GT_September_2011 by Ali Comelek

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GlobalizationToday

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The Official Magazine of the International Association of Outsourcing Professionals

GlobalizationToday September 2011

Commerce Redefined

Your Next IT Hub?!

Experts See Rural Sourcing as the Next BIG Thing

Also in this issue: • WHERE IS VALUE LOST IN OUTSOURCING DEALS? Page 20 • NEXT-GENERATION SERVICE DELIVERY MODEL Page 26 • MAKING GLOBAL LEADERS Page 34 • ARCHITECTING FOR FAILURE IN THE CLOUD Page 40

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INSIDE September 2011 7 PUBLISHER’S NOTE 8 NEWS FEED

What’s new and noteworthy in global commerce.

20 WHERE IS VALUE LOST IN OUTSOURCING DEALS?

by Baker & McKenzie

This white paper from Baker & McKenzie surveyed 93 global organizations. Read it to see what organizations should bear in mind when planning outsourcing engagements. Find out what are the top 5 most significant factors that cause a loss of value (and the bottom 5 factors)

26 NEXT-GENERATION SERVICE DELIVERY MODEL

by Susan Hogan, Erica Volini

Expanding the value-creation menu for consumer packaged goods organizations.

34 MAKING GLOBAL LEADERS by Daryl James

This article from Thunderbird School of Management looks into traits that you must have not to get lost in this new “flat” world.

40 ARCHITECTING FOR FAILURE IN THE CLOUD

by Stanton Jones

Don’t be one of the organizations that learn it the hard way when Cloud is not truly integrated.

SOCIALLY SPEAKING

by Ashley Gross

44 IAOP WORLD CONNECTION 49 SCRAPBOOK

How Rural Sourcing Benefits Communities Now and in the Future

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RecRuitment pRocess outsouRcing

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contingent woRkfoRce outsouRcing

Human ResouRces consulting

caReeR tRansition & oRganizational effectiveness

Some workForce SolutionS ProviderS Say they’ll go where you need them. we’re already there.

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RecRuitment pRocess outsouRcing

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PUBLISHER’S NOTE

Real Industry Experts

Ali Comelek

Founder and Publisher

You must have heard me say it millions of times. We believe that the best content comes from real experts: people like yourself that work day-in and day-out in this industry. For the September issue, we decided to put an even bigger focus on this principle. We asked our readers to submit their ideas to be published in this issue. Your response was amazing and we received tons of ideas, white papers and articles to be published in this issue. As you can imagine, this creates a good-news bad-news situation. The good news is that we are always very happy that you send us your ideas and articles, but the bad news is that we are sorry that we cannot publish all of them in this issue. If your submission is not used, we will hold on to it and hope to use it in the future. Reader content will always be an important part of our editorial at Globalization Today. Read more about this on Page 33. Thank you again for your incredible and continuous support. In this issue, first, we are going to look at a recent trend: rural sourcing. For buyers, rural sourcing industry offers a cost-effective alternative to offshore IT outsourcing. But beyond that, this industry also helps contribute to the revitalization of cities and towns across the U.S. You can read more about rural sourcing industry – as submitted by Ashley Gross from RSI on page 14. On page 20, you’ll find more information on key factors you need to keep in mind when planning outsourcing engagements. Outsourcing deals have become increasingly complex arrangements and to maximize savings they need to be structured in a way that aligns the customer’s desire for savings with the vendor’s desire to drive revenues and profit. Baker & McKenzie conducted a survey to benchmark those factors that are perceived to cause the greatest loss of value in outsourcing deals. On page 26, we will look into next-generation service delivery models for consumer packaged goods (CPG) organizations. Though there are signs of economic recovery fueled by government and corporate spending, CPG industry has been facing declining margins due to increasing costs and lack of consumer spending. Deloitte shares with us a new model that can help CPG organizations succeed in this new and challenging global environment. Lessons learned apply beyond CPG companies and we hope you find them useful in whatever industry you do business in. We round out the issue with looking into a great article by Thunderbird School of Global Management who has been ranked #1 in International Full-time MBA for 16 years (U.S. News and World Report). They share the traits necessary to make true global leaders and show us why the world in some ways is actually not so “flat.” You can read the whole story on page 34.

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NEWS FEED

NEWS Feed

WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING

XCHANGING AND BAE SYSTEMS INC SIGN SEVEN YEAR US PROCUREMENT OUTSOURCING SERVICES CONTRACT by BusinessWire

BAE Systems, Inc, a leading defense, security and aerospace company, has awarded a seven year procurement services contract to Xchanging (LSE:XCH), the business process and technology services provider. As part of this innovative arrangement, Xchanging will provide sourcing and supply base management services for $800m of BAE Systems, Inc annual indirect procurement spend across most categories of indirect goods and services including Information Technology and Telecommunications, Transportation, Contract Labor, Industrial Supplies & Services, Utilities, some Professional Services and others. Xchanging will also provide procurement management activities related to reporting, supplier and contract management. The contract runs through July 2018 with an option to extend for an additional three years by mutual agreement. “We are delighted to extend our relationship with an existing customer of Xchanging. This contract not only enables us to deliver value to BAE Systems, Inc, it also acts as a springboard for Xchanging Procurement Services in the fastest growing procurement outsourcing market globally.”

GlobalizationToday September 2011

Xchanging helps customers around the world drive sustainable improvement in supplier costs and process efficiencies associated with the procurement process. The contract reflects Xchanging’s position in the global procurement services market and firmly establishes its position in the Americas region. “We consistently seek opportunities to reduce cost, improve efficiency and increase speed to market,” said Dennis Bent, Vice President Strategic Sourcing, BAE Systems, Inc. “Outsourcing indirect procurement to Xchanging enables us to access top procurement talent supported by a proven approach to sourcing that will provide value to our business.” Scott Dever, Managing Director for

Xchanging Procurement Services in the Americas, said, “We are excited to be adding BAE Systems, Inc. to our broad customer portfolio and we are proud to be associated with such a high-performance, professional organization. This agreement opens up tremendous opportunities for growth and establishes Xchanging as a strong provider of procurement services in the Americas.” Ken Lever, Xchanging CEO commented, “We are delighted to extend our relationship with an existing customer of Xchanging. This contract not only enables us to deliver value to BAE Systems, Inc, it also acts as a springboard for Xchanging Procurement Services in the fastest growing procurement outsourcing market globally.”

NEWS FEED

HINDUJA BPO ARM BUYS CANADIAN FIRM OLS FOR C$74.85M by Business Standard

HGS (formerly known as Hinduja Global Services), the business process outsourcing company from the Hinduja Group, announced the acquisition of Canada-based On-Line Support, a customer relationship management company, for C$74.85 million. This is an all-cash deal. OLS offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages and has 1,650 seats at 10 sites in Canada. In 2010-11, it had a turnover of C$63.4 mn and has close to 1,800 employees. It has presence in media, telecom, technology and BFSI (banking, financial services and insurance) works with clients such as Bell Telecom, Virgin Telecom, Apple and American Express. “This acquisition will reduce our dependence from the US markets. After this, our revenues from the US will come down from 75 per cent to 60 per cent. The Canadian market, unlike the US, is growing and has had little impact from the recession. This acquisition will give us the market presence,” said Partha Sarkar, CEO. The acquisition is being funded through internal accrual but the company is also

in talks with banks to raise funds. “Before the acquisition, our cash was $150 mn. We are in talks with bankers to raise anywhere between $35 to $50 mn,” said Sarkar. This acquisition presents both companies with opportunities to crosssell and up-sell to existing clients.

Consolidated annual revenue of HGS will cross $300 mn. It now has a presence in 42 delivery centers across the USA, India, Philippines, Canada, Mauritius and the UK, with offerings in 25 languages. After the acquisition, HGS’ staff strength would be 21,300 employees worldwide.

RELIANCE COMMUNICATIONS MAY SOON SEAL $1.5 BILLION OUTSOURCING DEAL WITH ZTE, HUAWEI AND ERICSSON by Kalyan Parbat, Economic Times - India

KOLKATA: Anil Ambani-promoted Reliance Communications (RCom), the country’s second-largest mobile phone company by customers, is in advanced talks to ink a near $1.5-billion, multivendor managed services outsourcing deal with a clutch of telecom gearmakers such as China’s ZTE, Huawei and Sweden’s Ericsson, a senior executive privy to the discussions told ET. For the first time, the Anil Ambani flagship is looking to hand over operations, planning, maintenance and management of its country-wide CDMA and GSM networks to a cluster of vendors as opposed to a single entity.

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NEWS FEED

RIVERWOOD CAPITAL TO INVEST MILLIONS IN NEW COLOMBIAN DATA CENTER by La Republica

The business group, through its subsidiary Synapsis, announced the construction of a Data Center in the country as part of its initiative to expand the company in Latin America. The project will have an estimated investment of $7 million US Dollars. Regional General Manager of Synapsis, Leonardo Covalschi, was in charge of announcing the realization of this project, which promises to be the most modern one in the city, one that will also permit the country to expand its available infrastructure, key to the technological development in Colombia. The main factors that influenced the

construction of this Data Center in Colombia were related to the country’s competitiveness, as well as its political and economic stability, “the growth in technology that Colombia has achieved in recent years is well above the regional average, and that is very important for investment in the country,” said Robin Barquin, Manager of Synapsis Colombia. The project’s construction is expected to increase the operational capacity of Synapsis, in order to offer more competitive prices, expand its market position, build trust and confidence with its customers and it will be a great support in generating greater participation in future businesses. As Barquin noted, “We

will have an immediate impact on how we can reach our customers with better and faster services. In the short-term, this investment will result in us becoming more competitive.” The manager of Synapsis Colombia indicated that the size envisioned by the company for the construction, “will consist of 1,500 square meters at the first stage, and that should be completed in 11 months. We hope that our new Data Center will be operational by October 2012,” he concluded. Riverwood Capital is fulfilling the promise it made to invest several million dollars into Synapsis when it acquired the company.

NIIT TECHNOLOGIES ACQUIRES TRAVEL AND FINANCIAL SERVICES IT FIRM by Global Services

NIIT Technologies Limited, a global IT solutions organization, announced the acquisition of Proyecta Sistemas de Informacion S.A. (Proyecta), a software services company headquartered in Madrid. The acquisition enables NIIT Technologies to enhance its European footprint with Proyecta’s successful experience in servicing industry leaders in the Travel and Financial Services segments. This coagulates NIIT Technologies frontend capabilities for larger European engagements and provides a gateway to the traditional Spanish speaking countries in Latin America. “We welcome Proyecta to NIIT Technologies as we strengthen our Travel and Financial Services offerings in the region,” said Sunil Surya, President, NIIT Technologies, Europe. “Our comprehensive range of complementary services will strengthen our ability to serve our clients as a trusted IT partner”. Proyecta S.A. with over 100 consultants has deep domain capabilities and proven track record of providing experts and high value added Airlines and Banking

GlobalizationToday September 2011

consultants in Spain. It has a strong relationship with leading industry players in business intelligence, web and mobility applications. “NIIT Technologies comprehensive offerings would enable us to provide our customers with a wider and deeper range of services” saidFrancisco Izuzquiza, Founder and Director, Proyecta Sistemas

de Informacion. NIIT Technologies EMEA presence contributes to 35% of its global revenue. The Company is ranked No.1 in customer satisfaction among all global outsourcers in the Datamonitor Black Book of Outsourcing 2010 Travel Industry survey and has held this position for three consecutive years.

NEWS FEED

GLOBANT EXPANDS NA PRESENCE WITH NEXTIVE ACQUISTION by Global Services

Building and maintaining a global presence is increasingly being employed as a growth stategy by service providers. The route to this can be many. The more visible trends these days include opening new delivery centers in emerging locations or acquisitions in developed locations closer to customer base. Globant, a Latin American developer of software products is the latest one to follow suit with its acquisition of Nextive. Here are the excerpts from an interview with Guibert Englebienne, CTO & Cofounder Globant, on what led to the move and what would be its future impact. What was the idea behind the acquisition? Globant has been gaining lot of momentum

of late. We have a strong focus on US and the UK and 95 per cent of our revenues come from these two regions. So, we felt that we need to have a larger footprint in the US to be closer to our customers. Also considering the trend towards mobility, the acquisition of Nextive is a great feat as it is a strong player in the mobile and gaming space. Why Nextive? Nextive has a tremendous track record of delivering services and creating products for companies in the mobile and gaming sector, which is a significant part of what Globant does. For us, this is the first step of consolidation in the US market and a

move that will significantly increase our capabilities in the mobile space. We have found in Nextive a company that is young but growing very fast. More expansions in the pipeline? We continue talking to many companies in the gaming and mobile space, and we are looking at having a larger delivery center in the US. We also plan to increase the number of jobs in the US as we estimate hiring around 200 engineers in the next year and a half. Since Globant has been proposing on offering innovation as a service we are analyzing different companies in the consulting and creative side to work with us to bring innovative solutions. Our focus will continue to be on US and UK and at the same time we will look for increasing our footprint in Latin America. We have opened six new delivery centers there in the first half of this year. We are also planning expansions into Argentina, Columbia and Brazil.

