Sourcing and Vendor Mgt

Innovation Is Risky – But What’s The Risk Of The Same Old Supplier Relationships?

Christine Ferrusi Ross — Tue, 22 May 2012 18:25:45 +0000

Sourcing and Vendor Management professionals aren't known for their high risk tolerance. In fact, most focus a significant portion of their time reducing risks in their supplier base, protecting the business from supplier-related risk.

That's admirable and necessary. Of course the business shouldn't be subjected to predictable and preventable risk events. But let's think for a minute about what risks we're really avoiding: Are we avoiding the unnecessary risks that we could see coming? Or are we so focused on reducing any risk that we're not able to take advantage of new opportunities that could transform our businesses?

Innovation has once again become a business imperative -- because of the shaky economy, not in spite of it. Many SVM professionals tell me that being innovative in both what you buy AND how you buy it is what will make sure their businesses stay viable regardless of the economic situation. Innovation requires us to think about new technologies, and most likely new suppliers. It also requires us to think differently about how we manage those supplier relationships.

So what are the new supplier-related risks we face in this innovation-focused environment? We asked Jason Busch, Azul Partners, one of our keynote speakers at the SVM Forum this week, this question. He recorded his answer for us here:

And if his response leads you to have follow-on questions, don't forget to tweet them with the hashtag #SVM12. We'll ask him for you during the forum.

SAP Rapid Deployment Solutions (RDS) Address Cost And Speed Of SAP Deployment

Liz Herbert — Mon, 21 May 2012 13:28:23 +0000

At SAP SAPPHIRE (SAP's biggest user conference, May 14-16), SAP announced that it has deployed more than 1,400 instances of Rapid Deployment Solutions (RDS) at more than 1,000 unique customers. These solutions help customers deploy SAP modules in as short as a few weeks at a reduced price point by productizing typical configurations. SAP boasts cost savings typically in the 20% to 40% range versus similar deployments that do not utilize RDS.

SAP has more than 70 of these solutions currently available. Additional solutions are available through partners like Accenture and TCS. RDS solutions are available in a wide range of areas like CRM, Sourcing, Financials, and even SAP HANA.

SAP positions these solutions as "lego-like," meaning that customers can build one on top of the other and can customize and extend as much or as little as they want.

Our take? These RDS solutions are a great way for companies to quickly realize value out of SAP, an issue which has long plagued the SAP community. Even clients who need to go far beyond what an RDS offers and create a much more customized deployment might be able to jump-start their project with an RDS. However, these offerings are not available in all horizontal or vertical areas. SAP customers who want a complete solution heavily tailored for their industry-specific needs will likely need to turn to SAP's ecosystem of pre-built solutions, rather than lighter-weight RDS offerings.

See more at www.sap.com/rds/.

Are you using RDS solutions? Considering them? We would love to hear your thoughts!

Liz Herbert

@lizherbert

Clients Demand Business Innovation From Services Partners

Liz Herbert — Mon, 14 May 2012 03:53:17 +0000

Innovation is again the hot topic for clients, as it was before the economic downturn. Clients have a renewed interest in innovation and business growth, and they seek services partners who can help. But what is innovation in this context?

In this context, clients seek business innovation. They want a provider who delivers new ideas and insights that will change business processes to drive revenue or improve business processes (for example, through product innovation, customer process innovation, supply chain innovation). They do not mean delivery innovation or continuous improvement, where the provider improves service delivery efficiency to drive lower IT cost and/or higher quality of IT service to clients (for example, through improved delivery processes, shared services, reusable assets). (Of course, they usually do want this as well -- but this will not necessarily drive business innovation such as new products and processes.)

What do leading firms do to drive ongoing business innovation from services providers?

1) Put process around innovation. Organizations who successfully get innovation from their services providers put processes in place, from idea discovery to incubation to implementation to measurement. They also select services providers who have codified the innovation process. Ongoing innovation cannot happen by accident.

