The Outsourcing/Offshoring Network (TON)’s September 8 Program at LEGO — Program Details

June 23, 2016  |  No Comments

Our theme for the TON program being held at LEGO on September 8 will be “Trial & Error and Course Correction.” We’ll use the day to look at how we have both learned from our mistakes as well as experimented/piloted as we work our way through to better results with outsourcing and offshoring.

 

On the agenda, we’ll have input from Allan Lykke Christensen from LEGO’s CMA group and Britta Ponti from LEGO’s IT Group. Allan and Britta will share their organizations’ learnings with outsourcing and offshoring. Carsten Brinch Larsen from CMA will facilitate a LEGO Serious Play session where we’ll all get a chance to share our own “journeys” in outsourcing and/or offshoring. We’ll end the program with a panel discussion. Currently, Lotte Astrup Frandsen from Xellia and Kalvin Lyle from IO Interactive are panelists.

 

We’ll swing by the LEGO Museum and get a quick look at the LEGO House prior to heading to our social event scheduled for the evening.

 

TON is Denmark’s only cross-industry, cross-functional network working with outsourcing and offshoring. We are a network of client organizations and the network is vendor-free. If you are interested in finding out more, take a look here or contact Katie Gove at kg@trellis.dk.

Trellis’ network can save 20% on the upcoming SSON conference: Eastern Europe Shared Services

June 10, 2016  |  No Comments

Trellis is a media partner for the event in Budapest, October 11-13. Anyone in our network can use the discount code to get 20% off the price of a professional pass to the conference.

 

SSON’s 10th Annual Eastern Europe Shared Services Week is taking place this October, 11–13 in Budapest, Hungary.

 

With the focus on delivering next generation scope through value-add, talent and rapid automation, the 10th Annual Eastern Europe Shared Services Week evaluates how Eastern Europe Service Centres can stay ahead of the competition in regards to talent, digital disruption and harnessing value – the race is now a matter of jumping ahead or losing out by being left behind.

 

If your objectives are to harness value from your SSC, increase efficiency, align processes, keep costs reduced and acquire and manage your talent base, join 200+ of your peers in October for frank case studies, unique regional specific information sharing sessions and benchmarking exercises.

 

The programme showcases an exceptional mix of speakers and sessions designed to help you deliver direct savings to your business and identify ways to improve your service.

 

Download the agenda here

Quote the code: TRELLISCEE20 to get the discount.

Details are here

You can also just email events@ssonetwork.com, or call +44(0) 207 368 9809. SSON will gladly help you to register.

 

Innovation and Outsourcing: TON’s Program at DTU Executive School of Business on May 26

May 30, 2016  |  No Comments

BjörnThe TON network met this past Thursday at DTU’s Executive School of Business and spent the day discussing how (and if) innovation and outsourcing have symbiotic properties that are leveraged by our member organizations. Innovation clearly is the life-blood of business growth. How then do we apply it to outsourcing and offshoring in a way that can deliver on business goals?

 

Our program kicked-off with a presentation given by Björn Rudberg, Director Strategic Sourcing, Ericsson. Björn’s focus was on co-developing with vendors. Critical to being able to co-develop with vendors, noted Björn, is a change in mindset from the typical transactional, procurement-oriented thinking. Co-developing means that we need to establish commonly agreed upon goals and activities while also sharing an open economy and risk within the partnering area.Björn presentation

 

This is un-chartered area for many, indeed. Björn acknowledged that it’s easier to engage in this way when growth is part of the equation and that external factors like the financial crisis can in many instances make this kind of transparency and dependency almost impossible. Yet, the value that can be generated from complementary committed partnerships is worth exploring as it can be impossible to achieve otherwise, for instance due to specific technologies or markets.

 

Bettina and Lotte

Peter presentation

Peter Skyttegaard, Head of IT Strategy, Mærsk Line took the discussion in another direction, that is, the way in which Mærsk Line has innovated IT outsourcing models as a direct reflection of broader IT market strategies over the years. Mærsk Line is “the conveyer belt that makes global trade possible” and as such, has experienced rapid expansion along with the globe’s growth in trade over the past 20 years. During this growth, Mærsk Line has, at times, had an aggressively outsourced profile, and alternatively, a deep push to bring things back in-house, a cycle that is now coming back “in style” as digital transformation brings IT front-and-center with business strategy. The speed of change and the high demand for flexibility are challenging and disrupting traditional outsourcing models, demanding innovation.