CAPTIVE ANNOUNCEMENTS SOAR TO RECORD HIGH; OUTSOURCING TRANSACTIONS REMAIN STEADY by Everest Research Institute

The global outsourcing and offshoring market saw 61 captive announcements in the second quarter – a 42-month record high – while overall transaction activity remained steady with the signing of more than 500 outsourcing deals, according to Everest Group, an advisory and research firm on global services. Outsourcing transactions saw a marginal increase of 2 percent for the second quarter and an increase of 4 percent compared to Q2 2010. A one-hour webinar was held August 10 to present study findings and insights and will include a special feature, “What Service Providers Say About Clients,” presented by Dr. Mary Lacity, professor of information systems at the University of Missouri-St. Louis.

Major findings include: • Most captive announcements were in Asia while Eastern Europe and Africa also witnessed several announcements. A trend of no captive divestitures continued. • North America and Europe accounted for nearly three-fourths of all outsourcing deals signed during the quarter, but transaction activity slowed in North America while activity in the United Kingdom and Rest of Europe rose marginally. • Overall volume of renewals and restructured deals decreased 5 percent compared to the previous quarter, but ITO deal renewals and restructures

increased 8 percent. • Although no deals were signed with contract values over US$1 billion, 52 deals were recorded with contract values between US$200 million-$1 billion. • Offshore activity saw 45 delivery centers established in the second quarter compared to 46 in the previous quarter. Significant activity occurred in Eastern Europe and Africa. • Service providers’ consolidated revenues grew marginally in Q1 2011 versus Q4 2010, but consolidated margins fell over the same period. (Financials lag other service provider activity by one quarter.)

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NEWS FEED

RECENT OUTSOURCING DEALS Australia’s Department of Health and Ageing has selected Accenture to design and implement the country’s Personally Controlled Electronic Health Record (PCEHR) system. The initiative will span all Australia-based health systems and enable patients with a single record to manage care modernization support to the Department of Justice (DOJ) in the past.

The state of Florida is projected to save up to $15 million and streamline its communications systems with a statewide email service provided by ACS, A Xerox Company. For the first time, all Florida state agencies will use the same email system, eliminating 30 separate systems. It is also the first statewide private cloud email solution using Microsoft Exchange 2010, which has the security to be compliant with HIPAA and Criminal Justice Information Services (CJIS) standards and the scalability so the state can make the solution available to local government agencies.

IBM announced that Russell’s Convenience, which operates 24 convenience stores across the western US and Hawaii, has chosen IBM’s LotusLive cloud to transform how its employees collaborate with each other, their licensees, vendors and partners and respond more quickly to customer demands. As a result of moving to cloud computing, Russell’s licensee stores can now access and share information regardless of their location. They have instant access to cloud-based social networking and collaboration tools, including file storing and sharing, email, instant messaging and activity management. Instead of searching through emails or making multiple phone calls, employees can now collaborate on the fly, meet online to resolve issues, share sales goals, network with co-workers, and track projects to completion.

GlobalizationToday September 2011

BLOG BEAT NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD MULTI-SOURCING – COLLABORATE TO SUCCESS www.sourcingfocus.com

by Neil Meddick, Services Director, Computacenter

Multi-sourcing has become a common venture for large scale enterprises as they look to a number of partners for support on strategic projects in an effort to reduce costs and gain access to skills not readily available to them in-house. In theory multi-sourcing can reduce spend and provide predictable costs, guaranteed outcomes and improved service levels for customers and employees. This coupled with the ability to draft in experts to handle specialist tasks, rather than adding to the already busy work schedules of over-stretched staff, creates an attractive prospect for large enterprises. However, with the managing of multiple partners, deadlines and costs, multi-sourcing isn’t always a smooth operation, as quite often communication can break down and as a result collaboration breaks down too. Poor pre-planning, communication challenges and collaboration breakdowns can lead to a decline in service levels, dragged out projects, costs and ultimately; unfulfilled expectations.

www.sourcingfocus.com

But all is not lost when it comes to multi-sourcing. When the lines of communication are clear and open between partners there is less scope for error. A clear project leader amongst suppliers ensures good collaboration and cohesive multi-sourcing which results in the overall achievement of a successful project. In today’s workplace there are plenty of channels widely available to help promote this collaborative approach. With instant messaging, wikis, video conferencing, microblogging and traditional methods like regular phone calls and meetings, the opportunity for collaboration has never been more readily available. By collaborating through these channels, multi-sourcing can be managed in real time which could effectively provide a solution to communication breakdowns. This is something which can only ever be a good thing for the future of cohesive multi-sourcing and overall project success.

JUNIOR ISAS REPRESENT A GREAT OPPORTUNITY FOR BANKS – BUT OUTSOURCING IS THE WAY FORWARD by Tony Collins, CEO, OPAL

Junior ISAs represent a great opportunity for banks and other product providers – but outsourcing is the way forward. HM Treasury has recently announced that the limit for Junior ISAs (JISAs) will increase from £3,000 to £3,600 from 1st November. JISAS will work in the same way as an adult ISA, allowing children to shelter £3,600 a year from tax. Likewise, as with adult ISAs, money can be invested in cash or stock market investments. Clearly, this is good news for UK consumers and for children in particular, as a JISA will not only streamline and simplify savings for younger people, but will also allow them to maximise their savings and teach them about financial responsibility from a very early age. ISAs have proved to be a popular product with savers ever since they were first launched in April 1999, and savings and investment ‘wrappers’ like these continue to offer savings in terms of both income tax and capital gains tax. As such, JISAs could have an important role to play in helping younger people save for university or a deposit for their first home. At the same time, JISAs also represent a very exciting opportunity for UK banks and other vendors. Firms that do not currently have a Junior ISAs proposition – or that will need to change their existing proposition to take advantage of this new increased limit – should consider outsourcing in order to bring these products to market very quickly. In fact, under an outsourced model, many firms could bring a Junior ISA product to market in less than six weeks. When used in this way, not only will outsourcing avoid the need to review and alter your current internal systems, (which often struggle to adapt to the ‘new world’ of product lifecycles anyway), but it will also slash the time that it would take to modify existing product engines and policy administration systems in order to support these products. With any kind of new financial services product, time-to-market is everything. So if outsourcing can provide a much-needed shortcut, then why not take it?

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PERFECT PARTNERSHIP

Socially Speaking How Rural Sourcing Benefits Communities Now and in the Future By Ashley Gross “There is absolutely nothing negative about what you do.” David Markiewicz, reporter for the Atlanta Journal Constitution explained when interviewing Monty Hamilton, CEO of Rural Sourcing, Inc., for a piece on the rural sourcing industry. Buyers benefit greatly from utilizing the services of the rural sourcing industry. However, the benefits don’t stop with the buyers getting quality services at great rates; they extend far into the local economies and lives of the employees that service the buyers. Employees of rural sourcing type companies are no longer forced to make a choice between having a career for which they have a passion OR staying in a place where they enjoy the familiar lifestyle. Long gone are the days where someone grows up on a farm and his or her only option for a career is to work on that farm or to move to a metropolitan city for opportunities in their chosen field. Nonmetro areas across the U.S. are not only benefiting from expanded career options, but also are creating revitalized, minitech hubs that offer all of the hip factors of urban areas like walking or biking to work exotic restaurants and unique coffee shops, without the hassles of over-crowded cities. Colleges and universities are the cornerstones for supplying the talent to support this trend. Local educational institutions such as Arkansas State University (Jonesboro, AR) and Georgia Southern University (Statesboro, GA)

GlobalizationToday September 2011

have become advocates of this initiative. Their graduates prefer to remain in or near their college towns upon graduation, and until recently, that option did not exist. The education communities in non-metro areas tend to work more closely with the business communities than their peer institutions in the metro areas due to shared objectives of improving the local economies. Because of this partnership with the surrounding colleges and universities, rural sourcing companies are able to provide a high level of intellectual capital with a built in cost advantage over similar service providers in larger metro areas. According to McKinsey Quarterly, summer 2010, “In the United States, IT labor costs in smaller cities are lower than those in major urban markets by 35 percent or more.” The rural sourcing industry offers more than just a cost-effective alternative to offshore IT outsourcing. The industry helps contribute to the revitalization of cities and towns across the U.S that otherwise would be suffering in the present economy. With greater access to local colleges and universities and online education and training opportunities, today’s job seekers are no longer confined to old school jobs. This new educated talent pool is specializing in various fields, such as healthcare, technology, and advanced manufacturing. As a result there has been a significant shift from agricultural based workers to manufacturing and finally to knowledge workers.

PERFECT PARTNERSHIP

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PERFECT PARTNERSHIP

This continued shift in career paths is due in large part to the current state of the economy, which has lent itself to growing positions in healthcare and technology. The heads of economic development for Jonesboro, AR and Augusta, GA both attest to this transformation. They have seen a dramatic shift in industries that lead their flourishing local economies, specifically in their downtown environments. The types of jobs in these areas are key for future growth. Diverse, well-paying, knowledge jobs attract talented people, which all factor into the present and future sustainability of a particular city or town. Mark Young, President of the Jonesboro Chamber of Commerce and Economic Development specifically discussed how diversification of their economic base has led to a flourishing downtown economy in Jonesboro, AR. The city has its sights set on turning the once sleepy town into a miniAustin, TX, leveraging the enrollment at Arkansas State University and the local community to create a cool and hip downtown environment. Rural Sourcing, Inc., founded in Jonesboro, AR in 2004, moved to their current downtown location

in June 2010. It is not a coincidence that since this move, four to five additional technology companies have located within walking distance of one another, creating a synergy among the growing population, Jonesboro real estate developer and investor Clay Young explained. He goes on to describe the sense of community among companies with similar specialties wanting to locate near one another. They are able to feed off of one another, and in turn, these “white collar” jobs aid the local economy. So much so, in fact, that there has been a “dramatic” increase in the number of restaurants and stores opening downtown with more in talks for the near future. A similar trend has been occurring in Augusta, GA, recently rated # 4 for Private Job Creation nationwide by the Bureau of Labor Statistics and #23 by BusinessWeek in their 40 Strongest Metro Economies in the United States. The downtown population of the city has quadrupled in the last five years. Unlike most American cities, Augusta is currently at about 99% occupancy rate for its housing. As more and more people make lives for themselves in these smaller cities and towns, the area’s

DECIMATION OF AMERICA'S HEARTLAND

Source: Produced by Economic Research Service, USDA, . using data from U.S. Census Bureau.

GlobalizationToday September 2011

Non-metro counties with net out-migration of 10 percent or more, 1980-2000.

economy benefits greatly. Both Mark Young and Walter Sprouse, Executive Director for the Augusta Economic Development Authority, are in agreement that the economic impact multiplier of each new technology job in Augusta and Jonesboro translates into a 2:1 or 3:1 economic impact. This means that, for example, when a new $50k job is created, it will have an impact of about $100k to $150k to the surrounding economy. Each new payroll job “turns over several times,” per Mark Young. “People are eating downtown, spending money at retail stores, buying homes, and paying taxes.” All of which result in an uptick in the community’s value. This economic benefit is due in large part to companies like ESi, a global leader in crisis management software and technology, and Rural Sourcing, Inc. setting up shop in their revitalized downtown Augusta streets. In fact, Margaret Woodward, Executive Director for the Augusta Downtown Development Authority, described the surge in population as “re-energized” stemming from the fact that people want to feel connected with each other and the businesses and people running the town in which they live. From April 1, 2000 to July 1, 2009, the U.S. Census Bureau found that Chicago, New York, and Los Angeles have all seen a net migration out of the cities and into non-metro areas with rates between 4-5%. Why is the fact that economies like Augusta and Jonesboro are flourishing so important? Let’s backtrack about 5-10 years, shortly before the recent migration to more rural American cities and towns, before generation X and Y-ers wanted to return to their roots and raise families where they grew up. As a college education was becoming more readily available to people across the country, it was enabling the mobility of our workforce and leveling the playing field between educated populations in major cities and non-metro areas. This, in turn, led to a significant “brain drain” in non-metro areas. (See chart on left)

PERFECT PARTNERSHIP

It wasnâ&#x20AC;&#x2122;t until the last five years that the brain drain reversal began when people starting returning to a pre-WWI mindset, per Woodard. This mindset includes wanting to live in locations that afford a lower cost of living but also a higher quality of life. Often times, these cities and towns that people are calling â&#x20AC;&#x153;homeâ&#x20AC;? are locations where they grew up or where they have emotional roots of some kind, such as attending college there. An important thing to note is that this trend is not generational. From recent college grads to baby boomers, people are relocating to places where their quality of life is the primary focus of local leaders and the business communities. The surge in housing mentioned by Margaret Woodard has lent itself to a drastic increase in local merchants. In fact, Augusta is in the enviable position of having a waiting list for residents and merchants alike for their downtown lofts and storefronts. As a result of the higher quality of life than one would find in major cities, such as convenient commutes to work and many options for physical activity in a pollution-free outdoor environment, the turnover of rural sourcing companies is significantly lower. In fact, turnover rates in these companies are less than 5%. This eliminates the need to retrain new workers and repeat knowledge transfer as others leave. With an Austin, TX-like feel to the surrounding environment, people are able to fully connect with their community while also pursuing their passions, which

makes them great assets on any team. Between the social and economic benefits to the communities touched by rural sourcing companies and the cost benefits to the buyers of services, this industry trend has a long prosperous journey ahead. Intra-community connectivity is key to the future growth of non-metro areas across the United States. Through things like sustainability and green initiatives, hip downtown environments, forward-

thinking job creation, and partnerships with the education community and local government, smaller cities and towns are able to attract talent back home from major cities and reverse the debilitating brain drain. The future is a bright spot in an otherwise dim landscape for these non-metro areas that are able to attract innovative companies who are intent on creating an alternative for taking jobs offshore.