2) Use social media to collaborate at fast paces with customers, partners, and employees. Tools such as social networking sites, microblogs, and collaboration sites let firms gather ideas, evolve ideas, and rank ideas with a wide audience.

Clients Thinking About Contingency Plans In Wake Of Infosys’ Continued Visa Woes

Stephanie Moore — Wed, 02 May 2012 21:17:28 +0000

Infosys' continuing visa issues are causing concern for Infosys clients. While at first, the problem sounded isolated and related to a single whistle-blower, the continuing coverage suggests that the problem may be more widespread. Two recent events are increasing client concern. First, there was a CBS Morning News broadcast which seemed to support the original whistle-blower's accusation. Then, Infosys itself disclosed that the U.S. Department of Homeland Security had found errors in a significant percentage of I-9 employment authorization forms. This, combined with Infosys' somewhat anemic earnings announcement, has clients wondering what the future holds for Infosys.

Moving From The Horse To The Car: Innovation Or Improvement?

Lutz Peichert — Thu, 19 Apr 2012 10:15:22 +0000

Was the introduction of the Ford Model T an improvement or an innovation over the horse drawn wagon?

As an SVM professional, you may ask, "Why is this question important for me?" But as an ever-growing number of companies invest in innovation, they will realize a significant portion of this can come from the existing relationships with suppliers.

Forrester surveyed over 1,000 IT executives and technology decision-makers in Q3 2011 about which priorities will have the most significant impact on this year's IT services spend. The top answer, at 56% of the respondents, was the need to innovate and grow their business. In fact, innovation rated higher than the ever-important lowering operational costs (40%)!

To execute on these innovation priorities, you -- the SVM specialist -- must understand the innovation potential of your suppliers and how to leverage this in the future. Success on this endeavor will require setting the stage. SVM pros need to understand the difference between a supplier-driven improvement -- that we expect -- and a service or business-focused innovation that needs investment and management. SVM pros can start with three key items: 1) Use an innovation screening checklist to understand who to partner with; 2) educate vendors on business priorities and key stakeholders within the business to enable innovation; and 3) manage delivery-oriented innovation as a part of your daily vendor governance.

It's Time To Get Serious About Services Innovation

Christopher Andrews — Tue, 17 Apr 2012 19:19:48 +0000

Year over year, Forrester hears from clients who are frustrated with their providers' inability to provide innovation. In 2011, 60% of respondents to Forrester's Sourcing and Vendor Management Survey cited "Limited ability to define or provide innovation" as one of the top complaints when evaluating their suppliers. The frustrations behind these numbers include:

"I have to push my suppliers for every bit of innovation they provide outside of the contract."
"Vendors consider 'innovation' anything that involves selling me more stuff."
"They say it's innovation, but it's not even specific to my business."

Service providers, of course, are eager to market themselves as innovative. They're competing in a market filled with scrappy upstarts -- and they're all striving to differentiate offerings. Yet they are also frustrated with innovation -- the innovation demands of clients. The common complaints we hear from them include:

"It's rare that clients can define what they want when they ask for innovation."
"Our clients always tell us they want innovation. They are just not willing to pay for it."
"We can't provide innovation for clients if they won't put us in touch with their business."

A third group of people (clients and vendors) step back from these two arguments and tell us it's not relevant. To these people, innovation is not something a third party can provide.

At Forrester, however, we believe that reliance on third parties for innovation is not only possible, it's essential to the evolution of your company's technology strategy. This stems from two important trends:

True Global Outsourcing Should End The Visa Debate

Stephanie Moore — Tue, 10 Apr 2012 14:44:04 +0000

Ever since offshore outsourcing became popular, employment visas -- specifically the L1 and H1 visa -- have been a source of debate. Indian vendors have needed them to make their offshore model work. US technical employees have feared them because they threaten to take away their livelihood.

