business model innovation-innovative sourcing · pdf filebusiness model innovation innovative...

Business Model InnovationInnovative sourcing approaches

Sridhar Vedala

Managing Director

EquaTerra Global Sourcing

David Seybold

Partner, Vice President

IBM Global Business Service

1

1. Global Sourcing in Europe GrowingBelgium Leading

* GS : Deals with a Global Sourcing component

Current uptake

Emerging uptake

HighLow

Slow

Fast

Belgium

NordicsNL

France

Germany

Italy

Uptake of Global Sourcing across countries

Copyright @EquaTerra2008. All rights reserved

.

2

2. External Factors Further Bolstering Global Sourcing

Credit Crunch /

Slowing Economy

Mergers & AcquisitionsNew Markets/New Breed of

Companies

Severe impact on market

capitalisation and revenues

Focus on cost cutting

Proven Success Stories

Localisation and customisation

Many multinationals adopted

Global Sourcing

Proven success stories

Integration Global Sourcing

Opportunities

Global

Sourcing


.

3

3. Types of Services Globally Sourced Expanding

Others

BPO

Information

Technology

Application Packages Applications Remote

Development Maintenance Infrastructure

Specific to

IndustryF&A

Human

ResourcesBanking

Back Office

Business

Analytics

Financial

AnalyticsBusiness

Research

Facilities –

Green Initiatives

Prior Recent Emerging


.

4

4. Internal Factors Boost Global Sourcing

Internal Departments

Resourcing & ScalabilityTime to MarketBest Practices

Business Unit & Regional

Independence

Fragmented SourcingDuplication of Efforts

Contracts Up for Renewal

Past Contracts -> Models/ Pricing not leveraging

global sourcing

Contractors & Tactical Sourcing

High Reliance -> ExpensiveTactical, non-strategic ->

multiple vendors, sub-optimal pricing and service levels

Global

Sourcing


.

5

5. Changing Supplier LandscapeMore Choice of Suppliers

The US Market Recession

Impact of Currency

Exchange Rate

Market Opportunities in

Europe compared to the

US


.

6

6. Suppliers TransformingUnderstanding of Suppliers Critical

Strengths

ProximityLocal Resources

Weaknesses

Competitive PricingOffshore Experience

Opportunities

Global Footprint

Threats

Offshore ExpansionIntegration

Operating Model

Strengths

AttentionLower Price

Offshore ExperienceDirect Access to Delivery

Weaknesses

Onshore PresenceLocal References

Opportunities

Different Operating Models

Threats

Mostly India Focus

Global Indian

Both categories of suppliers are undergoing transformation changing the way they work and

engage with customers Copyright @EquaTerra2008. All

rights reserved

7

To optimize client value, IBM executes a “Globally Integrated Delivery”model; we are focused on five themes for continuous improvement and differentiation

Leadership & Culture

Supply Chain

Optimization

Delivery Integration

Differentiation

Diversification• Expand GDC country strategies

• Leverage government relations to improve talent supply and capture incentives

• Build critical mass through Centers of Competence in Industry and Language

• Develop breadth and depth of skills

• Integrate governance across the Markets and GDCs – common model

• Improve productivity and value with Technology Assembly Centers

• Monitor project health in real-time with Delivery Performance Management System

• Improve process, methods & tools for Solution Design & Delivery (SDD)

• Focus on staffing responsiveness

• Balanced high performance project teams

• Support for multi-center delivery and technology assembly centers

• Accelerate delivery centre leadership development programs

• Drive desired values, process and metrics across our talent base

Copyright @IBM2008. All rights reserved

.

8

Our Integrated Industry and Competency network deliver cost advantaged expertise close to client demands

Globally Integrated Capability

Tokyo - PLM Detroit – Light Vehicle

(MSS)

Cairo – PLM (eSW)

Regional centers - Automotive

Strategic GD locations

Integrated Industry Capability – Automotive Example

Peoria –

Heavy Equip

� Market and GDC-based capabilities are integrated into Global Automotive Industry Network

� Capability and asset development in CoCs and Global Business Solutions Center

Services that require a physical presence at the

client location

Local / OnsiteRegional

Services that need to be delivered from the same geographic region in the local

language

Global

Services that take advantage of global scale

and dynamics

IBM Global Solution Delivery Framework – Worldwide Common Process, Methods, and ToolsSales Solution Delivery

Stuttgart -

AISC

Pune – Lead CoC

Automotive

Kolkata - SAP

Shanghai - MPS

Primary service at location

• MSS – Marketing, Sales, and Services; MPS – Manufacturing Productivity Solutions; PLM – Product Lifecycle Management; AISC – Automotive Industry Solution Center


Market and GDC-based capabilities are integrated into Global Automotive Industry Network

Capability and asset development in CoCs and Global Business Solutions Center

9

GBS has an integrated business model spanning the Markets and Delivery Centres; we execute along industry and service line dimensions

Dedicated Capabilities: • Developing, supporting, and exploiting reusable

business solution and delivery assets.