ABOUT THE AUTHOR

Ashley Gross , Marketing Manager Rural Sourcing, Inc.

Ashley Gross is the Manager of Marketing for Rural Sourcing, Inc. (RSI). Her responsibilities include utilizing public relations, social media, online networks, and peer associations to build the RSI brand and rural sourcing industry as a whole. Prior to joining RSI, Ms. Gross honed her skills as a services marketing professional working for a talent staffing agency and an online marketing agency. She is a firm believer in forming, building, and maintaining relationships in order to ensure an ideal partnership among RSI and its peers. Ms. Gross is a graduate of the University of North Carolina at Chapel Hill, where she earned a B.A. degree in Economics.

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Agile IT, Agile Business By Jimmy Harris and Stephen Nunn No doubt about it: cloud computing is hot these days. It’s hard to read a newspaper or magazine without seeing something about the topic. As big as it is, however, cloud computing is actually part of an even bigger story: the fundamental re-creation of the traditional enterprise operating model. A whole panoply of technologies, applications and architectures is creating a way to scale the IT function up or down immediately to meet the near-real-time needs of any large organization. Tap into only the service you need, when you need it, for as long as you need it. The result is a far more agile and cost-effective IT function.

Agile workplace Agile IT is also transforming the way business is done by making it easier for people to use the right computing or communications device to access the information they need, when they need it, and to collaborate more effectively with others both inside and outside the organization. The traditional way companies have thought about linking workers with information has generally been device-specific. Now, mobile applications available at app stores are revolutionizing how consumers use their mobile devices, and we can expect similar developments at the enterprise level.

But if such a model for delivering IT capabilities is as compelling as it sounds, why not extend it beyond IT and apply the same model to any combination of people, process and technology? Because the cloud is more than a new IT architecture. It’s actually a new business design as well—a new, more flexible operating platform.

Eventually, CIOs will be able to think about an entirely different IT model: provisioning services by linking multiple providers and applications in a reconfigurable, end-toend manner to meet the ongoing needs of workers and the entire business.

The ultimate benefit and competitive advantage delivered through this new platform and design is greater organizational agility. An agile operating platform, enabled by outsourcing models and by an IT infrastructure that expands or contracts to meet demand, can help organizations be more responsive to the marketplace and create a more open environment for innovation.

The cloud model becomes even more compelling as one moves from hardware to software to processes and functions. In this third area affected by the cloud model, we find providers offering software or services that enable an entire function or workforce. Often called “software as a service,” this aspect of the cloud model begins to point to more radical changes in how businesses operate.

This newly enabled agility will transform business in several key areas:

Agile IT With traditional IT services, a company signs a multi-year contract for infrastructure support with an outsourcer or other provider. Once the ink is dry on the contract, those services are locked in for the specified period. With a cloud model, by contrast, IT services can be reconfigured quickly in support of new strategies and opportunities. When the needs of the enterprise change, a company isn’t saddled with irrelevant IT support or obsolete infrastructure. This kind of technology elasticity and scalability is fundamental to agility.

Agile processes

Cloud computing and software as a service present IT capabilities to companies on a pay-as-you-use basis. It’s an agile operating infrastructure that enables executives to make sourcing decisions in a rhythm that is more attuned to business cycles, rather than decisions that will result in a fixed condition over a period of many years.

Agile business But it is at the enterprise level where the use of the cloud model truly gets interesting. Here we find an enterprise operating platform that takes the app store approach to configuring IT capability and applies it to the business as a whole.

In this model, chief executives not only manage their organizations; they help design and redesign them too. They are managing, in fact, a virtual enterprise—an ecosystem of cloud providers, IT and business process outsourcers, and a host of other parties, both internal and external. We are some years away from this kind of enterprise operating model on a large scale, but the harbingers are already here. Consider “bundled outsourcing.” By having a single provider responsible for several related functions—human resources, finance, procurement, learning and so on—an organization gets the equivalent of the interoperability of technologies and processes at the enterprise level.

A new era The cloud model represents another stage in the relentless disaggregation of the business—breaking up the organization and its functions into logical components, keeping in house those that cannot be done more efficiently or effectively by an outside specialist, and letting someone else run everything else. This model requires new kinds of management styles, new ways of managing people and new ways of valuing the enterprise itself. Certainly these are significant challenges. But in a world where responsiveness and agility increasingly mark the difference between high performers and also-rans, agile IT and agile business will continue to be a distinctive feature of marketplace success. This article is based on “Agile IT: Reinventing the Enterprise” which originally appeared in the June 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: accenture.com/agileIT

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Where is value lost in outsourcing deals? 93 global organizations share their experiences on outsourcing By Baker & McKenzie

THE OVERVIEW

“Creating value isn’t simply about driving down unit prices.”

GlobalizationToday September 2011

Most outsourcing deals are negotiated with limited resources against tight deadlines. Negotiators rarely have the luxury of the time and resources they would like. To get the best deal you need to know hich issues to focus on to maximize value and set the relationship up for success. Experience shows that this isn’t simply about driving down unit prices to the lowest levels. Outsourcing deals have become increasingly complex arrangements and to maximize savings they need to be structured in a way which aligns the customer’s desire to make savings with the vendor’s desire to drive revenues and profit. This is easier said than done, which is perhaps why surveys have repeatedly found that the terms on which contract negotiators spend most time are limitation of liability and indemnification.1 Although important, these terms legislate for the results of failure; they do not in themselves reduce the probability of things going wrong in the first place. Placing too much emphasis on these terms during negotiations has several undesirable outcomes. Firstly, they are usually the most controversial terms in any negotiation. Tempers fray and adversarial positions are taken which is not conducive to fostering a spirit of cooperation to achieve mutual benefit. Secondly, it detracts the negotiating parties from those terms which

set the contract up for success, reduce value leakage, and stop things going wrong in the first place. This is a key feature of our approach to outsourcing which brings us to this survey. We are often asked what organizations should bear in mind when planning outsourcing engagements. To that end, we wanted to benchmark those factors which are perceived to cause the greatest loss of value. Measuring value is challenging and this survey is certainly not a scientific assessment. However, we hope that the results of the survey set out in this report will go some way to helping organizations understand the relative value of different factors. The main takeaway from this report is that focusing limited time and resources on factors which unlock the most value is likely to deliver better results than the tried and tested method of arguing over limitation of liability and indemnification. We should like to thank the 93 global organizations, across a broad cross-section of industry sectors, including clients and non-clients alike, which have taken the time to contribute to this survey.

“To get the best deal you need to know which issues to focus on.”

METHODOLOGY

We sent a standard questionnaire to our global customer/buy-side contact list which included a list of factors causing loss of value. Respondents were asked to rate each factor from 1, being the least loss of value, to 5, being the greatest loss of value. We also asked respondents â&#x20AC;&#x153;with the benefit of hindsight, if you were entering into a new outsourcing arrangement now, what one thing would you do differently.â&#x20AC;? To supplement our online survey, we carried out one-to-one telephone interviews with a number of different respondents. We received 98 responses from 93 different organizations, across a broad range of sectors. The following graph shows the split of respondent by industry sector:

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ACROSS ALL INDUSTRY SECTORS

HEADLINE RESULTS

The following graph shows the mean average scores for each of the twelve loss factors we identified, across all industry sectors: Incomplete service definition resulting in extra charges for “missing” services Poorly constructed service levels resulting in the vendor continually performing below the service levels required by our business Failure of our own business to implement internal change control An adversarial relationship rather than an innovative partnership Failure to consult internal stakeholders during the RFP process resulting in missing or conflicting requirements Failure to maintain competition during the procurement process - moving straight to a preferred bidder before negotiating the contract

ABOUT THE AUTHORS

Lack of flexibility - e.g. protracted, bureaucratic change control procedures; minor changes always resulting in extra costs “Lock-in” to the vendor during the term through exclusivity / minimum commitment; lack of termination rights / break rights Putting all our eggs in one basket - outsourcing too much to the same vendor

Michael S. Mensik Baker & McKenzie LLP

As the Chair of Baker & McKenzie’s North American Information Technology & Communications practice, Michael counsels companies on how to structure, negotiate and manage their internal and external sourcing arrangements, from contract manufacturing to IT infrastructure to various business processes. He also regularly advises information technology and e-commerce companies on various aspects of their U.S. domestic and foreign operations, including intellectual property protection, data protection and tax planning. In addition, Michael works with companies implementing enterprise risk management initiatives across the supply chain. He has been recognized as a leading outsourcing lawyer by Chambers Global, Chambers USA, Legal 500 USA and PLC Which Lawyer. In 2009, he was inducted into the “Outsourcing Hall of Fame” by the International Association of Outsourcing Professionals.

GlobalizationToday September 2011

Uncompetitive pricing during the term / ineffective benchmarking Expensive projects - e.g. vendors only using expensive senior on-shore resources for additional project services Lack of external resources (e.g. legal, consultants) to support the RFP process

TOP 5

The following were identified as the top 5 most significant factors likely to cause a loss of value in an outsourcing:

INCOMPLETE SERVICE DEFINITION RESULTING IN EXTRA CHARGES FOR “MISSING” SERVICES

In increasingly complex outsourcing arrangements, it takes time to fully understand and scope the services being outsourced. This is even more challenging in multi-country deals where there are often significant country and regional variances in the services required. Similarly, defining scope accurately for “to be” solutions at the start of a transformational outsourcing is challenging. As any outsourcing lawyer with

a few years of experience will tell you, there are tried and tested contractual mechanisms to help address the risk of “missing” services. But that is missing the point. So-called “dragnet” or “sweeper” clauses which in effect shift the risk of missing services across to the supplier are only part of the solution - indeed they can be very difficult to enforce in any case. The fact that this factor is given top billing in the survey suggests that these approaches, based on risk allocation rather than preventing the problem arising in the first place, are not entirely effective. Another

WHITE PAPER - WHERE IS THE VALUE LOST approach favored by suppliers is to provide for post contract signature “true-up” which involves checking the actual reality on the ground with the assumptions and service definitions set out in the contract. Differences may result in a pricing discussion or in some cases in an automatic increase in the charges. Understandably, this approach is not favored by customers as it can result in significantly undermining the overall business case and financial goals of a transaction. Telling the board that the service charges have increased by 15% is not an easy conversation to have. Although the antidote to the typical negotiation battle between “dragnet” and “true-up” will be deal specific, it is usually a combination of better planning, process, information exchange and due diligence prior to contract signature.

POORLY CONSTRUCTED SERVICE LEVELS RESULTING IN THE VENDOR CONTINUALLY PERFORMING BELOW THE SERVICE LEVELS REQUIRED

Several respondents commented that it is common for service level agreements to be based on what is easy for the supplier to measure rather than what is most valuable to the customer. When there is pressure to close a deal quickly, particularly first generation deals where there is limited internal data on the performance of the inscope services, service levels are left to be agreed after contract signature during the transition period which frequently leads to disagreements and perceived loss of value to the customer’s business.

FAILURE OF OUR OWN BUSINESS TO IMPLEMENT INTERNAL CHANGE CONTROL

One respondent gave the following example: rather than pay for a bench of supplier personnel to be on call and immediately available to carry out ad hoc project work, the customer decided to try to improve their internal demand forecasting from the business. This was very difficult to achieve with the result that demands from the internal business were invariably urgent and as the supplier had no bench of dedicated personnel, lead times to start ad hoc project work have lengthened. Failure to change internal demand forecasting has therefore resulted in a loss of value.

AN ADVERSARIAL RELATIONSHIP RATHER THAN AN INNOVATIVE PARTNERSHIP

When the relationship is working well and the parties are cooperating together, value is optimized, whereas when the parties are arguing this typically results in the festering of minor issues, damage to trust, stifled innovation and value leakage.

FAILURE TO CONSULT INTERNAL STAKEHOLDERS DURING THE RFP PROCESS RESULTING IN MISSING OR CONFLICTING REQUIREMENTS

The fact this factor ranks so highly is no doubt in part a reflection of the tight timeframes parties often have to conclude outsourcings. In the rush to get the deal done, there is less time to consult and verify requirements with internal stakeholders.