 

Peter closed with a reflection that none of the models that Mærsk Line has used or will use have been end-states in themselves. Instead, they have been appropriate responses to business strategy, market conditions and availability. We can expect to see more change going forward.

 

SamOur afternoon program consisted of a mini-workshop on innovation and outsourcing. The opening salvo for the workshop came from Sam Kondo Steffensen, Program Director, DTU-Business, who declared that “sourcing is the future.” Steffensen’s point was that the industrial digital globalization unfolding now means that companies will be defined by a system of strategic relationships that enables them to develop and deliver value. Value eco-systems will develop around IP clusters begging the question of what, exactly, will a company be in the future?

Lars

The focus on knowledge-intensive contribution in a market place where the role of space/distance has markedly declined means that companies are moving away from a heavy manufacturing base towards one of tech convergence.

 

With these thoughts in mind, Zoran Perunovic, Associate Professor, DTU Executive School of Business, facilitated a small group discussion on innovation and outsourcing among TON member companies. Central to our discussions was hearing where companies are innovating and where they are outsourcing. Are there commonalities? Are there missed opportunities?

 

Some of the observations from among the group discussions were: “Our company will need to gain more maturity to be able to master the network thinking we’ve talked about today.” “We are predominantly utilizing incremental innovation. Radical innovation would require us to risk too much.” “We don’t think about the opportunity agenda, we think about the problem agenda.” Yet, there is a shared realization that, “We Katiecan’t be great at every single thing. We have got both to focus and to partner to be able to cover the scope of what we need to do.”

 

Our day’s program concluded with an ironic observation that by focusing on core, we are often limiting our companies to incremental innovation while excluding the possibilities of radical innovation. Food for thought.

 
Our next TON program will take place at LEGO on September 8. We will take a look at experimentation and course correction in outsourcing and offshoring. Should you be interested in hearing more about our TON network, please contact Katie Gove at kg@trellis.dk or take a look here: TON.

 

Interview: Frederik Bastkaer Christensen, Zangenberg Analytics

May 19, 2016  |  No Comments

 

 

Trellis spoke to Frederik Bastkær Christensen, Associate Partner at Zangenberg & Company, one of the largest benchmarking organizations in the Nordic region, based on volume of transactions in which it has assisted. In addition to helping buyers of outsourced services, Zangenberg assists the larger advisory firms and law firms in forecasting prices and projecting the standard services in contracts. Frederik explained Zangenberg’s analytic approach to benchmarking, which has diverged from the “classical” consulting methodology as experience has accumulated across multiple industry and as outsourcing of IT services has become an increasingly digital phenomenon.

 

What was the principal goal of your presentation at the IAOP program?

 

Benchmarking in IT outsourcing has been around for 30 years. The traditional approach has not been very scientific. It has been a very manual process. But the outsourcing market has changed and benchmarking has changed with it. The discussion at the IAOP meeting was intended to open the black box around how this is done.

We talked about emerging technologies and disruptions from the cloud vendors and other developments – how those are affecting the services associated with benchmarking. What are the new contracts that we’ve been seeing telling us about the changes in our role as a consultancy – since now you can just go to the web to see how the typical cloud-based services are priced?

 

How do you differentiate your approach, especially in IT services contracting?

 

There will always be classical benchmarking, focused on analysis of whether the current pricing of IBM or CSC or another major vendor is competitive based on what we see as market price levels. But we believe the trend is from contract-based benchmarking to one based increasingly on indices. As services become more standardized, it makes sense to talk in terms of general trends in pricing. To remove the friction from these sorts of engagements, it’s in the interest of both the client and the vendor that the price adjustment mechanism is simple and transparent.

So we’ve developed a set of indices that we’ve published, and we use those in more or less customized ways to remove this friction and make it easier to revitalize the outsourcing contract and make the need for a transition every three or four years less important, because you have removed the issue of price.

If a contract has been in place for five years, and we know that given Moore’s Law and the benefit of experience a lot of these services will change in price, then we should be able to buy the same capacity for less. You would expect some technological evolution of these services. So you anticipate downward pressure on price.