Well, here we are in 2012 and the debate is hotter than ever. The offshore vendors, attempting to accommodate tech-savvy clients' agility and context requirements, require even more staff onsite in the US. Simultaneously, the US government, struggling to combat unemployment, shore up the dwindling middle class, and get through the 2012 election cycle, is cracking down on visa enforcement. For Forrester clients, this situation has become problematic as their vendors fail to land resources for mission-critical projects and the clients themselves are then compelled to use local contractors to fulfill their onsite needs (one reason staff augmentation vendors are seeing a big uptick in growth).

The most recent visa flare-up is related to the L1 visa and a letter that the US Chamber of Commerce and a group of Indian and US companies wrote to the White House on March 22, 2012. For the sake of context, the L1 visa, if abused, is particularly dangerous for American workers because it allows offshore vendors to bring non-US staff to the US and pay them home-country wages. So, for example, a developer from India on an L1 visa in Manhattan can legally be paid $7,000 per year, even if an American developer or an H1B visa developer (who must be paid prevailing US-wage) would be paid closer to $70,000 per year. The problem is that the L1 visa was meant for intra-company transfers (e.g., Acme Company France to Acme Company US), and yet outsourcing companies have found ways to use them for client projects and thus avoid paying prevailing wage for some IT roles -- effectively wiping out the competition for US staff or for legitimate H1B staff.

True Global Outsourcing Should End The Visa Debate

Stephanie Moore — Tue, 10 Apr 2012 13:41:35 +0000

Should You Be Using Service Level Management Tools?

Bill Martorelli — Mon, 02 Apr 2012 20:28:29 +0000

A couple of years ago, my then-colleague Patrick Connaughton wrote a market overview about service-level management tools, which included a discussion of specific toolsets intended to help customers manage both internal and external services-based relationships. Among the technologies in this space include Digital Fuel, Oblicore, Compuware's APM, Enlighta, Appirio, and others. Such service-level management tools, as we described them then, reflects one key aspect of toolsets like Digital Fuel and Oblicore, to monitor service levels for both internal and outsourced delivery. But the technologies also have other capabilities, including the ability to create catalogs and manage financial implications of services consumption, both internal and external.

Since that time, challenges in service consumption, including measuring and managing services relationships, have only gotten harder, complicated by the widespread trend toward multisourcing and multi-supplier relationships and new categories of cloud-based services like IaaS on the other. Given these challenges, tools like those described above would seem to have some possible value. Big industry suppliers sure seem to think so: Since we wrote our last report, NewScale has been snapped up by Cisco and Digital Fuel was bought out by VMware, with the goal in part to help customers of virtual solutions and cloud services meter their usage and help charge back for consumption. In addition, KPMG acquired Equaterra, meaning that KPMG also took ownership of Equaterra's EquaSiis, an outsourcing governance suite developed in conjunction with Microsoft. Oblicore was acquired by Computer Associates just months prior to our report. The acquisitions have in some cases meant a change in focus for the technologies acquired, to fit more cleanly to the broader product and services agenda of the acquirer.

Deloitte To Acquire Workday Implementation Specialist Aggressor

Liz Herbert — Thu, 29 Mar 2012 20:01:51 +0000

Deloitte continues to ramp up its software-as-a-service (SaaS) consulting practice, both through organic growth as well as acquisition. Today, Deloitte announced plans to acquire Workday implementation specialist Aggressor. Aggressor has been one of a very small set of Workday integrators (along with Deloitte), which means Deloitte now further boosts its already-impressive Workday practice.

This move furthers Deloitte's Workday practice, as well as Deloitte's overall practice in SaaS implementation and integration work. Deloitte also has strategic partnerships with other leading SaaS vendors, most notably salesforce.com.

For buyers, this means a stronger and deeper bench of consultants at Deloitte. But, on the downside, it removes a boutique/specialist option from the market, which appealed to some because of its laser focus, smaller size, and (perceived or real) ability to be more nimble, flexible, and price competitive.

Are you an Aggressor or Deloitte client or prospect? We would love to hear your thoughts!

