Stratoserve LLC

Upcoming KPO/BPO learning opportunities in Florida and New York

I am really glad to see the surge of recent interest on knowledge process outsourcing and the shared service domain. End of March you have the Orlando Florida event where you have the eminent strategy guru Ram Charan  leading the proceedings.  On a more applied and "what I can I do with this KPO thing specifically"  note is the nice event at New York on April 29 and 30 .

The KPO summit is chaired by the noted Duke University Professor Arie Y. Lewin . Talks include  financial sector KPO by Andy Eftathiou ; types of KPO including business,investment and legal research by Suresh Yannamani ;the India advantage by Ron Somers, and a KPO best practices panel discussion  with Vasant Bennett , Ken Cutshaw EVP and General Counsel of Church's Chicken and Ranjit  Dua of  Dua Associates.

On April 30th we have Julio Ramirez  on finance and accounting KPO, Marcia Mcleod of Williams Energy on contracting, Lawrence A. Schultis  on risk management in contracting, Jack Diggle    of Prince OMC   on managing human resources in KPO,  A group  from CPA Global  ( Bhaskar Bagchi, Inder Duggal and Susan Hanstad) with an operational KPO  case study; comparing India,Ghana,Philipines and Eastern Europe for KPO with Harry van Geijn of Fortis Insurance International; a case study of managing the "stay behind" workforce by Steve Hosle of AOL followed by Fauzia Zaman Malik  of Accenture  on captive vs build operate and transfer (BOT) models and finally  Frank Cocuzza of Penske (check out this story here) on relationship governance for KPO. Those new to BPO and KPO might like to attend the pre-conference sessions by  David Perla of Pangea3 LLC to prep for the main event.

KPO has indeed  come a long way from my various efforts since  2005 on "Global Outsourcing of Knowledge Based Services"!    

KPO is back in the news

Knowledge Process Outsourcing (KPO) is back in the news with estimates ranging from $10-17 Billion/year volume by 2010. I ran the first ever  MBA elective on "Global Outsourcing of Knowledge Based Services" in Fall 2005 - and a  CAPM seminar in April 2006, with the same title. While well attended, I think KPO  classes and seminars were rather early for 2005.  

During those early years "outsourcing" was a scary word associated only with  layoffs. Globalization and its opportunities was something that was not clearly apparent.

It was nice therefore to read the KPMG report  that explains the difference between "BPO" (Business Process Outsourcing ) and Knowledge Process Outsourcing particularly for the financial sector. The report is well written though I would disagree with the rather provocative subheading ...."outsourcing the core". You really cannot outsource your core competence  but you can certainly re-define what your firm's core competence is when you can get a knowledge task like equity research done overseas at a low cost. But all in all a great report !

e-Sourcing Workshop by Jim Kelly

The e-Sourcing Workshop  by Jim Kelly (of JVKG  )  turned out to be brilliant (check out the photos above).Here was someone who had worked for many years in procurement  and was able to bring out the practicalities of technology adoption in the automation of requisition to procure and pay in a variety of industries.

Later, I had a quick discussion with Jim about how B2B research looks at the e-procurement problem. B2B researchers look at buy tasks as a new task or modified re-buy or straight re-buy with major implications for B2B marketers. Similarly, procurement folks, being key members of buying centers have an urgent need to convert products and services to "straight rebuys" that allows the buying process to really reach out globally for suppliers. And naturally, it is far more easier on e-procurement when requirements are standardized.

A great insight from Jim's talk was, for me, a better understanding of  the nature of the organizational e-procurement process. Consider a three year contract that is negotiated using an e-procurement system. The buyer who works on the system would typically move out of her/his role in three years when time comes to  put out an RFP for the new contract. Institutional knowledge  of the RFP process for the commodity in question is lost and the new buyer has to start all over again.

How Relationship Marketing is Changing Procurement Management

Sometimes its just a quick remark that clarifies difficult issues and that happened with me yesterday when a very competent procurement professional mentioned that their company did not do much procurement activities i.e. bidding,negotiation because they preferred to stay with the same supplier. So, there was not much growth in procurement as a career...

This set me thinking because it marks a major shift in management practice because companies are realizing that just as it is more profitable to have good customer relationship management downstream - its probably more effective to have good supplier relationship management upstream the value chain. Just as you need to "fire" or "sack" your bad customers you need to do the same with your bad suppliers but for the good ones you have - good relationship management seems to be paramount.

So procurement managers need to extend skills beyond "negotiation" just as sales managers need to extend skills beyond simply trying to "close" the sale....paradigms have shifted!

Mature Global design Strategies improve profits

I was rather happy to read the Aberdeen report's summary which highlights that global product design and development leads to reduction in product development time and time to market while allowing the protection of intellectual property through Digital Rights Management.

This blog and my research has been investigating these issues for some time and I am glad that the data is now available. The question is how do you make it work in practice, particularly if you are not a gigantic organization that can afford to open offices worldwide and actually place your person to work with the supplier in another country. That is an interesting question .....

From supply chain to "global value chain" a report from NECON 2007

I returned from NECON 2007 and was struck by a major change in the supply profession from 2006. In three  words "global value chain," in contrast to the narrower "savings" theme of the previous year.

While in 2006 there was some talk about managing the global supply organization and global suppliers - this time I found a distinct shift in the way speakers addressed these two issues. Large corporations like Pfizer are clearly thinking globally for both managing the supply organization and suppliers. The ISM Chair Lisa Martin's talk was just superb and covered the global value chain imperative succinctly.