In classical benchmarking, you select five, six, maybe eight peers, with comparable contracts where the common denominator is industry or the types of services and you report on pricing and a host of other factors.

We have felt clients and vendors needed more precision. In statistics, you get more precision if you increase the sample size. If you consider a larger number of contracts, you can report with more certainty that this is the standard price or service. That’s what we do differently. We start with a much bigger sample, and add mathematical modeling of prices and services, whereas the classical approach is that a benchmarking expert is normalizing the prices within a selected set of peers.

 

But as you say, the benchmarking is no longer just focused on price.

 

An increasingly important part of the benchmarking exercise is the analysis of how those services evolve – what could we do differently that might make for a better contract, with better service or quality of services?

So one of the topics at the IAOP summit was, how can we use these insights for transformation? This might be the right price, but it’s the wrong service for you. You could achieve the same thing faster or at higher quality, but you need to use a different technology. So the challenge is to make the contract flexible enough to incorporate the innovation that’s going on in global services firms.

Since we see all these contracts and new ways of structuring them, how can we take benchmarking beyond this outdated situation where it’s only concerned with price? How can we turn benchmarking into a transformational tool and part of the strategic discussion?

Clients want transparency, they want a tool for transformation, and they want benchmarking to be part of the strategy-development process.

 

Was this discussion exclusively focused on IT services?

 

No. An IT contract is very different from a raw materials or supply chain contract. Some of the pricing is a bit arbitrary, for example when depreciation is long gone but you’re still paying fees for maintenance and so on. Benchmarking IT contracts is a discipline in itself. BPO contracts, across a variety of disciplines, usually are simpler. Infrastructure and operations – but then you also have application maintenance or development. You need to decompose what is in a Software as a Service versus on-premises software maintenance, how the process maps align and so on.

A lot of these services have been repackaged, rebundled in the transition from in-house software implementation to SaaS. You don’t see all the different components. Some transparency has been lost in that process. It’s very easy for the client, who pays one monthly fee, to understand. But when you decompose it, it becomes a bit tricky because you no longer see what goes into providing that service. That is where benchmarking helps, because we will have read all the fine print.

 

Your approach is different from that of the other presenters?

 

We differ in our approaches to a degree. We’re committed to using statistical methods to drive decisions, for our own reasons. But the message we all have in common is that benchmarking is not just focused on price. It’s a tool for gaining insight into how you can transform your current sourcing model into something more intelligent, and removing the friction between the client and the vendor, so that both parties benefit from increased transparency.

Traditionally, the client initiated the benchmark – that certainly was the case three to five years ago. Now, a lot of what we do is initiated by the vendor, to help them perform better relative to their peers. They want to get better at providing cloud services of different kinds, and they want to understand where they are underperforming and where they are underperforming.

People are now buying data from each other, using that as a sort of intelligence-gathering to govern management decisions about specific projects. The benchmarks are used as target metrics for success.

A Deep Dive into Benchmarking

May 18, 2016  |  No Comments

The Nordic Chapter of the IAOP (International Association of Outsourcing Professionals) held its quarterly meeting at Gorrissen Federspiel on May 10. We took a look at benchmarking with insight from Zangenberg Analytics, ISG, and Gorrissen Federspiel. The focus was on preparations for and conduct of “in contract” benchmarking and included insights into the “secret world” of leading benchmarking providers. We got a chance to hear about different benchmarking models and methodologies while drawing the line from negotiating benchmarking provisions to practical experiences derived from actual conducting benchmarking and managing the outcome of an benchmarking.

 

Tue Goldschmieding, Partner with Gorrissen Federspiel, kicked off the program with an introduction into key negotiation topics and market practices for agreeing to benchmarking provisions. The main pricing dynamic for contracts is an assumption of decreasing costs for the service provider which leads to the baseline trending downwards over the lifetime of the contract. As it is hard to precisely predict the actual decrease, the result is a fundamental tension between service providers and clients regarding benchmarking. Benchmarking is an activity with a high degree of discretion and traditionally, very low transparency.