Clients Say Big Data Is Now An Imperative (Not Just An Initiative) At IBM's Smarter Analytics Event

Liz Herbert — Thu, 22 Mar 2012 11:40:08 +0000

At IBM's Smarter Analytics event this week, clients and partners presented success stories about how organizations are driving business value out of big data, analytics, and IBM Watson technology.

Examples included:

- City of Dublin, Ireland using thousands of data points from local transportation and traffic signals to optimize public transit and deliver information to riders.

- Seton Healthcare mining through vast amounts of unstructured data captured in notes and dictation to get a more complete view of patients. Seton currently uses this information to construct programs that target treatments to the right patients with a goal of minimizing hospitalizations in the way that most efficiently optimizes costs with benefits. The ability to mine unstructured data gives a much more complete view of patients, including factors such as their support system, their ability to have transportation to and from appointments, and whether or not they have a primary care physician.

- WellPoint using Watson technology to improve real-time decision-making by mining through millions of pages of medical information while doctors and nurses are face-to-face with patients.

But, clients warned that as much as the technology is advancing, the biggest hurdles remained the internal ones. Clients stressed that they face a critical challenge in introducing, driving, and changing the organizational mindset to work in a new way that can take advantage of these great advances in technology. What did they suggest?

1) Executive sponsorship from the top (C-level)

2) Hiring or retraining for new roles like data scientists (schools like Syracuse are introducing and promoting new programs out of their iSchool, which can help with reskilling experienced talent from other areas)

3) Strong governance around the program

What is your organization doing in this area?

Oracle Had A Strong Third Quarter, But Well-Informed Buyers Can Still Get Great Deals In Its Q4

Duncan Jones — Thu, 22 Mar 2012 09:46:38 +0000

Oracle reported its results for the three months to February 29^th yesterday, and it beat analysts' expectations. Software license sales were up 15% from last quarter, and up 7% on last year's Q3. The blogosphere's "Oraclefreude" delight at its disappointing Q2 appears to have been premature. Enterprises' insatiable demand for processing power and Oracle's excellent products ensure a continuing demand for more "per core" license capacity of its flagship database products.

"Oracle is on track to deliver the highest operating margins in our history this year," said Oracle President and CFO, Safra Catz, in the company's press release. "Oracle can achieve these record margins as an integrated hardware and software company because we are focusing on high margin systems where hardware and software are engineered to work together."

What does this mean for sourcing professionals considering Oracle deals in its important fourth quarter to May 31^st?

Despite Oracle's financial rebound, I'm still confident that sourcing professionals with leverage will be able to get better prices in the next three months than they've gotten before, provided they use that leverage wisely. Here are three reasons why:

1. Oracle's good Q3 was the result of sales execution and deal timing, in addition to underlying demand. Firstly, the delayed deals on which Oracle blamed its Q2 miss boosted the Q3 numbers when they eventually came through. Secondly, some sales teams encouraged clients to bring forward purchases into February, which boosted their Q3 number but reduces the pipeline available for Q4. This gives you extra power if you have discretion to threaten to delay purchases beyond May and to offer to bring purchases forward from later in the year.

SVM Pros Should Play A Pivotal Role To Facilitate IT-Business Discussions To Define Or Refine A Comms Technology Strategy

Brownlee Thomas — Fri, 16 Mar 2012 18:08:47 +0000

SVM pros often are tasked with facilitating formal and informal discussions between IT operations and business stakeholders for input and feedback when attempting to evaluate and refine a strategy for new communications technology decisions and sourcing. Comms technology planning and sourcing should be centralized within IT in order to avoid islands of investments by business decision-makers who don't want to wait for IT to work through a lengthy evaluation process that they're not even involved in.

However, given the escalating pace of communications technology evolution (e.g., the iPad phenomenon), it's more important than ever before to take measures to ensure an open dialog between the businesses and IT, specifically about new technology evaluations, testing, and proof-of-concept trials with vendors that IT is undertaking within its operational labs or on behalf of a division. SVM also can facilitate regular discussions between business stakeholders that include sharing lessons learned from recent proof-of-concept and pilot activities, etc.