Stephen Slade's  talk explained how software today can help with making the entire value chain more visible across global operations.Similarly the panel discussion on outsourcing clinical trials had a star panel of both buy and supply side experts and the panel brought out the complexities of the global contract research process.

I was motivated by all the exciting sessions to add slides to talk some more about the "low cost country" aspects rather than only focus only on the difference between business processes and knowledge processes. I too emphasized the "value" chain perspective in the context of low-cost country sourcing.

Overall, a great conference !

So what is the big deal with "Sterling Service Contracts" ?

Well for one,  the new Sterling Service Contracts , gets linked to many of the categories that I blog about! And that is a lot of categories...

Some of the things that Sterling Service Contracts will do includes, and I quote from Sterling's press release:

START QUOTE:

• Storefront capabilities that provide customers and partners with a personalized and branded buying experience increasing loyalty.
• Intelligent order orchestration that determines the most efficient and least costly location to fulfill an order.
• A 7000+ member logistics network that reduces the cost of inbound and outbound shipments through optimization, automation, and collaboration with carriers.
• Network-centric WMS that reduces inventory levels at each stocking location by managing inventory across all locations as a single inventory pool.
• Supply Chain Visibility capabilities that balance supply and demand by collecting, summarizing and displaying inbound supply information in a usable, understandable and actionable format.

END QUOTE

Sterling is probably not the only supplier offering this bundle though Forrester Research does think that the product is a step closer to the "perfect order". What's "perfect" about the concept and so fascinating is that it brings alive a lot of organizational theory that was developed for years and years before IT and the Internet made all this a reality.

Collaborative Product Definition Management (cPDm)

After a very nice Easter weekend, I found myself stuck like an old record on my April 1,post about how SFA happens outside the company and does not depend on existing customer data or processes, particularly when you are looking for new customers. Applications that can be quickly deployed,used and benefits seen make obvious sense for folks who want to sell more units of the same old widget.Therefore the Gartner report for CRM does not come as a great surprise. But enough!

What happens when you want to handle the front end of New Product Development?  This phase involves ideas, idea screening,concept and perhaps prototype development and concept testing. With global teams working simultaneously on projects web based PLM applications are a big hit. This Collaborative Product Definition Management (cPDm-interesting  abbreviation) )  segment is doing great and fore casted at almost 14% growth and will have 13B$ sales in the 30B$ PLM market in 2011 according to this report  -UGS corp is leading in this segment.

Once again, just as the SFA front end of CRM can be stand alone it makes sense that the cPDm front end of PLM  is also  finding a good market in stand alone SaaS  applications.

What's next for the US Small and Medium Manufacturer ?

The GNHCC Business Expo 2007 turned out to be a huge rallying of small and medium companies in the New Haven region. Tireless efforts of the organizers and various supporting organizations,associations and well wishers of New Haven businesses made the event a great success.  As I wrote earlier - I was on the  CAPM panel

From GNHCC Busines...

for "Procurement Strategies for a Global Economy". The event set me thinking about the future of the US small and medium manufacturer. The venue of the expo was the old Winchester factory that was closed down and renewed calls to "re-capture" the past "glory" of manufacturing left me somewhat confused. Is that possible or even desirable?

Unlike Japanese companies who take their good suppliers to overseas markets, large US companies simply expand overseas and do not take care of their US based smaller suppliers. I have no formal data but would guess that most small companies who supplied to larger firms who moved out had to fend for themselves. They embraced cost cutting and six sigma, cut manpower, alarmed young people into avoiding studying science and engineering and generally went into a downward spiral.

Even at the EXPO the tone was of "defending" manufacturing rather than "attacking" new markets. In my presentation on "5 Quick tips to add value to your global supply chain" I emphasized that new global markets like India and China had the biggest US companies and these companies were trying to develop a local supply base. For example, the Small Scale Industries Association of Kartnataka, whose capital is Bangalore has over 3000 members and many of them will be eager to tie up with the smaller manufacturer from New Haven and then help tap markets in South Asia,Middle East, Central Asia and Africa.

The question is - how much the small and medium sector is willing to venture globally? If they did actually appear in some form in other global markets I am sure that their old US customers who moved overseas will like to do business with them.

Alliances,mergers and supply chains

2007 has got off to a great start - the weather in the North East US is unseasonably warm and people are not complaining although there is underlying concern about "global" warming. It's interesting that we have started looking at weather with a "global" perspective. Switching gears, I just finished a research paper on global alliances and innovation in high tech -high change sectors. High tech sectors like biotech,pharma,certain types of engineering involve lots of trials and rapid change. Global alliances have become a particularly useful and flexible organizational option to deal with expert knowledge domains on a "short term" basis. Joint Ventures (JV's)have become less favored organizational forms because of rigidity ,high failure rates and the need of partners to fight over "control". Thus 90's have seen a decline of JV's and a rise in alliances. With the growth in Internet and web based "visible" global supply chains the demand for supply chain visibility can now be met.

Mergers and acquisitions on the other hand are driven by all kinds of reasons that look financially good (say one partner has valuable real estate,great scientists, a great new product pipeline) with one big downside. Merged organizations have huge management problems including managing combined  personnel and supply chains. M&A's are therefore the opposite end of a working alliance in terms of being able to make the supply chain work in a non-duplicated and integrated fashion. Things become more challenging when prior due diligence does not have Supply Chain integration as a top priority as this report by Robert Malone suggests. I tend to agree with Jay Welsh of Accenture when he says that Supply Chain executives get involved after the merger deal is done. It'll be nice to know how many acquiring companies really provide for adequate money and time that is required to integrate global supply chains particularly with multiple locations in multiple countries.