Developing Sourcing Strategies in a Disruptive Environment: TON Program Wrap-up

January 22, 2016

Thanks to the whole team from Danske Bank for making yesterday’s TON program such a success. It was an interesting juxtaposition to be discussing disruptive forces and new ways of working in such a gorgeous old-world building. It’s probably worth remembering that we are always taking something from the past forward with us as we progress.


Ronan McIvor of the University of Ulster lead our workshop on developing sourcing strategy. Ronan’s framework focuses on four main categories, each of which should be thoroughly investigated in order to be able to properly arrive at a sourcing strategy using either internal or external resources. The categories are: Organizational capability; Transactional cost; Location and distance analysis; and Implementation and management.


Transcending the traditional core/non-core process analysis, Ronan’s capability analysis looks into competitive advantage and capability as a more precise tool to filter sourcing options. As an example of the way that this industry often gets tied into knots about core/non-core, Ronan offered the case of Rolls Royce finally deciding to outsource engine design and manufacturing to BMW using the competitive advantage/capability assessment instead; a decision that had measurably strong impact on the company’s bottom line.


A key message of Ronan’s work is that sourcing strategy formulation is messy. It involves complex interactions and interdependencies among processes, people and functions, all of which must be considered to properly develop a sourcing strategy. What’s right for one company may not be at all right for a company operating in the same industry and in the same market.


The balance of our day was used looking at a couple of disruptive forces: Working globally and robotic process automation. Peter Ørberg Jensen from CBS launched the discussion on disruption by noting that disruption is pretty much the name of the game for us as we are always working with relocation and re-allocation of resources which are by definition disruptive.


Jens Christian Ipsen, Sr. VP Information Management and Data Warehouse, Danske Bank contributed a session on Offshoring Maturity–Moving to High Performance Global Teams. Jens Christian’s central message was that everything rises and falls based on management and leadership. Danske Bank’s management has made it clear that the global workforce is part of Danske Bank’s IT strategy. Period. The quest to find talent, let alone to be cost competitive demands that Danske Bank avails itself of resources located outside of Denmark. Danske Bank’s portfolio of global resources stretches from Denmark to other Nordic locations to Lithuania and to India. Yet merely staffing from multiple locations doesn’t guarantee a seamlessly integrated global team. Danske Bank has had to work very hard to identify and then measure its team players on some core capabilities: Empowering colleagues, delivering and relationship skills. Danske Bank’s experience has shown that it is not enough to just be a good coder. To work successfully as a part of Danske Bank’s team, one has to be able to build and maintain relationships as well as to be a catalyst of productivity for colleagues.


Søren Bisgaard, First VP, Head of Process Automation & Global Team Development, and Abhijit Tuljapurkar, Process Automation Lead, closed out the day’s program with a session on the Paradigm Shift in the “Traditional Outsourcing Model” Due to Workplace Automation. Søren emphasized that reaching Danske Bank’s 2020 strategy explicitly demands that the organization exploit scale and optimization while outperforming the industry in customer experience and digital transformation. Successfully delivering on the strategy will mean leveraging global teams to continually improve the bank. Doing so requires Danske Bank to combine offshoring with automation to uncover potential. Abhijit spoke in more detail about just how Danske Bank is working with automation, a good example of which was the transformation of the mortgage lending process from a heavily human-intervention driven process including 55 individual steps to one that uses just four; while reducing transaction time from 60-90 minutes to a mere 10-12 and the error rate from 11% down to 4%.


From the tone of the post-program discussions, it’s clear that we will be re-visiting the topics of global teams and automated processes in the future.