BOTTOM 5

The following were identified as the 5 least significant factors likely to cause a loss of value in an outsourcing (1 being the least significant):

A LACK OF EXTERNAL RESOURCES (E.G. LEGAL, CONSULTANTS) TO SUPPORT THE RFP PROCESS

Although there was some variation (particularly between lawyer and nonlawyer respondents), overall the factor ranked as the cause of the least loss of value was a lack of external resources, including legal and consultants, to support the RFP process. As a stakeholder, external lawyers and consultants clearly have work to do to demonstrate the value that they add to the process. Anecdotally, there are many examples of negotiating teams referring to the lawyers as “deal blockers” and a feeling that lawyers damage the relationship and the value it can deliver by being belligerent in negotiations. Point scoring, not wanting to “lose face” and having to “win” arguments are common criticisms. However, self-interest duly declared, there are perhaps other factors at play here. As legal budgets come under pressure, lawyers and consultants are increasingly kept out of the procurement process until very late in the negotiations.

Often they are brought in to “document the deal” once the RFP responses have been reviewed and a preferred supplier selected. The lawyers then have the unenviable task of trying to clarify what the deal is - which is often unclear or incomplete - with very little commercial leverage over the supplier and considerable pressure from both sides to close the deal as quickly as possible. The question for internal lawyers and their clients is does this matter? Lawyers can add real value to the RFP process. If lawyers are only used to argue over the liability and indemnity provisions, then they will be an expensive side-show. Where their talents can be better applied is supporting the early stage of the process, helping to form the engagement strategy, identifying potential legal risks that may impact the scope and solution and helping to plan the timeframe and resources for the RFP process. In addition, once the timeline Continued to page 24 » ABOUT THE AUTHORS

Ross E. McKean Baker & McKenzie LLP

Ross is a Partner in the Information Technology & Communications practice of the London office of Baker & McKenzie. He specialises in outsourcing, offshoring and major technology and technology enabled services projects, primarily advising users of outsourced and offshored services. Part of Ross’ practice includes advising on data protection and information management projects, both with respect to multijurisdictional outsourcing and offshoring projects and also as stand-alone compliance assignments. Ross also advises on interception laws and has advised several multi-nationals on network security issues relating to global networks. He writes frequently for PLC magazine on information management and network security issues. Chambers has praised Ross for having ‘superb drafting skills”.

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Continued from page 23 »

has been fixed, lawyers can, with the right experience and approach, help to curtail negotiations on the “what happens if ” terms of the contract, such as liability and indemnities by proposing terms which reflect standard market positions to free up more time to negotiate the terms which will prevent problems arising in the first place, such as scope, service level agreements and governance.

ABOUT THE AUTHORS

Edward J. Hansen Baker & McKenzie LLP

Edward is a partner in Baker & McKenzie’s North American Information Technology & Communications practice and is based in New York. He has nearly two decades of experience representing clients in complex information technology and business process outsourcing transactions. Edward has advised a broad array of companies ranging from start-up software developers to multinational corporations contracting for global systems and services. Working with clients and their advisors from the early stages of transactions, his practice focuses on transformational technology enabled transactions involving system acquisitions, information technology and business process outsourcing, managed telecommunications arrangements, outsourcing agreements, custom software development and distribution agreements and professional service agreements. Edward has been recognized as a leading outsourcing lawyer by Chambers Global, Chambers USA and Legal 500 USA and was named one of eleven key “innovators and influencers” who will drive change in the business technology sector by InformationWeek.

GlobalizationToday September 2011

EXPENSIVE PROJECTS E.G. VENDORS ONLY USING EXPENSIVE SENIOR ON-SHORE RESOURCES FOR ADDITIONAL PROJECT SERVICES

Anecdotally it is a common complaint that vendors only use the most expensive resources for ad hoc project services. These are typically charged on a time and materials basis. Interestingly, this factor scored very low in the loss of value rankings.

UNCOMPETITIVE PRICING DURING THE TERM / INEFFECTIVE BENCHMARKING

A trend towards shorter term outsourcings and the difficulties with implementing a benchmarking exercise may explain the low ranking for this factor.

PUTTING ALL OUR EGGS IN ONE BASKET - OUTSOURCING TOO MUCH TO THE SAME VENDOR

Over the last five years, with some notable exceptions, smaller deals limited to particular types or “towers” of services and sometimes to particular countries remain more popular than “mega deals” where many different types of services are outsourced to the same vendor. This is perhaps why this factor has been ranked relatively low in the rankings.

LOCK-IN TO THE VENDOR DURING THE TERM THROUGH EXCLUSIVITY / MINIMUM COMMITMENT; LACK OF TERMINATION RIGHTS / BREAK RIGHTS

As with uncompetitive pricing and ineffective benchmarking, the low ranking of this factor is probably in part a reflection of the trend towards smaller, shorter term deals where there is less risk of “lock-in.”

WHITE PAPER - WHERE IS THE VALUE LOST DOING IT ALL AGAIN

Respondents were asked to describe one thing which they would do differently if they were to undertake a new outsourcing deal with the benefit of hindsight. This question provided a rich and wide ranging source of ideas, including the following: Many respondents said they would invest more time and resources in indentifying the scope, business requirements and objectives of the outsourcing up front and then ensuring that the contract was crafted to deliver these goals. These comments are reflective of other recent surveys in which negotiators identified “scope and goals” as the term which would be most productive in supporting successful relationships. Keep the bid process competitive for as long as possible in order to ensure optimal value for money and service quality.

Spend more time reviewing and agreeing requirements and goals with internal stakeholders and ensuring they are realistic (rather than a list of “nice to haves”). Also, ensuring that the final deal agreed is communicated to internal stakeholders who frequently think that if they ask for something in a RFP, the service provider will supply it. Compromises and concessions agreed during the negotiations are often not communicated which results in a mismatch in expectations. Setting up a “win-win” contract model that locks in common interest and creates trust and value.

Negotiate a value formoney price rather than the cheapest price. Better internal education to capitalize on the benefits won by the negotiating team. A more clearly defined strategy for the negotiations, to mitigate protracted discussions. Implement/streamline internal business communication processes to facilitate deal progression. Allow enough time to run a procurement process and set the contract up for success. As one respondent in the financial services sector commented “our greatest problem is that we put ourselves under unnecessary pressure by stipulating unrealistic timescales.”

Failure to consult internal stakeholders during the RFP process resulting in missing or conflicting requirements Failure to maintain competition during the procurement process - moving straight to a preferred bidder before negotiating the contract Putting all our eggs in one basket - outsourcing too much to the same vendor Lack of external resources (e.g. legal, consultants) to support the RFP process Failure of our own business to implement internal change control An adversarial relationship rather than an innovative partnership Incomplete service definition resulting in extra charges for “missing” services Poorly constructed service levels resulting in the vendor continually performing below the service levels required by our business Uncompetitive pricing during the term / ineffective benchmarking Lack of flexibility - e.g. protracted, bureaucratic change control procedures; minor changes always resulting in extra costs Expensive projects - e.g. vendors only using expensive senior on-shore resources for additional project services “Lock-in” to the vendor during the term through exclusivity / minimum commitment; lack of termination rights / break rights

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Next-generation service delivery model Expanding the value-creation menu for consumer packaged goods organizations. By Susan Hogan, Erica Volini

There is good news for businesses: Signs of an economic recovery continue. However, unlike most other recoveries, this one is being fueled by corporate and government spendingâ&#x20AC;&#x201D;not by consumers. Much like the great depression of the last century, it appears this great recession may have altered consumer spending for the foreseeable future. Conspicuous consumption is out, frugality and saving are in. NEW RECIPES NEEDED

This seismic shift in consumption has potentially shattering impacts for consumer packaged goods (CPG) companies that have benefited from consumersâ&#x20AC;&#x2122; hunger for more and the willingness to pay for it. As evidenced by continuing low retail price inflation, despite increases in commodity prices, CPG companies are no longer able to just pass along cost increases. In the face of declining margins coupled with increases in energy costs and benefit programs, doing nothing is not an option. In fact, doing nothing could result

in companies literally growing themselves out of business. Many companies that made labor cuts during the downturn have limited rehiring during the recovery. While productivity gains can help profitability in the short term, at some point, without dramatic changes in the way work is done, additional headcount will be needed to

support growth. While some companies may accept the inevitable, others view the post-economic crisis environment as an opportunity to make fundamental changes in work processes that will enable them to again grow profitably, despite the challenges.

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TODAY’S SPECIAL: CENTERS OF EXPERTISE

Centers of Expertise (CoE), sometimes known as “knowledge centers,” are providing many companies with the ability to leverage talent across the organization to reduce costs as well as improve quality and service. To be sure, cutting costs while simultaneously raising service and quality sounds very similar to cutting taxes while increasing spending and reducing the deficit: too good to be true. The truth is that it may not only be possible, but that no artificial ingredients—meaning undiscovered methods or expensive technologies—may be required. Similar to transactional shared service centers (SSCs),COEs consolidate work among fewer people and reduce job fragmentation to enable companies to do more with less. But unlike SSCs, which add value by reducing the cost to provide a unit of work (e.g., pay an invoice, reconcile an account, and/

or hire an employee), COEs add value by leveraging capabilities instead of necessarily cutting cost per work unit. One way to think about how COEs add value is to consider how a company might defend itself in a lawsuit. Hopefully, no one would apply the transactional SSC’s “reduce the cost per unit” philosophy, and hire the legal firm with the cheapest attorneys on a rate-per-hour basis. This approach would likely result in companies losing cases and making significant payments as a consequence. Rather, companies would strive to find legal representation whose attorneys have the knowledge and experience to win the case, whatever their rate-per-hour cost. In this instance, as with CoEs, spending more actually reduces total costs byleveraging knowledge and experience.

MOVING BEYOND THE TRADITIONAL RECIPE

Many executives are already aware of how an SSC delivery model has been used to consolidate back-office transactional activities in the Finance, HR, and IT functions. Increasingly, CPG companies are implementing SSC or CoE models for other functions—even those that may be

“closer to the business.” They are moving beyond the traditional functions to help drive growth, improve global effectiveness, and reduce costs—a core objective. Broadening the scope of the shared services model can enable additional cost reductions, increased service levels,

enhanced organizational control, and greater consistency. Once companies have effectively migrated transactional activities to shared services and realized the benefits of a shared services model, they often begin targeting processes “higher up” the value chain for a shared approach.

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According to Deloitte’s 2011 Global Shared Services Survey, these include functions such as supply chain/procurement, sales/ marketing, real estate/facilities, and legal, to name a few (see Figure 2).1 Many of these functions have historically been considered more “core” to the business. Examples of processes CPG companies have moved to a shared delivery model include the following: Supply chain/procurement ••Create and issue purchase orders (POs)/ process PO change orders ••Conduct spend analysis* ••Manage and assess supplier performance* ••Price management ••Logistics management

Real estate ••Manage assets/leases ••Manage transaction processing for real estate ••Manage and report financial performance ••Manage facilities ••Develop and manage real estate portfolio*

Sales/marketing ••Customer service/customer relationship management ••Order management ••Customer database management ••Pricing ••Marketing campaign management ••Sales forecasting ••Customer analytics

Legal ••Contracting support ••Legal/statutory/external reporting ••Paralegal support ••Manage external counsel ••Legal research and analysis ••Intellectual property ••Litigation support ••Community affairs

CHEF’S SELECTIONS (TARGETS FOR CPGS)

CPG companies have compelling reasons to expand the existing menu of shared service dishes. Given the extensive distribution and manufacturing networks and methods typical of CPG companies, we think there are many “second generation” transactional and knowledge-based functions that would benefit from the application of a shared model. CPG companies should consider targeting those areas of their organization capable of yielding the most significant return on their change investment. This means identifying the “low-hanging fruit”—functions most easily converted

GlobalizationToday September 2011

to an SSC or CoE that will increase efficiency and reduce costs—versus functions requiring a greater investment of time, resources, and ingredients. It is also suggested that CPGs apply a shared services model first to those functions— typically transactional functions—that are least likely to trigger stakeholder resistance. An effective implementation may lead to a growing recognition of the many benefits to be gained from applying a shared model to functions closer to the “back office”; this, in turn, may reduce resistance to applying a shared model to more customer-facing, closer-to-the-

core-of-the-business functions. Below are several functions common to many CPG companies that present an especially compelling case for a shared delivery approach: Procurement While many companies have implemented programs to improve sourcing to reduce costs, these changes are often met with resistance when run as a department rather than as a service organization. Complaints of inferior goods or delays in obtaining items often result in rogue spending and the erosion of savings over time. By embracing the customer service approach of SSCs and COEs, companies are able to improve compliance, which generally translates into increased savings. A CoE can do more than reduce the cost of acquisitions. At one CPG company, for instance, the job of locating repair parts for truck fleet maintenance was moved from the depot to the CoE. There were significant concerns that the move would result in trucks being taken out of service for extended periods while waiting for parts from the lowest bidder identified by the CoE. In fact, the CoE did a better job of sourcing most maintenance items and was able to exercise the clout of the company’s scale when scarce parts were needed. The CoE was able to contact many more suppliers and had greater insight into which suppliers were likely

WHITE PAPER - EXPANDING THE VALUE CREATION to have the needed parts. As a result, the CoE was able to get the trucks back on the road more quickly than local depot staff attempting to locate needed parts. Additionally, parts purchase analysis enabled the CoE to determine that some parts were being replaced prematurely, often while still under original equipment manufacturer (OEM) warranty. The CoE filed the claims necessary to recover the costs of repairs already made and obtained agreement from the vendor that the remaining trucks would receive future replacement parts in a timely manner, which would help reduce down time going forward. These results would not have been possible without the aggregated data and talent of the CoE, which enabled the analysis necessary to spot opportunities to both cut costs and improve customer service. Customer service Everyone has experienced examples of horrendous customer service at some time. Unfortunately, often these experiences occur during calls made for the sole purpose of getting an issue resolved. Long wait times, multiple handoffs that require a customer to explain the issue to multiple people, and getting disconnected prior to resolution of the issue are sure ways to lose a customer and have the customer share their experience with possibly millions of others via social media outlets. Centralizing customer service as a cost-cutting measure is often the root cause behind poor service, because many companies think of a call center as if it were an SSC for a transactional activity: Increasing calls per agent cuts the cost per call. However, if organized as a CoE, a consolidated customer service capability becomes a true service opportunity. Creating positive customer experiences begins with understanding what customers want. Do they want information—“When will my order be delivered?”—or service—“My order is missing components; what are you going to do to fix this?” Customer loyalty is often earned when a company is able to effectively address a problem. A customer service CoE enables a company to keep the focus on the service in customer service as well as impact costs, rather than cut costs at the risk of impacting service.