Aligned Centers of Competence • Repeatable processes leveraging best practices and re-usable

solution assets by most experienced practitioners

Market Teams Global Delivery Solutioning Lead

Global Business Solutions Center

Location / market specific network of expertise

Go

ve

rnm

en

t

Te

lecom

Re

tail

Ban

kin

g

Au

tom

otiv

e

Oth

er

Go

ve

rnm

en

t

Te

lecom

Re

tail

Ban

kin

g

Au

tom

otiv

e

Oth

er

Markets / Regions Global Delivery

Service Lines

Strategy and Change

Finance Mgmt Systems

Supply Chain Mgmt

Customer Rel. Mgmt

Human Capital Mgmt

Application Services

Global

Solutioning

Solutioning

Team

Competencies

• SAP, Oracle, Siebel

• Learning & Development

• Packaged Product &

Services

• Groupware

• Business Intelligence

• Enterprise Integration

• MF & AS/400

• Application Development

• Application Innovation

• Enterprise Architecture &

Technology


10

7. Preference of Sourcing Models Changing

• Captives

• Selective Strategic Sourcing

• Best in breed – multi-sourcing

• Synergies between BPO and IT

Physical Offshore Presence

Engagement Type

Resourc

e M

anagem

ent

Gre

ate

r Degre

e o

f

Ow

ners

hip

Extended Enterprise

Staff Augmentation

Outsourcing

Internal Function

Inte

rna

lS

upp

lier

FTE BasedResults or SLA

Based

CAPTIVES

+Service Based

Project Based


11

8. Approach to Location Analysis Changing

1. Location Analysis

Resources Available

Wages

Expertise

Stability etc

2. Vendor Analysis

Perspective: India is a temporary phase and the location will change when India is no longer attractive

1. Vendor Analysis

Vendor Maturity

Experience

Understanding of Global Sourcing

Flexibility etc

2. Location Choice

Driven primarily by business need

Also influenced by vendors

Perspective: Vendors have influenced the choice of destination and in future India will remain important since many vendors will have base in India

Destination is function of

Resource Availability

and Costs

Destination is function of

Vendor Maturity


12

9. Its Not about Resource Availability but About Resource Management

Myth Reality

Locations are only about a

large availability of talent and

low costs

The high attrition and wage

inflation will wipe away India

advantage

The talent available at global

locations is appropriate only

for transaction services

Proper management and

channelization of resources

New Opportunities and

market stabilisation -> lower

attrition rates & wage hikes

Suppliers (Global and Indian)

have set up CoEs in global

locations value add services

Skills + Resource Management + Location Advantages


13

10. Customer Drivers and Requirements – Changing

Drivers Requirements

Resources

Crunch

Time to

MarketSystems

Enhancement

Cost

Savings

Access to

Best

Practices

Control &

Flexibility

Access to

DeliveryAlignment

AttentionSavings

Guarantee+

Customers choice of suppliers, operating models and engagement models are changing as more options are

availableCopyright @EquaTerra2008. All rights reserved

14

About EquaTerra

EquaTerra sourcing advisors help clients achieve sustainable value in their IT and

business processes. Our advisors average more than 20 years of industry

experience and have supported over 2000 transformation and outsourcing projects

across more than 60 countries.

Supporting clients throughout the Americas, Europe, Middle East, Africa and Asia

Pacific, we have deep functional knowledge in Finance and Accounting, HR, IT,

Procurement and other critical business processes. EquaTerra helps clients

achieve significant cost savings and process improvement with internal

transformation, shared services and outsourcing solutions.

Contact us

BeLux: +32 (0)2 709 29 32 [email protected]

China: 86 (0)21 28909093 [email protected]

Finland (Baltics and Russia):

+358(0) 9 2516 [email protected]

Germany: +49 (0)69 [email protected]

India: +91 11 4051 [email protected]

Netherlands: +31 (0)88 002 2900

[email protected]

Sweden (Nordic HQ): +46 (0)8 662 30 67 [email protected]

UK: +44 (0) 845 838 [email protected]

US: +1 713 470 [email protected]

15

About IBM speakerDavid J. Seybold,

Partner and Vice President

IBM, Global Business Services (GBS)

Dave is the Global Business Services Consulting Leader in Europe. He leads all the

consulting and delivery related operations across Spain, France, Italy, Netherlands,

Belgium and other European countries.

Prior to Dave’s current role he was the was responsible for IBM’s Global Delivery

centre services. During 2006-08 he lived Bangalore, India and led the industry

verticals for IBM’s global delivery operations. GBS has over 73,000 staff in India with

significant global delivery capabilities all major industries and six major practices:

Customer Relationship Management, Financial Management, Supply Chain

Management, Strategy and Change Services, Human Capital Management,

Application Innovation Services and Application Management Services. Prior to this

role, Dave was responsible for the development of IBM’s global delivery consulting

services in India.

He has been a partner responsible for Supply Chain Management services in IBM US

and prior to that he was Global Partner, Product Life Cycle Management (PLM) and

Innovation services. Dave has 19 years of business consulting experience and is a

thought leader in innovation management processes, supply chain management and

information technology. Dave has worked with a diverse set of global clients across

the electronics, automotive, consumer product and retail industries. He has been

published in Supply Chain Management Review, IBM Systems Journal and other new

publications.

Dave holds a BS in Quantitative Analysis and a BA in Economics from Pennsylvania

State University, an MS in Operations Research and an MBA from the University of

Maryland, Smith School of Business.

To learn more about IBM Global Delivery and Staff Augmentation Services, contact your IBM sales representative or visit:

•ibm.com/services/ams

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