 

Transparency was front-and-center in Fredrik Bastkær Christensen, Associate Partner, Zangenberg Analytics’ presentation which argued for using statistical models rather than peer-based data for increasing precision and transparency in benchmarking practices. Fredrik’s approach is one of employing benchmarking as a strategic problem-solving tool. Central to his message was that indexation, to some extent, will replace traditional benchmarking and that we should expect to see a reduction in friction between service providers and clients driven by the resulting increase in transparency and predictability.

 

Poul Tokkesdal, Director Nordics, ISG, contributed a session on Forward-Looking Benchmarking. By this, Poul means that contract benchmarking has developed from price setting to uncovering and removing constraints on delivery as the basis for realising value, exploiting emerging technologies and moving to transformational contracting models. Poul offered the following quote from Albert Einstein as an illustration, “Any fool can know. The point is to understand.” The focus is now on where value can be added.

 

Our program ended with all three presenters participating in a panel discussion which allowed the audience a chance to inquire and elaborate on the topic of benchmarking.

 

For more information on the IAOP’s Nordic Chapter, and on the IAOP in general, please see www.iaop.org.

 

KMD Poland’s Jens Brinksten: Firms Ask Much of Sourcing Partners, Not Enough of Themselves

March 30, 2016  |  No Comments

JensBrinkstenOne of the true outsourcing veterans in Nordic business, Jens Brinksten, brings first-hand knowledge of alternative sourcing to Denmark’s KMD, as head of KMD Poland — a level of experience unusual among parent company executives. He has set up offshore operations across Eastern Europe and Central Asia. Jens shared his perspective with the audience at the March TON meetings; we caught up with him shortly after the event and asked him to enlarge on some issues he raised during his provocative presentation.

 

Jens, you seem to suggest that when companies run into problems in outsourcing projects, the first place they should look for answers is inside their own organizations, not their partners’ operations.

 

My angle on outsourcing is very practical. A lot of companies spend a lot of money on consultants, lawyers and auditors to do things that KMD did entirely internally. People tend to believe that if they hire McKinsey, everything will go well. But if your company is fully committed to outsourcing as a discipline, have people with first-hand experience in it and plan things very thoroughly from the beginning, you really don’t need the outside help.

 

They tend to want to outsource outsourcing?

 

That’s a funny way of putting it, but yes. Danes in particular tend to assign these projects to their youngest managers to outsourcing projects, because nobody else in the company thinks this is fun. They put a new guy in charge, instead of a more experienced executive who really knows the business processes being outsourced and is in the best position to adapt those processes to the outsourced environment.

 

The outsourcing vendors that companies contract with in the offshore markets are very experienced nowadays. They rarely are the sources of the problems in outsourcing. They’ve run many, many projects in the last 15-20 years, and they really know what to do. Most of the bottlenecks and problems I see when I advise companies originate with the companies who want to outsource but are not prepared well enough.

 

When you outsource, you should do it in good times, when you have the budget and the resources to do the work internally, but you choose to outsource it because it makes sense to do that. Outsourcing is most costly during the first 18 months. That is an investment period. That is when you should be planning the entire process, from Day One to Exit. And this is something I’ve observed – outsourcing plans rarely include an exit strategy – a plan for what happens if the program doesn’t live up to expectations. That’s a mistake.

 

There’s a fear of being connected with an initiative that became a failure.

 

Yes. Too many managers and boards are too reluctant to close down an outsourcing engagement, because that’s never a popular decision. They would rather label it a success, even when everyone knows it’s a disaster. Maybe the cost per production hour has gone down, but that is because we just added more production hours to an existing cost base. We didn’t really save anything.

 

Projects also run into problems if they start out without top-level management buy-in. And it is important to involve the people who were most critical of the initiative directly in the outsourcing project. Those people usually have legitimate points, and you have to address their criticisms directly in your planning – if you can’t address those points, your critics probably were right. If you involve them, and they are wrong, at least they have had their say. In my experience, those people tend to be the ones who say what everyone else thinks. They are influencers. So having them on your side can make a big difference in getting and keeping management support.

 

Outsourcing projects need to be undertaken as openly as possible. It’s a sensitive subject. Outsourcing projects tend to generate rumors and to make people nervous about what it going to happen to their jobs. It is very difficult to get the communications right when it comes to outsourcing – why are we doing it, what’s in it for you, what’s in it for the company. Often, when I advise companies on outsourcing, I find that nobody has prepared a communication strategy – internal, for the employees, or external, for the financial community. There is no HR strategy.

