspects of contract administration, Relationship and Change Management. Clients are expecting some of their key vendors to also manage such niche aspects for them.

I will try and extend on this line of thinking -- and why I see Program Management as an opportunity and challenge -- in the next blog entry, but would love to hear your views too.

Posted by Mohan Babu K. at 07:44 PM | Permalink | Comments (3) | TrackBacks (0)

I blogged about the Merger and Acquisitions in the enterprise software space last week, and almost as a follow-up came the big news of Oracle bidding for BEA. How this deal will play out is anybody’s guess: Analysts are already speculating: Oracle bid too low says BEA, Wall Street Journal’s The Business Technology Blog sums up the implications, which tech analyst and blogger Om Malik seems agree with: 

The only obvious losers in this deal are other midsize software companies and their customers. Between SAP’s acquisition of Business Objects earlier this week and the potential BEA deal, it’s clear that the era of the midsize software company is over. The big guys need to grow, and the only way they can continue to do so is by buying smaller companies. This should cause uncertainty at mid-size software companies, which is never good for customers.

Going back to my earlier blog and the interesting points made by Michael about M and A among enterprise software vendors and the increasing role of offshore players in the segment:

“Apply this phenomenon to offshoring and it careens into the reality that offshoring customers still trust the 'bigger is better' mantra for vendor selection, and thus this would seem to align with other market realities and give the "packaged software" idea more legs. To me, it reeks of absorbing innovation and specialization (ala Microsoft in the 90's) in favor of market control. Real solutions do not promise to span the entire enterprise and delve into every nook and cranny of conducting business without admitting openly that the REAL work of such massive alignment is years of process analysis, custom development and very often pushing through multiple failures. Now, once the Big 4 and there Indian challengers get fully on board we'll have the same collusive consulting (where software decisions are made before engagements even begin) that got us to where we are today with bulky systems underachieving and slowing the true digitization of the enterprise.”

He warns of the possible risks of “collusive consulting,” especially as offshoring is added to the complex equation of product selection and enterprise platform roadmap definition. This is a topic that is highly subjective; one which I am hard pressed to speculate on. of course, to his credit, Michael concedes

“I am also humanist, and know many who navigate these potential conflicts of interest with great professionalism and a genuine desire to provide tangible business value to clients. I also know it’s tough to move mountains, and I am writing from an idealistic perspective in light of the current market picture. Nevertheless, my comments are directed at the structural problems and the lack of sound market based incentives when a company (for example) buys ERP, BI and consulting from a single behemoth. A salesman will tell you this will reduce “integration” issues, but I would urge savvy IT decision makers to heed the durable latin warning: caveat emptor (buyer beware).”

In addition to the points I made in my earlier blog, the fact remains that offshoring players, especially tier-1 firms are in the ‘strategic mix’ of technology consulting, product selection and technology roadmap definition. The flip side of being in the consulting space is risk of advising on or participating in deals that inadvertently may have dimensions of “collusive consulting” that Michael alludes to. Addressing such risks is challenging at best of times for client organizations: sourcing managers and technology leaders have the responsibility of ensuring due diligence and enforcing a robust governance, and to build the right checks-and-balances. Goes without saying, when due diligence slips through the cracks… don’t just blame the consultants. :-) 

Here I would agree with Michael: I too would urge savvy IT decision makers to heed the durable latin warning: caveat emptor (buyer beware).

Posted by Mohan Babu K. at 10:09 PM | Permalink | Comments (0) | TrackBacks (0)

A few weeks ago, I blogged about “M & A among offshorers" In that blog, an aspect of mergers I omitted was the big consolidation among enterprise software vendors during the recent years. Just a few examples from the past few years: Peoplesoft buying J.D. Edwards, in turn getting bought out by Oracle. Similarly Oracle bought out i-flex and CRM maker Siebel. IBM acquired Rational Software.  and Lotus.

Now comes news that “SAP may buy Business Objects.”  Bloggers and analysts are certainly vocal about this, move [Sadagopan, John Murrell, barrons, Mark Evans TechCrunch] though many have ignored the strong offshoring angle.

Packaged software adoption in enterprise IT, especially Enterprise resource planning [ERP] systems has steadily grown in recent years. Andrew McAfee had blogged about the homogenizing effect due to the increasing adoption of packaged software by enterprises “After all, this argument goes, firms are increasingly buying commercial software (from vendors like SAP, Oracle, Microsoft, Business Objects, etc.) rather than writing it themselves. Consequently, everyone's business processes should become more similar and undifferentiated, since they're encoded in the same software. IT doesn't separate winners from losers, in other words --  it brings them closer together, and makes it less likely that anyone's going to stand out.”
The offshore / offshoring angle of packaged  software and the mergers among ERP vendors is equally interesting, though not many analysts and bloggers seem to focus on it:

• Package implementation. Software services firms, Infosys included, are involved in systems integration and package implementation. The advantage of leveraging offshoring service firms for complex implementations is two fold: the obvious (cost benefits and skill pool) and the not-so-obvious: strong alliances between service firms and product firms.  Both together can be potent combination for client organizations
• Offshore Package support. Again a follow-up of the previous point. Leveraging the GDM to provide a 24X7 support to end users in large organizations, many who may be  globally distributed themselves. 
• Offshoring by product companies. Just a small sampling of product firms that also have captive development centers (a.k.a. offshore development centers, ODC): SAP India - Enterprise Software Systems | Business Solutions, oracle in India, IBM products India
• Offshore market for products and services. The recent InfoWorld article “SAP doubles customers in India” talks about  how “SAP has doubled its customer base in India from 1,000 to 2,000 over the last one year. Markets in India and China will play a key role in its drive to sign up 100,000 customers by 2010” 
• Any other angle I may have missed….

Posted by Mohan Babu K. at 10:03 PM | Permalink | Comments (4) | TrackBacks (0)

Follow-up to my blog earlier this week [Patenting Offshoring Jobs or a patent to manage offshoring processes?]. Thanks to Stephanie Overby and others for mailing me about the latest: "Power to the People: IBM Withdraws Offshoring Patent". Stephanie blogs
Bob Sutor, IBM's vice president of open source and standards, is helping to spread the word for his colleagues in the presumably overworked intellectual property division:
"IBM has put into the public domain and withdrawn its application for patent number US2007/0162321 - Outsourcing of Services. This patent application covers analyzing work flows, skills, economic costs, etc. Here’s why we are withdrawing it — IBM adopted a new policy a year ago to sharply reduce business method patent filings and instead stress significant technical content in its patents. Even though the patent application in question was filed eight months before the policy took effect in September, 2006, had the policy been in place at the time, IBM would not have filed the application. We’re glad the community pointed this application out so IBM could take swift action."

Posted by Mohan Babu K. at 02:29 PM | Permalink | Comments (0) | TrackBacks (0)