Supply chain Use of a shared model for indirect sourcing enables CPG companies to apply the same strategic sourcing principles they currently apply to their direct spend. This can deliver benefits through improved vendor rationalization and enterprise-wide purchasing power for better leverage in pricing negotiations. Packaging activities also present an opportunity for consolidation. Having a single organization handling the activities related to packaging, including design and documentation, improves consistency across the enterprise. At one multi-division CPG company, individual divisions’ requirements often resulted in additional supplier service costs. By centralizing the supply chain, conflicting purchase order requirements were indentified, discussed with suppliers on a gain-share basis, and standardized, resulting in lower costs for the company as well as lower service costs for the suppliers.

Logistics Several areas within logistics could benefit from a shared approach. Among these are planning and allocations, in which an enterprise-wide perspective can mitigate fluctuations in manufacturing demand. The logistics function for distribution and transportation activities can also be consolidated. Implementation of a CoE for management of a CPG company’s enterprise-wide network of warehouses enables more effective management, improved efficiency, and reduced waste. At one company, for example, prior to the formation of an equipment management CoE, each division handled its backhaul operations individually, which often resulted in empty trailers passing each other on the highway. Only by managing the equipment through a CoE was the company able to efficiently identify the preferred location to perform its backhaul operations, which allowed it to both cut costs and reduce its carbon footprint.

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WHITE PAPER - EXPANDING THE VALUE CREATION

Marketing Centralizing activities such as basic market research enables CPG companies to do more with less by aggregating an often fragmented activity. Consider, for instance, the possibility that ten brand managers working independently of each other may each spend (say) $10,000 for the same macroeconomic trend informationâ&#x20AC;&#x201D;a total cost of $100,000. Alternatively, a marketing CoE with access to the same $100,000 could purchase the information once and disseminate it as needed, leaving the remainder available for additional analytics and access to more in-depth analyses across the company. At one organization, performing a price strategy analysis was beyond the reach of the individual brand managers, as no single brand manager had the budget to hire economists or pay for a study. After establishing a pricing CoE, the company was able to hire economists and statisticians who analyzed demand elasticity, pricing, and promotion, and made recommendations accordingly. With the insights from this effort, the company generated a half-point increase in marginsâ&#x20AC;&#x201D;the direct result of concentrating demand and obtaining the required service through a CoE. Given its perceived proximity to the core of the business, CPG companies may encounter more resistance to efforts to bring a shared approach to marketing activities than for the other areas described here. Nonetheless, CPG companies may find that the potential benefits make it worthwhile to explore the opportunities for a shared approach presented by marketing activities including rebate and coupon management, campaign and advertising management, consumer analytics and channel management, and pricing and competitive analysis, as examples.

GlobalizationToday September 2011

WHITE PAPER - EXPANDING THE VALUE CREATION

CHEF’S SECRET FOR SUCCESS

Careful planning, a strategic approach, and attention to the challenges that can arise are essential to realizing the value of a shared services model. The experience gained from creating SSCs for traditional transactional functions enable companies to be aware of and more effectively address the challenges to extending the transactional shared services model to non-traditional functions. Among the lessons learned: ••Culture is the primary driver of an effective implementation. ••The magnitude of change, as well as the fear of loss of control and the resulting level of resistance, will increase in direct proportion to the proximity of the function being shared to customerfacing, core-to-the-business functions. ••Understanding the dollar cost of the investment and amount of time necessary to realize savings enables better management of expectations. ••Implementation effectiveness is directly correlated to the amount, quality, and consistency of leadership support, communication, and approach. ••Sticking to executive decisions is essential to keeping the organization focused and on course. Many of the challenges companies frequently encounter when attempting to implement a transactional SSC can be compounded when implementing a CoE. The following are factors to consider: ••A CoE effort can run aground simply due to a lack of stakeholder awareness. A shared services model can be

used for certain knowledge-based functions. Stakeholder education and communication are essential, especially for leadership in areas that may be affected. ••The business case for a shared approach should be clearly articulated and communicated to the stakeholders of the functions under consideration. Lacking a clear explanation, executives may remain skeptical of the value proposition and resistant to the effort, especially where closer-to-the-core-ofthe-business functions are involved. ••Executives should be aware that the initial investment required to create the infrastructure for a CoE may occasionally be greater than either doing nothing or the investment required to implement a transactional SSC. ••Talent attraction, retention, and engagement are critical concerns for the highly qualified personnel typically employed at a CoE, as the cost of turnover and the opportunity cost of unfilled positions are correspondingly greater than they are for the personnel of a transactional SSC. ••Given the nature of certain knowledgebased and analytical services, defining clear, measurable performance metrics and developing service-level agreements can be a challenge. It is vital to evaluate each function correctly, carefully define the goals of the CoE, establish appropriate customer expectations, and enable meaningful customer feedback by applying performance measurement tools to the CoE’s service quality and

processes. ••Certain knowledge-based functions require the use of highly sensitive data instrumental to a company’s competitive advantage. Protecting this data is vital to any CoE that touches it, especially if any element of the deliverable is offshored or outsourced.

THE NEW MENU

Given the many factors influencing current marketplace appetites—an uneven economic recovery with a slow growth environment, relentless global competition, new technologies, and changing consumer behavior—CPGs should use as many methods as possible to reduce their costs and increase their efficiency. A shared model applied to both transactional and knowledge-based functions can provide the means to help CPGs succeed in a challenging environment. Despite the challenges, the value of this new menu is clear: Consumer packaged goods companies that effectively apply a shared model to appropriate functions across the entire scope of their organization will be better positioned to outperform those that do not—now and in the future.

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GlobalizationToday

A Radical New Approach to Journalism

Giving the REAL Experts a Voice – And Letting Readers Determine What’s ‘Fit to Print’ Who decided that journalists, who’ve never worked a single day in the industries they cover, are the subject matter experts who should be writing the content for industry trade journals? Not us. At Globalization Today we think that borders on idiotic. If you want great content, you need to rely on experts. And to us the real experts are the people who work in the outsourcing industry “trenches” day in, day out. That’s why most of Globalization Today’s editorial comes from the industry itself. We’ve opened our platform to accept great content from wherever it may spring. And to help determine what “great” content is, we’re using technology that allows readers to rate each piece of content. This way the best content will “bubble” to the top and be more visible and the content that isn’t as useful will get buried. A true editorially meritocracy. This is your chance to contribute to our industry and get your voice heard. Yes – You can write for Globalization Today and get published. Every article submitted online will be published online and top rated content will be published in our monthly magazine edition. Go to www.globalizationtoday.com or email info@globalizationtoday.com to get your editorial contributor account.

MAKING GLOBAL LEADERS

Making global leaders Formula hinges on three traits By Daryl James Life changed in an instant for Bob Dudley when he flipped on the television in his hotel room April 20, 2010. As director of BP operations in Asia, he had come to India on business and wanted to catch up on world news. But instead of the routine headlines he expected to find, he saw a breaking story about his own company with people he recognized. An explosion in the Gulf of Mexico had killed workers on the Deepwater Horizon platform, and oil was gushing from the seafloor. “I knew immediately it had the

potential of being something catastrophic,” says Dudley, a 1979 graduate of Thunderbird School of Global Management in Glendale, Arizona. “I think if you go around BP, everybody will tell you exactly where they were on that day.” Dudley rushed to Houston, Texas, and spent the next several weeks immersed in the Gulf Coast recovery effort. While media outlets still followed the story daily, BP announced a change in leadership starting Oct. 1, 2010, with Dudley as its first American CEO. In his new role Dudley continues to monitor the Gulf Coast recovery closely. But he also must deal with increasingly complex situations involving government, business and social sector organizations in other regions from the Arctic to Central Africa. Thunderbird President Ángel Cabrera, who visited Dudley in London two weeks before the leadership change, describes the BP assignment as “one of the toughest management jobs of our era.” Cabrera says the Gulf Coast spill highlights the evolving and growing expectations society deposits on CEOs. “Running an efficient operation and BP Group CEO Bob Dudley will be a keynote speaker Nov. 10, 2011, during the Thunderbird Global Business Dialogue in Glendale, Arizona.

GlobalizationToday September 2011

delivering financial results are just part of the job description,” Cabrera says. “Global leaders today must manage increasingly complex relationships and respond to often conflicting demands and needs of different stakeholders.” Cabrera and Dudley will share the stage with other leaders from the public, private and social sectors Nov. 10-11, 2011 at the inaugural Thunderbird Global Business Dialogue in Glendale. Together they will explore leadership in the 21st century and what it takes to thrive in an increasingly interconnected world. “The world needs people who can function with lots of ambiguity and patience, who can listen and think about issues from all sides and find solutions,” Dudley says. “Thunderbird is a great place to bring people together to think globally.” The business school, which opened in the aftermath of World War II on a converted U.S. Army Air Force base, has focused on educating global leaders since 1946 in the Arizona desert. “Our accumulated institutional experience from 65 years engaged in this endeavor has taught us that global leadership hinges on three fundamental traits,” Cabrera says. “Successful leaders in the 21st century need global mindset, global entrepreneurship and global citizenship.” Global mindset allows leaders to decode what is going on around them in

MAKING GLOBAL LEADERS

cross-cultural environments and choose the right behavior for each circumstance. Global entrepreneurship allows them to convert this knowledge into actual innovation that creates value for society. And global citizenship allows leaders to maintain lasting influence as they consider issues such as ethics and social responsibility. “Global leaders must care deeply about the consequences of their enterprises,” Cabrera says. “Not just for their investors, but for everybody around them.” While some men and women seem born for global leadership, Cabrera says all three traits can be taught and learned. “Now more than ever,” he says, “the world needs people equipped with these skills.” AN URGENT CALL

A few years before the Gulf Coast spill, Dudley found himself embroiled in an a crisis of a different sort thousands of miles

away in Moscow. Dudley temporarily resigned from BP in 2003 to lead TNK-BP, an independent oil company formed from a BP alliance with two Russian companies. The three partners each brought distinct corporate values to the mix, resulting in something Dudley calls an “intercultural laboratory.” “It was a Thunderbird’s dream for managing something complex,” he says. Despite the tense relations that resulted, Dudley and his Russian oligarch partners made things work for about five years, and oil output rose from 1.3 million to 2 million barrels per day. Then a power struggle erupted in 2008 as oil prices spiked. Dudley declines to discuss much of what happened due to political sensitivities, but other sources describe an “intense campaign of harassment” against Dudley to force his resignation. He left Russia in July 2008 under threat of house arrest, and stepped down as president and CEO

of TNK-BP a few months later. Looking back on the episode in 2011, Dudley sees a microcosm of the complex challenges many global leaders face in the 21st century. As the world grows increasingly interconnected through trade, leaders of global organizations must navigate cross-cultural relationships that often span business, government and social sector boundaries. Oil and gas industry leaders have navigated partnerships such as these in isolated, politically unstable regions for decades. But Dudley says the pace of change and the difficulty involved have increased in recent years. “Our industry seems to get more and more complex,” he says. “Oil and gas will have to adapt like everyone else.” Cabrera says companies such as TNKBP show the urgent need to develop global leaders who can tackle the challenges to come. “Global leadership in the 20th century was about a person from country

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MAKING GLOBAL LEADERS

Cuban entrepreneur Diego Veitia has launched several companies, including International Assets Holding.