 

Do you find people are receptive to this criticism?

 

I shared some of these kinds of stories at the TON meeting, and I could see a lot of people nodding. People came over to me during the breaks and shared similar stories. I heard from a lot of people that new sourcing approaches began when their companies were financially in the red and management viewed outsourcing as a way to save money, as a way to get back to profitability. They didn’t see that the benefits don’t really start to come until the project is 18-24 months along. So these people know that their management boards are losing sight of this initial period of investment – but they don’t dare to say it.

 

Scandinavian companies always want to offshore work to the top-notch people, but we don’t want to outsource the top-notch jobs. We hire these outstanding people and then we give them the worst jobs, which they are substantially overqualified to do – especially in Central and Eastern Europe – and then they get sick of it and leave. Then we wonder why we can’t keep good people in our offshore business centers. We forget that people in Eastern Europe are very ambitious, and they want challenges in their daily work. And if you can’t make them feel challenged, they can find another company that can.

 

There are thousands of books out there about sourcing. But what do most of these books focus their attention on? How to select an outsource vendor. The authors have forgotten to focus on the mother companies – how they should prepare themselves before they go out and source. What processes, procedures and best practices have to be in place, in the parent company, so we can be assured that people who come from another culture background and speak another language can understand our company and the work we need them to do?

 

That includes all of the specifications and documentation – are they delivered in a form and in language that the outsourcer’s people can understand and use them? We tend to view these things as the vendor’s responsibility, but it isn’t. It’s ours.

 

So management is basically saying, “This is a peripheral function, the kind of thing we would choose to outsource…why should we change anything about the way we run our business for the sake of doing some non-core business function better?”

 

Exactly. In my experience, we are not doing enough to involve our sourcing partners. Think of a man who is sitting there cutting stones. If you hire that man to cut stones, he will think about the work in one way; if you hire that man to build a cathedral, he will think about that work very differently. We are hiring too many stone-cutters.

Identifying and Mitigating Outsourcing and Offshoring Risks: TON Program 17 March 2016

March 18, 2016  |  No Comments

We had a great TON program on outsourcing and offshoring risks at CBS yesterday.

 

Ronan McIvor, Professor, Ulster University, kicked off the day’s program  with a workshop on identifying categories and drivers of outsourcing and offshoring risks as well as Identifying strategies for mitigation. Ronan brought our focus to several common risks, e.g. loss of internal capabilities, higher than anticipated transition costs, and challenges with managing remote teams while also emphasising that many risks are stage-dependent, e.g. the high costs of vendor search and selection prior to contracting. Ronan also noted that general business and operational risks are typically magnified when outsourcing and/or offshoring is involved. Discussion about mitigating risks raised the interesting point that often, mitigating actions can themselves introduce risk, e.g. the move to multi-sourcing to reduce the lock-in risk, raises risks in governance involving multiple vendors.

 

After setting the stage, Ronan guided our group discussions to talk about specific risks, drivers and mitigations. While having our group discussions, it was vital to discuss whether the particular risk was driven by a client, vendor, process or relationship driver, in order to best be able to understand and mitigate the risk itself.

 

Katrine Milman from Bestseller joined us to talk about CSR and how outsourcing can impact the brand. Bestseller’s labels are producing apparel in countries including Bangladesh, China, Turkey, India, Italy, Pakistan and across Eastern Europe. The number of suppliers is growing annually and now includes over 800 factories and over 350 suppliers. Audit programs to assess and monitor these suppliers and their factories require a substantial investment yet are critical to ensuring adherence to Bestseller’s code of conduct and to protect their brand(s). In addition, corporate guidelines such as neither working in multi-factory buildings nor buying through agents, help to ensure that risks are properly minimized.

 

Michael Mol, Professor, CBS, then briefly described Apple’s challenging offshored outsourcing situation which has been covered in the international press. This gave our network a chance to discuss the major issues: Does Apple bear the responsibility for the actions of its supplier towards the supplier’s employees? What good is a code of conduct if Apple can’t/won’t enforce it? and; What is the role of governments at outsourcing destinations?