Moreover, because telephony and mobility technologies and services in many distributed companies typically are provisioned by local market GMs, centralized IT SVM organizations often struggle to get some control over sourcing practices for the associated services. SVM, regardless of its mandate from IT's steering committee, has to deal with more and more instances of self-provisioning by business leaders that bypass established processes.

Identify Your Current State As A Starting Point For A New Communications Strategy By Conducting An Audit Of What's Out There

Brownlee Thomas — Fri, 16 Mar 2012 18:05:05 +0000

Defining a best-practice communications strategy requires establishing a planning starting point. To do this SVM professionals need to undertake a comprehensive audit of the company's communications operational current state that includes compiling use cases by different business divisions; determining the more popular and alternative procurement models; and identifying specific as well as general vendor management responsibility and processes. Key to a successful audit is obtaining wide business buy-in, which can be achieved by a combination of obtaining a mandate or official endorsement from the IT executive steering committee that includes key business leaders, and asking business operations executives for input and feedback starting with at least two major divisions and then socializing an opinion and concerns about comms technology input across all the major businesses. As a next step, SVM and the IT communicatons technology strategy planning team need to actively solicit feedback and additional data that will be used to develop the future-state communications technology vision. In this way, and specifically when the business stakeholders who've participated see their ideas and concerns reflected in the strategy planning documents, momentum will build for interest and readiness by the businesses to move forward faster to flesh out, finalize, and execute a new strategy.

Canada Takes A Long-Awaited First Step To Eliminate Archaic Foreign Ownership Restrictions On Telecommunications

Brownlee Thomas — Fri, 16 Mar 2012 17:04:51 +0000

The Canadian federal government has (finally) made a move to lift Canada's rules on telecommunications operator ownership from a previous maximum of 46.7% (20% direct plus 30% indirect) foreign ownership -- albeit only for smaller market players. Earlier this week, the Minister of Industry announced amendments to the 1993 Telecommunications Act that will remove all restrictions on foreign ownership of wired and wireless network operators that have less than 10% market share. Details haven't been provided on precisely how this will be calculated, but it's assumed it will be based on national market share in terms of revenues and addressable customers. The rationale stems from Conservative government's desire to stimulate competition in the Canadian national market where two operators -- Bell Canada and TELUS -- dominate fixed-line business and consumer voice and data services, and where three wireless operators -- Rogers (which is also a major cable operator), Bell Mobility, and TELUS -- have a 95% chokehold on cellular services.

Sourcing and Vendor Mgt

Innovation Is Risky – But What’s The Risk Of The Same Old Supplier Relationships?

SAP Rapid Deployment Solutions (RDS) Address Cost And Speed Of SAP Deployment

Categories:

Clients Demand Business Innovation From Services Partners

Clients Thinking About Contingency Plans In Wake Of Infosys’ Continued Visa Woes

Moving From The Horse To The Car: Innovation Or Improvement?

Categories:

It's Time To Get Serious About Services Innovation

True Global Outsourcing Should End The Visa Debate

Categories:

True Global Outsourcing Should End The Visa Debate

Categories:

Should You Be Using Service Level Management Tools?

Deloitte To Acquire Workday Implementation Specialist Aggressor

Categories:

Clients Say Big Data Is Now An Imperative (Not Just An Initiative) At IBM's Smarter Analytics Event

Categories:

Oracle Had A Strong Third Quarter, But Well-Informed Buyers Can Still Get Great Deals In Its Q4

Categories:

SVM Pros Should Play A Pivotal Role To Facilitate IT-Business Discussions To Define Or Refine A Comms Technology Strategy

Identify Your Current State As A Starting Point For A New Communications Strategy By Conducting An Audit Of What's Out There

Canada Takes A Long-Awaited First Step To Eliminate Archaic Foreign Ownership Restrictions On Telecommunications