IT Sourcing – Why are you tracking your onshore and offshore resources?

How many companies are spending inordinate amounts of time, resources and systems to track the number (by headcount) of onshore and offshore resources? Are you compelled to continually understand how many people are onshore and offshore on a moments notice? Did you complete an assessment to get the initial numbers and then kept on tracking forever? Have you loaded the data into an online database and then required your lines of business to update the headcount and distribution each month? If you are doing any of these items, I’d venture to say that something is wrong and your organization is missing the point of vendor delivered capability.


Instead of tracking the offshore resource headcount and distribution, think about doing the following;


1. Setup a policy and monitor adherence. The truth is, vendors are probably going to be much more productive and cost effective if you let them do their job. This does not mean they have that assigned seat next to you on the floor and they wait until your calendar opens up to determine what to do next. This does not mean that looking out at a pool of resources that you have shipped onsite, with everyone in the room means increased productivity. Take the time to figure out what you really need onsite, set that as the goal and stick to it. Examples include setting onshore: offshore targets using percentages of total or defining the key roles that you will always want onsite, while leaving the remaining roles to by filled by offshore resources. Have the supplier self-monitor adherence to these targets and assign a service level agreement (SLA) metric that the supplier must meet.


2. Ask the supplier. If you are embarking on an initiative or a model for continual support, take the time to ask the supplier what their view is as to how best to operate. They should be upfront in terms of requirements and how best to optimize their delivery model. You should not try to make them a shadow of you or a complete replication of your culture and organization. You are asking supplier resources for help, so reach out and recognize that if they are a good fit to the work that must be completed, you will have many more options and greater flexibility in your delivery.


3. Get rid of the tracking. What do you get for tracking supplier resources? How much is it costing you to track and maintain this data? Why are you doing it instead of asking the supplier to do the tracking? A lot of organizations will put in place elaborate models for tracking where the supplier resources are located, and often track the number of hours, and then implement policies and controls that just add overhead for the supplier. Instead, spend your time focusing on deliverables and execution. You will realize more benefits.


This may seem like harsh advice, but I’ve sat in too many meetings and strategy sessions on this topic with little understanding of the reality that there is little ROI in performing this tracking activity. Once you have the basic supplier resource information, and understand your supplier baseline, set the goal you want to achieve. Then step back and seriously consider what more you really need to make it happen!


IT Needs to Spend More Time Innovating

For a long time information technology (IT) has been considered the backbone of many organizations, providing back-end support and services that are necessary, but not in direct support of the customer experience.


Over the years, IT has evolved a strong set of disciplines focused on running the factory, developed an extensive collection of tools, methodologies and services, all of which have had little or no impact on the true customer experience. This world has quickly changed. All you need to do is go into an Apple store and watch the customers, or see what is being used while sitting on a train or in an airport, or talk to a teenager about what they like on the web in terms of useful technology. You will quickly realize that IT in the enterprise had better get it’s act together and become part of the innovation drive or they will become obsolete very soon!


A way to get a gauge on whether or not you are part of the innovation stream is to take an objective look at your current IT portfolio. How much of the portfolio is focused on driving efficiency and improving cost models versus working with the business customer on understanding how IT can be used to improve the interactions with the ultimate end customer?


We’ve worked with clients on significant strategies to drive internal IT and business transformation, streamlining organizations and onboarding new internal capability, only to find that the end
customer is still using paper forms and tedious manual processes to engage. My bet is that unless IT steps up and truly becomes part of the R&D business lifecycle, the business will move ahead without IT.


You may feel that you just can’t implement or innovate fast enough to meet the challenges of your business
model. Your internal team may be challenged with a lack of expertise, not enough funding, or in some cases, no clue as to what the leading technologies or innovate approaches are in the marketplace. One way to tackle this challenge and get in front of it, is to seriously engage with your IT partners at all levels.


Envision an RFI specifically focused on innovation using your current set of business and vendor partners. Or, look at what it would take to make each vendor contractually obligated to participate with you in a forum on a bi-annual or annual basis that is focused on innovation. Aside from engaging the vendors participate, why not sweeten the pot, and provide the incentives for everyone to participate. Think of what could happen if you were now in the “drivers seat” to define and develop new and innovative capabilities and then had the leverage to offer this to the broader marketplace!


To get focused on how you and your team can spend your time and focus on innovation, ask yourself a
few key questions:
  • What does the customer need from me? (Consider the “end” customer, not just your business partner.)
  • Does the current IT process model foster innovation?
  • What could be done to the IT strategy and portfolio to shift some of the focus to innovation?
  • Am I engaging the right thought leadership to realize innovation (both internal and external)?
  • What are the primary ways my company is going to innovate this year (can I name 4-5 key actions)?


The answers to these questions could help you and your team recognize what your current focus is around
innovation and, if necessary, reset the focus on innovation for the future!


The Danger with Core Competencies

How often have you sat in a meeting regarding the IT portfolio or a new strategy and the conversation quickly
turns to an opinion regarding the organization's core competencies? How many times has someone signed
up for work or taken on a project that is way beyond their capability, beyond the vendor capability and in some
cases way outside of your business model? The key is to understand an organization’s capabilities while
simultaneously remaining mindful of the danger with core competencies.


Most companies lack a good understanding, and in some cases, a basic knowledge of their core competencies. Although this phrase was introduced back in the late 90’s and you have probably completed several studies around core competenices in your professional career, it is still relevant in just about every IT strategy discussion. This relevance becomes more critical when you are considering options like managed service delivery or approaching some unique combination of ITO, BPO and KPO.


One of the dangers to avoid when identifying core competencies is to make sure the group narrows rather than
broadens the definition. When tasked with figuring out what is core, some teams will define everything they do as a competence. They may not consider whether they do a good job or if the competency is a market differentiator.


Being precise and focused around what you consider to be core is critical. A narrow view will help you in the long run. Narrow allows the team to focus its energy on a manageable set of compentencies around which to drive transformational change. Focusing on one or two critical processes that are essential to the business model and their supporting competencies is a great way to set priorities and charter a roadmap for successful delivery.


Some examples that are indicators of being in the” danger zone” of core competencies include:
  • A core competency list that includes “everything and the kitchen sink." Teams will often create a list that contains every skill or generic process utilized by the company. Watch out if it includes things that you buy rather than build, a brand item, or the competency just does not exist.
  • The competency list is not your real set of competencies. The list should include a few items and only those skills or capabilities that are integral to your current and future business model.
  • Competency definitions are pithy. When the team creates two-word examples that lack any definition, how can you explain to your customers and your internal team why these are core and ultimately why you are going to do something with them in the future?
  • Competency lists are too long. Some companies think it’s more credible to have a longer list and that this builds confidence in the business model. In reality, a long list can mislead or overstate what is really a part of the business model.
If you are not mindful of some of the pitfalls, you may be faced with the challenge that your company does not
have defined core competencies. If that happens, go back and get focused on how to define this key strategy
You may have to go back to basics in order to avoid the dangers noted above.