 

In our next session, we got a chance to look at risk from another perspective, that of organizations establishing offshored/outsourced set-ups. Jens Brinksten, CEO, KMD Poland. Formerly with Simcorp (Ukraine), Cikclum (Ukraine), KPMG (Uzbekistan), E&Y (Uzbekistan), and Egmont (Eastern Europe), contributed with insights from his many efforts establishing offshored centers. Primary to Jens’ message was that client organizations are typically not doing the necessary preparatory work to really understand the issues and that once started, it’s really hard for management to take corrective action or stop an offshored initiative. The key to really making this work is to have the unequivocal backing of the management committee and to communicate, communicate, communicate.

 

Our program ended with a panel discussion moderated by Katie Gove, including some of our members: Fredrik Cedmert, Director, Commodity Management, Global Procurement & Supply Chain, GN; William Menzel, Senior Vendor Manager, Strategic Partnerships, KMD; Laith Said, Strategic Partnership Manager, Grundfos, and Lars Nordestgaard Nielsen, Nordic BPO Director, ISS. A central question was whether companies are truly able to establish comprehensive risk “pictures.” Several panelists pointed out that the “picture” depends on who drives risk assessments and supplier audits. One thing is clear and that is that increased C-level interest on risks in outsourcing has been driven by a better understanding of financial liabilities. Our discussion covered a lot of ground but came back to a critical point that companies must really good as general risk assessments and really good at responding appropriately in critical situations.

 

Ronan wrapped up the day by observing noting the need to include the vendor perspective on risks and that often, the flip side to risk is value.

 

Our next program is on May 26 at DTU’s Executive School of Business. Our theme is innovation and outsourcing/offshoring. Already on the program are Björn Rudberg of Ericsson who will come to talk about co-development with vendors and Peter Skyttegaard of Mærsk Line who will take a look at innovations in outsourcing business models. DTU will develop a workshop on outsourcing of/in the future. If you wish to join us or to find out more, contact Katie Gove at kg@trellis.dk

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

January 22, 2016  |  No Comments

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.

 

TON enters new territory (Jylland) to learn about Vestas’ paradigm shift in IT and outsourcing strategy

November 10, 2015  |  No Comments
We had a terrific program at Vestas in Aarhus on Thursday. We can report back that it’s actually quite lovely in Jylland. Who knew?!
 
The Vestas team took us on a deep dive into their significant paradigm shift in IT strategy and their corresponding sourcing maturity journey. I would like to give a lot of credit to the Vestas team for their honesty and willingness to share. Thanks.
 
Henrik Stefansen, Senior Director, Global IT Sourcing & Vendor Management, kicked off the program with a welcome and a short intro to Vestas. With more than 18,800 employees worldwide and 54,900 installed turbines in 74 countries, Vestas is the only global wind energy company. As Henrik explained it, Vestas’ IT’s goals of delivering cost efficient IT, enabling business goals and creating customer value are best achieved by leveraging external capacity and resources via an orchestrated sourcing approach.
 
Torben Bonde, CIO, opened up about Vestas Global IT’s transformational journey driven in large part by three primary forces: 1) customer demand for information; 2) Vestas’ processes and solutions are increasingly dependent upon integrated and agile IT solutions; and 3) the digital revolution means that IT is in everything. Responding properly to these forces has demanded that Vestas transforms the way that IT is developed, used, and supported. The old operating model, Plan-Build-Manage was not capable of delivering according to the new demands. Therefore, Vestas IT developed and committed to a strategic paradigm change that meant substantially increasing outsourcing and using an orchestrated model with Vestas in the center, managing appropriate levers, vendors, internal teams and technologies.
 
Eugene Pottenger, CIO Support, then took us through a detailed look at how Vestas is working with sourcing strategy. It has been quite a deliberate transformation from a policy of “thou shalt not outsource” in 2009 to a model of strategically leveraging a portfolio of sourcing models to achieve business goals in 2015. Vestas’ commitment to the sourcing strategy vision has been cemented with a re-organization of IT, effective as of October 1, that is specifically designed around the strategic context of sourcing to deliver according to business drivers.
 
Our TON network then had an opportunity to work on two challenges presented by Vestas but certainly relevant to all of our members: 
1) Implementing a multi-vendor set-up without jeaopardizing existing vendor relationships and with the intent to create an open yet competitive landscape among the core vendor group, presented by Eugene Pottenger;
and
2) Organizing and collaborating across Service Management, Delivery Management, and Vendor & Contract Management, presented by Henrik Stefansen and Steen Bech Jensen, Head Sourcing Execution.
 