A doing business in country B,” Cabrera says. “Global leadership in the 21st century is a lot more demanding.” Most academic definitions of leadership involve the ability to influence others. Cabrera says global leaders must be prepared to influence others unlike themselves. They must have an uncanny ability to bring together individuals and resources from different parts of the world in ways that create value for all parties involved. They must understand commonalities and differences among people, places and cultures. They must envision solutions that combine resources and talent from different geographies in ways that create mutual value. “They cannot help some at

the expense of others,” Cabrera says. Making global leaders in this mold starts with global mindset. GLOBAL MINDSET

As a frequent flier to all parts of the world, Thunderbird Professor Mansour Javidan, Ph.D., spends more time at international airports than most people. Being an Iranian-born scholar with dual Canadian citizenship sometimes creates complications at airport security, so Javidan arrives early whenever possible. He often kills the time before his flights by watching business travelers cope with the unfamiliar airport customs and procedures. “You’ll see passengers

who are very stressed,” says Javidan, who will join Cabrera and Dudley at the Thunderbird Global Business Dialogue. “They don’t know where to go or how to read the signs. And there are others who are just fine. They may be brand new at that airport, but they remain at ease as they walk around and figure out where they’re supposed to go.” Javidan calls this an “acid test” for global mindset, the starting point of global leadership. He says managers who can’t handle the stress of international travel likely will stumble when it comes to cross-cultural negotiation and business communication. “When you are in a global position, you are dealing with an environment and people who are different from you, so you are automatically out of your comfort zone,” he says. “People who have a global mindset are just fine with that.” Since the early 1990s, Javidan has worked to understand why some managers flop while others thrive in complex global environments. At Thunderbird he has become the godfather of global mindset, leading a research team that has spent more than five years defining, quantifying and developing the trait at the Najafi Global Mindset Institute. In the process, the team has developed BP Group CEO Bob Dudley accepts a Career Achievement Award from Thunderbird President Ángel Cabrera during homecoming events in March 2009.

GlobalizationToday September 2011

MAKING GLOBAL LEADERS

a scientific self-assessment called the Global Mindset Inventory, an online tool that allows managers to quantify their strengths and weaknesses before diving into overseas assignments. More than 10,000 managers worldwide have completed the Global Mindset Inventory so far, and many have provided qualitative feedback. One of Javidan’s favorite comments comes from an executive who defines global mindset as: “Being comfortable with being uncomfortable in uncomfortable environments.” Another executive describes global mindset as a trait woven into a person’s DNA. “It’s like a bug,” he says. “Once you have it, you can’t get rid of it.” Thunderbird defines global mindset as a set of attributes that help leaders influence individuals, groups, organizations and systems unlike their own. Javidan says global mindset includes three major dimensions. Psychological capital includes passion for diversity, quest for adventure and self-assurance. Intellectual capital includes global business savvy, cognitive complexity and cosmopolitan outlook. Social capital includes interpersonal impact, diplomacy and intercultural empathy. The Global Mindset Inventory allows Javidan to assign number values to all these components. Low scores in any area

signal rough times ahead for aspiring global leaders, but Javidan says managers should not fear negative results. The primary purpose of the project is to give individuals confidential feedback to help them improve. “Our approach is to be helpful to individual managers,” Javidan said. “We are a business school. Our job is to help people develop themselves.” GLOBAL ENTREPRENEURSHIP

Cuban businessman Diego Veitia quickly saw a problem when he arrived at Thunderbird in 1965 as a young MBA student. The global business school sat in the middle of cornfields on the outskirts of Phoenix, far from any vibrant nightlife. Thunderbird students needed a place to unwind — and to meet women. Veitia and a classmate ventured off campus one evening and found a suitable nightclub, but business was slow. The nightclub needed customers. Veitia saw an opportunity and negotiated a partnership with the owner. Then he traveled to nearby Arizona State University and invited as many co-eds as possible to come for free drinks. Paying customers from Thunderbird easily compensated for the free drinks once they

heard about the women, and Veitia and his classmate emerged as campus heroes. Veitia has applied the same strategy on a global scale throughout his career. Wherever he goes, he looks for market gaps and finds ways to give customers what they want. In Costa Rica he found an abundance of exotic flowers and ornamental plants, which he started exporting to less tropical parts of the world. Several ventures and companies later, he founded a financial services company that grew into International Assets Holding. “We are what an old British merchant banking company would have been like,”

Thunderbird Professor Mansour Javidan, Ph.D., leads the Najafi Global Mindset Institute.

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MAKING GLOBAL LEADERS

Merle Hinrichs speaks to Thunderbird graduates April 30, 2010, after receiving an honorary Doctor of Internaional Law.

Veitia says. “We work with institutions to facilitate trade abroad.” In 2010 the company climbed 91 spots on the Fortune 500 to No. 49 — one spot ahead of PepsiCo. “We went from a company of three people to around 800 people in 27 to 30 offices around the world,” says Veitia, another leader scheduled to speak at the Thunderbird Global Business Dialogue. Cabrera says a global mindset allows leaders such as Veitia to connect the dots between markets and to recognize gaps that might exist in one region but not another. Global entrepreneurship is the ability to harness this knowledge in a way that creates benefits for society.

“Global mindset by itself won’t make you an effective leader,” Cabrera says. “It might allow you to travel the world, write a lot of books and have a lot of fun. But it won’t make you a global leader.” He says successful global leaders must turn their global mindset into something tangible. Sometimes this means starting new enterprises. Other times it means seizing opportunities within existing organizations or systems. Cabrera says the key is value creation. “When entrepreneurs see lack of talent or lack of resources, they see opportunities to create value,” he says. “They strive to create value.”

GLOBAL CITIZENSHIP

U.S. expatriate Merle Hinrichs started clean and broke when he arrived in Hong Kong more than 45 years ago. The manager Hinrichs came to replace met him at the Hong Kong airport and drove him straight to a Shanghai-style bathhouse. After a two-hour scrub down that left both men spotless, they dressed and went outside to get their car. “It was gone,” Hinrichs says. “The car was stolen, along with my suitcase and all my personal belongings.” All that remained was a passport, a wallet with $25 in U.S. currency, and the clothes Hinrichs wore to the bathhouse. Despite the rough start, Hinrichs knew immediately that Asia was his future. His initial assignment in Hong Kong led to the launch of Asian Sources, later renamed Global Sources, a business-tobusiness media company that Hinrichs founded in 1970 as a way to promote trade between East and West. Global Sources went public on the NASDAQ market in 2000, and Hinrichs serves today as chairman and CEO of the Hong Kong-based company. Annual revenue topped $100 million in 2004 and $200 million in 2008. Hinrichs, a 1965 Thunderbird graduate scheduled to speak at the Thunderbird Global Business Dialogue, relied on global Students pass the campus library at Thunderbird School of Global Management, built on a converted Army Air Force training base following World War II.

GlobalizationToday September 2011

MAKING GLOBAL LEADERS

Thunderbird School of Global Management President Ángel Cabrera, Ph.D., has led the school since 2004.

mindset and global entrepreneurship to build his company. Global citizenship has allowed him to sustain his success through four decades. Cabrera says managers consumed with maximizing short-term profits rather than creating real, sustainable value destroyed billions of dollars in shareholder and taxpayer money in the financial crisis of 2008. “A culture of unrestrained greed lies at the root of the economic meltdown that has seen banks collapse, markets tank and unemployment rates soar,” Cabrera says. “This global catastrophe demonstrates the enormous responsibility business leaders hold, not only in their companies, but in society at large.” This does not mean corporate leaders ought to disregard the need to make money for shareholders. “On the contrary, professional managers understand they must strive to compensate investors for the risks they assume,” Cabrera says. “But they also understand that the long-term viability of their business requires that they behave ethically.” He says global leaders who maintain influence for as long as Hinrichs do so only when they demonstrate global citizenship, which refers to a person’s commitment to ethics and social responsibility. Hinrichs says global citizenship requires leaders to balance the interests of many competing stakeholders — including employees, shareholders, customers, suppliers and entire communities.

“I struggle with it all the time and think about it,” Hinrichs says. “How do I balance the benefits that I provide to my employees with the benefits I provide to my shareholders and the benefits I provide to my clients and the community?” Hinrichs also must take care of himself and his family. “You must be whole with yourself,” he says. “You must understand how you can sustain your position and the benefits you bring to your community and your company.” Finding this balance lies at the heart of global citizenship. Hinrichs says many organizations gyrate from one extreme to another. Business leaders seeking short-term profits sometimes error on the side of exploitation and callousness, while government leaders seeking re-election sometimes error on the side of misplaced compassion. “Some people get a little confused about what philanthropy means,” Hinrichs says. “For philanthropy to be sustainable, you as an individual or you as a company or you as a country must be whole.” He says enlightened leaders who find this balance see philanthropy as a privilege for all people, not just the wealthy. “Each one of us has the opportunity every day to give, to provide, to enhance, to participate and to be philanthropic in spirit and philanthropic in nature,” he says. Hinrichs says this is what Thunderbird represents. “Thunderbird has strived to introduce its students to the concept of global citizenship

through enlightened leadership,” he says. “If I cannot produce value for my clients, then I cannot provide value to my employees or value to my shareholders. If I cannot do that, then I undermine my relevance as a global citizen and a global leader.” NOT SO FLAT

New York Times columnist Thomas Friedman boldly declared in 2005 that the world is flat. In many ways he was right, Cabrera says. “Powerful communications networks, integration of products and services and the growing mobility of ideas and human talent have opened the door to anybody in any nation to compete on a flattened playing field,” he says. But don’t throw away the globe in your office just yet. Leaders who must bridge barriers and unite diverse groups understand the world is still round. “Growing interconnectivity has brought cultures closer, but the trend also has distinguished regional and national differences,” Cabrera says. “As markets become more and more interdependent, we are compelled to pay closer attention than ever before to these differences.” Global leaders who find long-term success in this environment will be those who develop global mindset, global entrepreneurship and global citizenship. “The global landscape has flattened,” Cabrera says. “But diversity still makes the world go round.”

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ARCHITECTING FOR FAILURE IN THE CLOUD

AMAZON’S RECENT OUTAGES: ARCHITECTING FOR FAILURE IN THE CLOUD By Stanton Jones

The headlines were both ominous and instant: “Wake-up call for Cloud Computing;” “Live by the Cloud, die by the Cloud;” and a personal favorite, “Down Goes the Internet.” These are but a few of the messages that emerged almost immediately after the most recent Amazon Web Services (AWS) outage. As a leader and a pioneer in public Cloud Computing, Amazon lives under a microscope - a microscope that is amplified a thousand-fold by the viral power of social computing. Let’s look back at the most recent and high-profile incidents. On August 7, a power outage in Dublin, Ireland, affected one of the Availability Zones in Amazon’s Dublin data center, which is the company’s primary European hub for its Cloud Computing platform. The power outage, caused by a failed transformer, was large enough that it disabled a portion of the system that synchronizes the company’s backup generators. Without backup power to recover from the massive outage, many customers using Amazon’s Compute Web Service (EC2) in the European region were affected — some for hours, some for days. On August 8, Amazon’s EC2 and Relational Database Service (RDS) in the U.S. East Region, located in northern Virginia, experienced an outage. According to Amazon’s Service Health Dashboard, these services were affected for approximately 40 minutes. Finally, the AWS outage that occurred in late April is generally considered by many to be the watershed moment in Cloud Computing’s still-nascent life. On April 21, Amazon made a configuration change during a network upgrade that caused a cascading series of events leading to what it calls a “re-mirroring storm.” As a consequence, Amazon’s storage service was essentially “stuck” and unable to locate new storage space for both new and existing customers. This led to a significant period of degraded functionality and downtime for major Web 2.0 sites such as Reddit, Foursquare and HootSuite, as well as a plethora of bad public relations for Amazon. To its credit, Amazon has released detailed postmortems for both the April and August incidents. These summaries include a surprising level of detail into the root cause of the outages, information on a service credit for customers who were affected and, finally, an apology from Amazon. In analyzing the overall impact of these outages, it must be noted that

GlobalizationToday September 2011

some sites were only moderately affected and others weren’t affected at all, most notably Netflix. Why did some sites sink, while others sailed through the storm? As with any complex system, there is no single answer. However, organizations that “architected for failure” tended to fare better than those that did not take that step. Netflix, which released its lessons learned from the April outage, built its platform around the assumption that services and/or zones within EC2 could be unavailable for extended periods of time. Clearly, not every EC2 customer has the technical chops to build Netflix-like applications, and Amazon needs to make it easier to increase redundancy by taking advantage of multiple availability zones and regions (which it appears to be doing). However, this is a public Cloud platform, and customers who did not take full advantage of Amazon’s redundant architecture or did not create their own replicated solutions ended up paying the price. To make sure you, your company and your customers don’t end up sinking in the next major Cloud outage, it is critical that you take a step back and view Cloud services as one of several key components

ARCHITECTING FOR FAILURE IN THE CLOUD

in your broader service delivery strategy. Regardless of whether these components are delivered in-house, outsourced or delivered via the Cloud, effective planning and execution across all components are vital. Business continuity planning (BCP) and disaster recovery (DR) are two mission-critical parts of this planning process and should be included in your overall delivery strategy. Unlike a traditional outsourced agreement — in which the supplier takes on a significant level of responsibility in delivering the BCP and DR plans — a public, commodity Cloud platform requires that customers retain a significant amount, if not all, of this responsibility, as well as the associated risk. In return, the customer gets a highly scalable, cost-effective and fast-toprovision computing platform. The bottom line is that some organizations are finding out the hard way what happens when they don’t integrate Cloud Computing with their broader service delivery strategy. By including business continuity planning and disaster recovery in the Cloud architecture design process, enterprises can significantly reduce the risk of business disruption.