In small groups, we discussed these two challenges and our own organizations’ experiences working with multiple vendors, incentives, shared SLAs, and how to become more transparent in key vendor relationships in order to enable collaboration and competition that leads to better outcomes.
 
Steen Bech Jensen and Henrik Stefansen then raised the subject of vendor management tools as a way to enable increasing sourcing maturity and re-allocation of staff to higher value tasks. Vestas bravely admitted that their own organization’s outsourcing maturity was less than optimal for achieving high value in outsourcing and that this honest insight drove them to look for ways to quickly ramp up their sourcing governance quality, one element of which is using a software tool to manage key vendors while tracking contractual obligations. 
 
The Vestas “Deep Dive” concluded with an update by Henrik Stefansen on Vestas’ large scale infrastructure outsourcing decision from 2013: That is, the reality of living with the decision and reflections on Vestas’ outsourcing maturity. Henrik gave us a quick summary of the burning platform that Vestas confronted in 2013 and the demand from the top to very quickly outsource infrastructure as a part of the larger turnaround strategy. While shortening a usual 10 month process to a mere 10 weeks is something that Henrik will not willingly do again, he saw through this dramatic episode that a typical RFP process can be significantly shortened without a notable loss of quality. From today’s perspective, Vestas can see that the drastically shortened process and decision lead to a number of assumptions, such as what a particular service consists of, that resulted in considerable energy after-the-fact to remedy. Yet, Henrik honestly noted, Vestas as a first-time outsourcer was bound to have stumbled at some points because they didn’t necessarily know the questions to ask and the criticality of having Solutions, Commercial and Legal folks sit together rather than working independently. The most critical learning for Vestas, and one that they will now use going forward, is that the intention of the contract must be expressed so that all subsequent contract disputes can be more easily rectified.
 
Our day concluded with Michael Mol, Professor, CBS, drawing The Red Thread through our program. Michael drew our attention to the issue that limited managerial attention limits the external span of control; meaning that hierarchical models (subcontracting and tiers) by definition pushes responsibility (and execution) further down the line and away from management. Newer models, such as networked and mixed, rely to a much greater degree on reciprocity and trust. Yet, these newer models while promising much more business value are not trouble-free and require much more coordination and dependence than more hierarchical models.
 
TON’s social occasion was a hands-down success and one which we definitely look forward to doing again. It was a great way to get to know our network members in a less structured manner. Thanks to everyone for making it such a great time.
 
Our next program is on January 21, 2016 and will be held at Danske Bank. Please contact Katie Gove at kg@trellis.dk to hear more.

The future of outsourcing and perspectives from facilities management

October 23, 2015  |  No Comments

Please join ISS, the IAOP (International Association of Outsourcing Professionals) Nordic chapter and the Copenhagen Institute for Future Studies (CIFS) at the next ISS Business Forum meeting on outsourcing.

 

We will look at market developments in the Nordic region and the future outsourcing models which will define the market going forward.

 

Date: November 17, 2015

Location: ISS World Services Buddingevej 197 2860 Søborg
 

 

Program:

  • 14.30-15.00: Registration and Coffee
  • 15.00-15.15: Welcome by ISS and IAOP Nordic Chapter
  • 15.15-15.30: The Nordic outsourcing market by Henrik Jerleskog and Claus Christensen, EY
  • 15.30-16.15: Launch of the ISS 2020 Vision White Book – Future of outsourcing and perspectives for FM by Peter Ankerstjerne, ISS and Jeff Saunders, CIFS
  • 16.15-16.30: Coffee Break
  • 16.30-17.00: Outsourcing case Nordea by Trine Thorn, Nordea
  • 17.00-17.30: Panel Discussion on future outsourcing models with Ole Horsfeldt, Gorrisen Federspiel, Trine Thorn, Nordea and Bent Petersen, CBS
  • 17.30-17.45: End of programme
  • 17.45-19.00: Networking, drinks and snacks
 
Please RSVP prior to November 13 by sending an email to: marketing@group.issworld.com
 
This event is open to all, we ask just that you register in advance so that we can better accommodate all participants at the event.