ABOUT THE AUTHOR

Stanton Jones is Vice President and Chief Information Officer of TPI, the leading independent sourcing data and advisory firm in the world. Jones is responsible for TPI’s corporate technology strategy as well as all of the company’s information technology operations globally. Stanton is also an active member of TPI’s Cloud Computing Solutions Business Unit, helping clients develop and implement their cloud sourcing strategies. Stanton is an active speaker and blogger, with a focus on emerging trends in Cloud, Mobile and Consumer IT. LinkedIn: http://www.linkedin.com/in/stantonjones Twitter: @stantonmjones

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THOUGHT LEADER

OFFSHORING OF IT SERVICES By Bala Subramanian

During recent years, a number of countries have become offshoring destinations for IT and BPO services. While India continues to be the preferred destination other popular choices are Eastern Europe, China and Latin America. Global multinational companies have been outsourcing and smaller midsize organisations are rapidly joining the bandwagon and adopting offshoring models. With this in mind Bala Subramanian, Vice President â&#x20AC;&#x201C; Europe, ITC Infotech, considers the types of offshoring models and compares them. A number of offshoring models are being considered and adapted which include staff augmentation, ad hoc project work, build operate and transfer (BOT) models and dedicated development centres. The key drivers are access to a larger talent pool, lower costs, greater flexibility to scale up and scale down quickly, quicker time to market and capacity to over-invest in critical activities or at critical times. The first step should be to develop an internal business case for offshore outsourcing and creating a blueprint for possible offshoring activities ranging from the development of business applications, service, support and maintenance of IT infrastructure. Such blueprints are becoming cornerstones of customerâ&#x20AC;&#x2122;s sourcing strategies with an objective to introduce offshoring as a key element of their partnership model. Three important trends are emerging in the offshoring strategy for 2011. The first is cost reduction, which seems to be an important decision to reduce application development and support costs. The second trend is quality, where European customers have expectations to embed quality in the development process. The other trend is a partnership model with a flexible service provider who is willing to invest in future transformation initiatives as an alternate to traditional service providers. With the primary objective being cost reduction as a trend in 2011, organisations should be aware of the hidden costs involved in offshoring strategy. The hidden costs are typically ignored when there is a run to select a partner for cost reduction with a combined goal of increasing productivity. The business case that is created for offshoring should clearly articulate item-wise hidden costs so that the entire cost model is visible and expected returns are justified. The hidden costs typically include the additional infrastructure costs, travel costs, training costs,

management and governance investments and expected investments in transformation initiatives. Mid-size enterprises who are testing waters for the first time, can consider both a pilot approach and big-bang approach. Both approaches can yield good results if managed well, but initiating a pilot project seems to be a natural course of action for first time offshoring companies. Sufficient planning and clear understanding of expectations are paramount to the success of pilot projects to ensure that the effort, money and resources spent deliver the expected results. A successful pilot project will pay for a long-term global delivery model and a strong focus on return on investment. Again, as part of the offshore sourcing strategy, organisations should evaluate which offshore model to adopt. This can be pure single location offshoring, combination near-shore with offshore and follow the sun model. This will help to receive the intended value expected in the offshore outsourcing arrangement by concurrently adopting a combination of different models as per the need of the organisation. To create a successful offshoring strategy, service providers should look for certain key pointers from customer organisations. The pointers include commitment from senior management, willingness to take risks and have the right mindset, a good mix of engagements ranging from development to support, good revenue and turnover, having an internal champion with a mandate to adapt offshoring strategy and long term commitment in terms of business. Specifically in the UK and European markets, offshore services providers should be aware of HR regulations governed by labour and law. These regulations involve loss of employment due to outsourcing and changes to service provisions. Services providers should work with their legal departments closely to understand the risk and implications and costs involved. The costs can impact the overall business case. Implementing a robust governance model is key to ensuring the success. The service provider governance team should work closely with its customer management teams to provide the right visibility and direction to the overall operations. The governance structure should be built on the principles of providing direction, planning and monitoring, execution and optimisation. Customer relationships should demonstrate sound management, flexibility and trust and expected returns. ABOUT THE AUTHOR

Bala has 24 years of experience in the IT Industry (across IT, BPO and KPO services) and has served in a variety of roles, which included sales, strategic accounts management and managing large and complex delivery engagements. Bala has a unique blend of leadership, operational and entrepreneurial experience and success at growing businesses and services lines groundup. He brings decades of experience across US and European markets.

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WHAT’S HAPPENING AT THE IAOP

WELCOME NEW IAOP MEMBERS

IAOP’S CHINA CHAPTERS ANNOUNCE FIRST EVER “CHINA WEEK” EVENT Join us October 11-14 as IAOP’s China chapters tackle critical topics in the outsourcing industry at individual chapter meetings held in Hong Kong, Shanghai, Qingdao and Beijing. For more information, visit www.IAOP.org or email memberservices@iaop.org.

IAOP is pleased to welcome new and renewing corporate and professional members from: A.P. Moller Maersk; Accedeo; Accenture; Allstate Insurance Company; APAC Customer Services; Applied Materials; Assenda; AstraZeneca; Backyard Leaders, LLC; Bancolombia; Capgemini; Charles Schwab & Co.; Chubb; Clear Harbor; CME; Columbia Univsersity; Covidien; Credit Suisse; CSC; Eli Lily; GPS Group, Inc.; Hess Corporation; Hewlett Packard; Hospital Corporation of America (HCA); Infosys; ISS Facility Services; Join Innovation Technology Co., Ltd; Kelly OCG; Kraft Foods; Kromann Reumert; Lawson Software; Lear Communications; Lexis Nexis; Manulife Financial; McKenna and Associates; Microsoft; Morrison & Foerster; NCO Group, Inc.; NCR Corp.; Neusoft Corporation; Nordea Life & Pensions; Northern Works; Oakton; Orange Business Services; PHH Corp.; PwC; Softtek; SunGard Asia Pacific; Symantec; TCS; The Goodyear Tire & Rubber Company; The Guardian; The Results Companies; TPI; University of Missouri - St. Louis; VanceInfo; Vangent, Inc.; Vodafone; Washington Gas; Whirlpool; Wipro Technologies; WNS; and Zurich Financial Services. For information on IAOP membership, please visit www.IAOP.org/membership or email sales@iaop.org.

CONFERENCES & EVENTS IAOP MEMBER FORUM: USE OF ADVANCED TOOLS & TECHNOLOGIES IN OUTSOURCING

IAOP invites you to join its Chicago Chapter, Midwest Chapter, Cloud Computing Chapter and Tools & Technology Innovation Chapter for a one-day IAOP Member Forum at the offices of Kirkland & Ellis in downtown Chicago, IL on November 10, 2011 where leading outsourcing customers, service providers and advisors will share their experiences and best practices in the use of advanced tools and technologies to improve the value from outsourcing and/or shared services. The forum is complimentary for IAOP members, but you must reserve your seat at www.IAOP.org/MemberForum. Non-members may register for $250 at www.IAOP.org/MemberForum_Tools. Attendance is limited to the first 150 registrations.

GlobalizationToday September 2011

THE 2012 OUTSOURCING WORLD SUMMIT® February 20-22, 2012 | Disney’s Contemporary Resort & Conference Center, Lake Buena Vista, Florida Outsourcing Beyond the Horizon: Turning Opportunities into Tomorrow’s Successes

Today’s

Year after year, The Outsourcing World Summit brings the global community of outsourcing professionals together for an unparalleled knowledge sharing, networking and personal and business development experience you can count on. The 2012 Outsourcing World Summit - the 15th edition - will continue this tradition of excellence. The financial and economic crisis has reshaped and transformed the outsourcing industry. It has also created never before seen

WHAT’S HAPPENING AT THE IAOP

MEMBERSHIP Membership in IAOP provides access to an extensive array of services, and just as importantly distinguishes organizations and professionals as leaders in the field of outsourcing. IAOP membership demonstrates a commitment to innovative thinking, continuous performance improvement, and to the sustaining development of outsourcing as both an industry and as a profession. CUSTOMER CORPORATE MEMBERSHIP Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become Customer Corporate Members of IAOP. This membership provides organization-wide access to the association’s research, training, certification, and networking programs - all designed to help companies achieve better business results through outsourcing. PROVIDER/ADVISOR CORPORATE MEMBERSHIP Outsourcing service providers and advisory firms should join IAOP as Provider/Advisor Corporate Members. This membership provides the same organization-wide access to IAOP’s research, training, certification, and networking programs as Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies. PROFESSIONAL MEMBERSHIP Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers, or advisors. In addition, it provides these professionals with direct, personal access to association services. For information on IAOP membership, e-mail sales@iaop.org.

opportunities. The 2012 Summit addresses how to capitalize on these opportunities to maximize success at your organization. • Learn what the latest innovations are and how to implement them • Hear industry best practices and lessons learned from leading practitioners and visionaries • Stay current on the latest outsourcing tools and technologies, including the cloud • Meet and evaluate vendors in the Global Services Mall (or showcase your company as an exhibitor!) • Network with 700+ outsourcing professionals from around the globe Every year, hundreds of outsourcing executives from across the industry and around the world who are seeking the very latest insights and ideas attend the Summit. Educational sessions deliver specific actionable solutions to current challenges faced by experienced professionals. Case studies feature actual experiences and the lessons learned, and discuss new ideas, approaches and opportunities. The Outsourcing World Summit has become the event that executives attend each and every year to stay informed of the latest developments affecting the outsourcing industry and their profession. For more information and to register, visit www.IAOP.org/OWS2012. Register early to take advantage of special rates and offers!

MEMBER SERVICES

IAOP membership provides access to a wide range of services designed to help you and your organization improve outsourcing outcomes. Many of these services are included as part of IAOP’s Professional or Corporate Membership, with discounts available for use beyond the level provided. Some services are also available individually at non-member rates. • Globalization Today - The official publication of IAOP creates the largest and best informational publication on outsourcing by uniting and tapping the collective intellect of individuals from around the world. IAOP Members receive a free subscription plus the opportunity to get published, promote products/services and advertise. • IAOP’s Knowledge Center, Firmbuilder.com® - This online repository houses more than 600 articles, including chapter meeting presentations, conference proceedings, industry whitepapers, research articles and more. • Chapter Network - Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing. • Conferences & Events - IAOP hosts the world’s best-known and most highlyrespected executive conferences on the topic of outsourcing. • Certified Outsourcing Specialist Family of Certifications - Receive 50 complimentary COS tests each year. • Value Health Check Survey - This web-based diagnostic tool provides outsourcing customers and service providers with rapid insights to realizing outsourcing value. • BestOutsourcingJobs.com - Companies seeking the best talent for outsourcing jobs, as well as professionals looking for employment opportunities, can benefit from this IAOP member service provided through BestOutsourcingJobs.com (BOJ). For more detailed information, visit www.IAOP.org/MemberServices.

CALENDAR OF EVENTS

IAOP CHAPTER MEETINGS •

SEP 7

NORDIC CHAPTER MEETING ON “DEPLOYING AND MANAGING A MULTISOURCED ENVIRONMENT”

•

SEP 7

AUSTRALIA CHAPTER MEETING ON “OUTSOURCING IN CHINA 2011” AND “OUTSOURCING – POST GFC”

•

SEP 8

SAN FRANCISCO AND GLOBAL TECHNOLOGY INDUSTRY JOINT CHAPTER MEETING

•

SEP 12

ATLANTA CHAPTER MEETING ON “BEST PRACTICES IN RECRUITING, WORKFORCE MANAGEMENT AND MANAGING ATTRITION”

•

SEP 14

CANADA (TORONTO) CHAPTER MEETING

•

SEP 14

PACIFIC NORTHWEST CHAPTER MEETING ON “LEGAL TALKS FOR IT GUYS: IP PROTECTION IN A GLOBALIZED WORLD”

•

SEP 21

VOICE OF THE CUSTOMER CHAPTER WEBINAR ON “WHAT PROVIDERS SAY ABOUT CLIENTS”

•

SEP 29

TEXAS AND TRANSBOUNDARY SOURCING JOINT CHAPTER MEETING ON “DOES GLOBAL SOURCING DELIVER HIGHER VALUE”?”

•

OCT 10

SWITZERLAND CHAPTER MEETING ON “APPLICATION DEVELOPMENT AND MAINTENANCE OUTSOURCING: FROM NEW COMMERCIAL MODELS TO OFFSHORE STRATEGIES”

•

OCT 11- 14

CHINA WEEK

•

OCT 19

MIDWEST CHAPTER MEETING ON” BUILDING ITO AND BPO BUSINESSES IN THE MIDWEST - CHALLENGES AND OPPORTUNITIES”

To join and view a full listing of our current chapters, go to www.IAOP.org/Chapters.

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WHAT’S HAPPENING AT THE IAOP

NEWSWIRE IAOP CONDUCTING GLOBAL SURVEY: CORPORATE SOCIAL RESPONSIBILITY IN OUTSOURCING Results to be released at 2012 Outsourcing World Summit

A global survey being conducted by the IAOP will update the growing importance of corporate social responsibility (CSR) in outsourcing. IAOP is surveying outsourcing providers, customers and advisors on their actions and views on CSR, as well as sustainability and environmental responsibility. The survey will be conducted through this summer and early fall, and results will be released at the 2012 Outsourcing World Summit at Disney’s Contemporary Resort in Lake Buena Vista, Florida. The survey is open to the association’s 110,000 plus membership and affiliates as well as all outsourcing professionals interested in participation. It is available at www.IAOP.org. IAOP’s Corporate Social Responsibility (CSR) subcommittee of the Advocacy and Outreach Committee is sponsoring the survey. Members of this subcommittee include industry leaders in CSR, as well as academic researchers with the Ted Rogers School of IT Management at Ryerson University and representatives of ITSqc and the Rockefeller Foundation. A study by Professor Bill Hefley of the University of Pittsburgh and ITSqc showed that companies who ranked as the world’s leading outsourcing providers in IAOP’s 2009 Global Outsourcing 100® had significantly greater CSR activities than other outsourcing firms. Adhering to the highest ethical standards, contributing to local communities and bettering the environment are just a few ways outsourcing can be used as a powerful tool in advancing critical social, economic and environmental issues on a global basis,” said IAOP CEO Debi Hamill. “The CSR survey provides us with important information about where the industry is headed in this area.” For more information on the survey, email pam.odell@iaop.org. OUTSOURCING PROFESSIONALS TO LOOK BEYOND THE HORIZON AT 2012 SUMMIT Annual IAOP Event to Explore Turning Opportunities into Successes

With outsourcing opening up many new growth opportunities for organizations globally, the International Association of Outsourcing Professionals® (IAOP®) will look toward the future at its 2012 Outsourcing World Summit. “The financial and economic crisis has reshaped and transformed the outsourcing industry,” said IAOP Chairman Michael Corbett. “It has also created never before seen opportunities.” Themed “Outsourcing Beyond the Horizon: Turning Today’s Opportunities into Tomorrow’s Successes,” the 15th annual event will be held Feb. 20-22, 2012, at Disney’s Contemporary Resort & Conference Center in Lake Buena Vista, Florida. The 2012 Outsourcing World Summit will address how to capitalize on these opportunities to maximize success at organizations and delve deeply into issues that are critical to today’s professionals and their companies. During the three-day event, more than 700 professionals from around the world will come together to learn about the latest

GlobalizationToday September 2011

innovations and how to implement them; hear industry best practices and lessons learned from leading practitioners and visionaries; stay current on the latest outsourcing tools and technologies; and meet and evaluate vendors. The event’s program committee currently is accepting proposals for presentations from outsourcing buyers, practitioners, advisors and researchers from across the profession to be delivered at the event. For more information, visit the 2012 Outsourcing World Summit site at www.IAOP.org/OWS2012. CERTIFICATION & PROFESSIONAL DEVELOPMENT COP MASTER CLASS & GOVERNANCE WORKSHOP SCHEDULE

The COP Master Class is a great option for earning up to half (75 points) of the Knowledge and Training points needed for COP certification, and fully completes the required training for the aCOP designation. Completing the one day Governance Workshop is worth another 15 COP Certification points. IAOP is actively registering now for the following classes: • SEPTEMBER 5-8, 2011: KUALA LUMPUR, MALAYSIA • SEPTEMBER 19-22: INVERNESS HOTEL & CONFERENCE CENTER, DENVER, CO - LAST NORTH AMERICA CLASS IN 2011! • OCTOBER 19-21, 2011: HARBOUR PLAZA METROPOLIS, HONG KONG • NOVEMBER 21-24, 2011: KUALA LUMPUR, MALAYSIA

WHAT’S HAPPENING AT THE IAOP

Member of the Year Award Recipients Honored IAOP honored two of its members at a luncheon ceremony during its annual conference, The 2011 Outsourcing World Summit, at Renaissance Esmeralda, Indian Wells, CA, on February 22, 2011. From left to right: Debi Hamill, Senior Managing Director, IAOP; Jag Dalal, COP,, Managing Direcotr, Thought Leadership, IAOP; Members of the Year Bobby Varanasi, COP, CEO, Matryzel Consulting Inc..; Christopher Long, COP, COO, StayWell Health Management; and Mike Corbett, Chairman, IAOP.

• NOVEMBER 23-25, 2011: MAASTRICHT, THE NETHERLANDS - NEW! ONLY A FEW SEATS LEFT • MARCH 26-29, 2012: CHAPEL HILL, NORTH CAROLINA - NEW! FIRST NORTH AMERICA CLASS OF 2012!

Please visit www.iaop.org/training_calendar for a full list of classes and current discounts and specials. CORPORATE PROGRAMS

IAOP’s private master class calendar is filling up with Corporate Companies taking advantage of educating their employees inhouse! With the dramatic cost savings, there is no better time than now to use up your training budget. Host an in-house class for between 10 and 25 employees, partners and customers and save on time and travel. Classroom training will be delivered by an IAOP Authorized Trainer at your facility with each student who successfully completes the COP Master Class provided with a Certificate of Completion noting that they have earned 75 points toward the COP designation and fulfilled the aCOP training requirement. Executives interested in bringing the COP program division- or company-wide are invited to contact your account executive or email sales@iaop.org.

DO YOU HAVE WHAT IT TAKES TO BECOME A COP?

The COP designation powerfully demonstrates that individualspossess the experience and knowledge required to design, implement and manage outsourcing initiatives that have a high probability of achieving an organization’s intended outcomes. Do you have what it takes to join the industry’s most elite professionals? Take this 10 QUESTION QUIZ (www.IAOP.org/ download/download.aspx?ID=1595) and see if you have what it takes to become a “Certified Outsourcing Professional” today. AWARD & RECOGNITION PROGRAMS NOW ACCEPTING APPLICATIONS: THE GLOBAL OUTSOURCING 100® AND THE WORLD’S BEST OUTSOURCING ADVISORS

IAOP is calling on outsourcing service providers and advisors to apply for its annual Global Outsourcing 100® and join the ranks of past leaders like Accenture and Alsbridge. Applications for the annual independently judged, opt-in ranking are being accepted now through Nov. 1, 2011. For complete details and FAQ’s about the 2012 rankings and to apply, visit www.IAOP.org/GO100. Now entering its seventh year for service providers and fourth for advisors, the Global Outsourcing 100® has become an important

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WHAT’S HAPPENING AT THE IAOP

resource to help companies make more informed purchasing decisions based on an objective methodology. The unranked lists will be previewed at the 2012 Outsourcing World Summit, Feb. 20-22, 2012 at Disney’s Contemporary Resort, Lake Buena Vista, Florida, and fully released in May 2012. “In its seventh year, the Global Outsourcing 100 is widely recognized as the industry’s go-to list. Our work in building its foothold and growing awareness continues as we strive to create value for providers and advisors, and the companies that want to do business with them, said IAOP Managing Director of Thought Leadership, and 2012 judges’ panel chair, Jagdish Dalal, COP. Companies will be judged using an objective methodology that examines 18 criteria, including size and growth, customer references, organizational competencies and management capabilities. Each company selected for The Global Outsourcing 100 is recognized by IAOP on its website and at various events and programs throughout the year, and in a special advertising feature in FORTUNE® magazine reaching the magazine’s worldwide circulation of over one million and readership in excess of five million. For complete lists and more than 80 sub-lists with rankings by geography, industry and service areas, see the web address above. Companies can submit applications for the Global Outsourcing 100 and World’s Best Outsourcing Advisors via an online application form and do not have to be IAOP members to apply. The deadline for fully completed applications is Nov. 1. INTERNATIONAL ASSOCIATION OF OUTSOURCING PROFESSIONALS SEEKING NOMINATIONS FOR BEST OUTSOURCING TEAMS GEO Award Recognizes Leading Outsourcing Teams in Best Practices and Innovation

IAOP is accepting nominations for The Global Excellence in Outsourcing (GEO) Award. The award program, which is in its second year, recognizes outsourcing professional teams for their innovation and best practices. The GEO distinguishes outsourcing professional teams at customer organizations who have advanced the field’s best practices, created innovative solutions and delivered great results for their companies. “As outsourcing increasingly becomes strategic, it’s more often teams of outsourcing professionals who are creating the results their

GlobalizationToday September 2011

companies need,” said IAOP CEO, Debi Hamill. “On the heels of a successful first year, we once again look forward to honoring GEO winners on their accomplishments that raise the bar for all of us.” Nominations: Nominations are open to IAOP member and non-member customer teams globally and applications for the award are prepared and submitted by the outsourcing professional team itself. Nominations are accepted through September 30, 2011. Submissions will be reviewed by a panel of independent judges selected by IAOP’s Membership Committee and led by Bill Hall, committee chair and founding partner of Pretium Partners. Winners are recognized at IAOP’s Outsourcing World Summit® each February and will have the unique opportunity to share their leading-edge outsourcing approaches through multiple thought leadership activities led by IAOP. For more information and to nominate your team, please visit www.IAOP.org/GEO. NOMINATIONS OPEN FOR THE 2012 HALL OF FAME

Nominations are now being sought for the 2012 Outsourcing Hall of Fame Inductions. IAOP’s Outsourcing Hall of Fame is one of the most prestigious awards available to individuals working in the field of outsourcing. The Hall of Fame is unique in that it recognizes individuals not only for their contributions to the management practice and industry of outsourcing, but just as importantly for their contributions to society at-large through outsourcing. Inductees are generally senior executives working in the field as customers, providers, or advisors who have made significant contributions to both business and society through outsourcing over a period of years. Recipients of The Outsourcing Hall of Fame award are selected by IAOP’s Advocacy & Outreach Committee and are inducted into the Hall of Fame at The Outsourcing World Summit or an IAOP executive forum. Please log in to IAOP and a nomination form is available at MYIAOP or contact Pam O’Dell at pam.odell@iaop.org for details. For more information on any of IAOP’s programs and services, email info@iaop.org.

SCRAPBOOK

IAOP in China

Please Join IAOP’s Leadership at the First-Ever China Week! Since 2005, IAOP has helped shape the future of outsourcing in China and enhance the professionalism of the industry in the China marketplace through conferences, training, chapter meetings and more. This fall, IAOP’s China chapters will spend four days tackling topics critical to the region during China Week 2011. We hope to see you there! AGENDA Tuesday, October, 11: The Week begins with the Hong Kong Chapter addressing The Importance of Culture and Language in Successful Outsourcing Relationships. Wednesday, October 12: Come to Shanghai, where the Chapter will discuss Governance of Outsourcing Relationships. This meeting will conclude with a cocktail reception hosted by The American Chamber of Commerce in Shanghai. Thursday, October 13: Find us in Qingdao, where the chapter will be looking at Security Issues in Outsourcing to China. Friday, October 14: The week ends in Beijing, as the chapter shares thoughts on Outsourcing in China’s Domestic Market. For information on participating in one or more of these meetings, please contact IAOP at memberservices@iaop.org.

YEAR IN REVIEW

GlobalizationToday December 2010

Outsourcing Professional Certification FrameworkTM (OPCF) The OPCF is designed to address the needs of individuals who work across the global outsourcing industry from entry level positions focused on the delivery of outsourced services through to senior executives leading global outsourcing programs at customer, provider, and advisor organizations. At each stage in an individual’s career there is an opportunity for both professional development and professional recognition. The OPCF is made up of three families of certifications:

 Certified Outsourcing ExecutiveTM (COE)  Certified Outsourcing Professional® (COP)  Certified Outsourcing SpecialistTM (COS)

BENEFITS OF CERTIFICATION  Certification establishes a level of professional recognition essential in a field as complex and risk-based as outsourcing.  When working together across the customer-provider relationship, certification brings a common framework for success that benefits both organizations involved.  Certified individuals command greater respect within the industry and their companies, higher compensation levels, and expanded and enhanced career opportunities.

I’M A COP

*Expect better, more consistent results with me.

Training programs are available at the individual and corporate level. For more information, visit

www.IAOP.org/OPCF.

ADVERTISER INDEX PAGE #

COMPANY NAME

URL

18, 19

Accenture

www.accenture.com

BCS

www.bcs.org/opportunity

2, 32, 55

International Association of Outsourcing Professionals (IAOP)

www.IAOP.org

4, 6

Kelly Outsourcing & Consulting Group (KellyOCG)

www.kellyocg.com

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