Innovation and outsourcing Co-sourcing, Ecosystems and KPIs Nevi Inkoopdag, 22 th June 2017 Bart van der Linden Theo Bosselaers
Nice to meet you Bart van der Linden PhD Candidate Nyenrode Business University Theo Bosselaers, Founder Source2Innovate Canon: contract specialist WRGL; trainer E-mail: b.vdlinden@Nyenrode.nl E-mail: trb@planet.nl Ecosystems
Agenda • Introduction • Platform Outsourcing Netherlands • Workgroup Innovation • Co-sourcing • Introduction • Case study • Results • Ecosystems • Introduction • Case study • Results • KPI’s • Q&A Ecosystems
Introduction: background PON • Platform Outsourcing Netherland (PON) • Started in 2005 • Main objective is to professionalize the Dutch (IT) outsourcing sector with all stakeholders. Stakeholders are: • Outsourcers, Service providers, Lawyers, Academics and consulting firms / professionals
Innovation & IT Outsourcing: introduction
Can innovation happen after the ink is dry? ‘Creating innovation by outsourcing and alignment’ Presentation PON (2010)
Background workgroup innovation Definition innovation Innovation process Implementation of First workgroup Second workgroup Third workgroup innovation 20 members 15 members 20 members 3 subgroups 3 subgroups 4 subgroups - Co-sourcing - Optimize IT - Government - Ecosystems - Improve the business - Manufacturing - Measurement & KPI’s - Innovate the business - Financials Book Book - Rest Seminar Seminar Book Scientific paper Scientific paper Seminar Article
Theory: meta-model Innovation pillars 3 OS 4 CP 1 2 1 2 3 4 5 5 IC SC Go Innovation Sourcing Organisational Collaborative Governance Characteristics Characteristics Innovation Process Structure Innovation Dimension of Position IT Governance domains innovation organization models Process models Reason for Mode of outsourcing innovation Organizational Governance Phase of structure systems outsourcing Market segment of Modes of innovation collaboration Duration of Organizational outsourcing Competences climate Impact of Strategy of innovation Innovation outsourcing process Organizational monitoring Client of Leadership Location of culture innovation systems outsourcing
Co-sourcing
Co-sourcing “Outsourcing also now embraces significant partnerships and alliances, referred to as co-sourcing arrangements, where client and vendor share risk and reward.” ( Hirschheim & Dibbern, 2014)
Co-sourcing: introduction • Co-sourcing is a joint initiative that, in terms of outsourcing, was initiated after a period of having an outsourcing relationship. Examples of Co-sourcing we studied are: – Business model innovation using IoT (Internet of Things) for the product portfolio of an manufacturer – Optimization of the helpdesk-services using A.I. – Business process optimization by developing smart bins, by Schiphol Next – Aegon and HCL starting a joint initiative, cXstudio 21-6-2017 11
Cosourcing: introduction Case: • Cosourcing is a joint initiative that, in terms of outsourcing, was initiated after a period of having an outsourcing relationship. Examples of cosourcing we studied are: – Business model innovation using IoT for the product portfolio of an manufacturer – Optimalisation of the helpdesk-services using A.I. – Business process optimization by developing smart bins, by Schiphol Next A collaboration of and – Aegon and HCL starting a joint initiative, cXstudio 21-6-2017 Pon Werkgroep Innovatie - start werkgroep 12
The contract between Aegon and HCL • Focus on building the studio together. • HCL: designers / developers • Aegon: product owners, testers, information analysts. • HCL takes care of the studio, workspaces, catering, etc. • Onshore developers, working with offshore team was not successful. 21-6-2017 13
Experiences with the contract • Positive: fixed budget for the studio within which we can optimize. • Positive: team culture wins over contracting sides. • Two Wi- fi’s, two printers etc. so using physical agenda’s for booking a room. • Issue: multi-disciplinary optimization hindered by two budgets. • Issue: balancing focus on costs versus focus on agility. • Sometimes HCL receives request to pick up work when it’s the product owners (from Aegon ) who didn’t prioritize the work. • What are the next steps taking into account that IT is becoming more and more strategic?
Lessons learned • Co-sourcing is not fully developed yet. • The cases developed out of an existing outsourcing-relation. • How to start an initiative: • Change existing contract: statement of work. • Traditional tenders for Co-sourcing. • Outside-in innovation. • Co-sourcing in different situations • Innovation of outsourced services i.e. first line helpdesk. • IT related innovation for the business (i.e. newspaper case). • Innovation of products: new services for existing products bases on data analytics. • Success factors • Incentives must reflect the need for cooperation. • Align the right stakeholders. • Teamwork of members of the different organizations is essential including the business. • Knowledge of business of the partner is essential. • Necessity of monitor tools (Excel is nog always sufficient).
Ecosystems
Ecosystems “ A Business Ecosystem consists of a large number of participants , which can be business firms and other organizations. They are i nterconnected in the sense that they have an effect on each other. Interconnectedness enables various interactions between the members. These interactions can be both competitive and cooperative . Together with interconnectedness they lead a shared fate among the organizations. The members are dependent on each other, and the failures of firms can result in failures of other firms ”. (Peltoniemi, 2006)
Case Brainport: ASML as ecosystem connector introduction
Ecosystem: introduction • The concept of IT ecosystems is relatively new • The following items need to be shared within the ecosystem: – Objective (e.g. optimization IT landscape or innovation) – Way of working (e.g. process and platform) – Shared trust • Examples of IT ecosystems we studied are: – Business process optimization by developing smart bins, by Schiphol Next – Shell’s One IT ecosystem – FrieslandCampina IT ecosystem 21-6-2017 19
Case FrieslandCampina Ecosystem • Goal: promote innovation: we cannot do it ourselves Shared responsibly Shared approach Shared success of members of the ecosystem (FrieslandCampina and IT partners) Innovation of (out)sourcing strategy and process
Case: how to start (planned) Ecosystems
First results
Case: Governance • Collaboration board • Responsible for initiatives to improve quality in end2end processes and innovation proposals. • Same starting points apply for all members • i.e. IT adds value when users are productive, systems are running, adequately reaction on changing in business needs, ... • Monthly meetings • Focus on eXperience KPI’s • How does the system contribute tot end2endprocess • workshops
Case: success factors • Presence of a lead firm • Ecosystem connector (facilitator) • Create executive and management buy-in by all members • Establish joint vision, targets and rules of engagement • Create transparency on performance • Priority initiatives identified collaboratively • Facilitate joint execution of initiatives • Celebrate success (show cases) • Share failures
Lessons learned • New concept for IT business • Share and agree on • Goals (i.e. optimization of IT, cost reduction of innovation • Way of working (processes, platforms) • Trust each other (goals, processes, stakeholders) • Different type of ecosystems • IT ecosystems for improving e2e services with multiple IT partners: FrieslandCampina • IT ecosystems for innovation using IT Innovation lab • IoT ecosystems for the business (i.e. Schiphol, business ecosystems such as Brainport – ASML)
KPI
KPI How to measure innovation? • Process KPI’s (i.e. 8 of Mc Kinsey) • % successful innovations • Value of innovation is also important Not easy to establish useful KPI’s We found out that: • Measurement in first phases is crucial and difficult • After business case phase it is business as usual
KPI First phases: simple 5 W model was successful (based on article Hajdasinski) • Case: printing company and delivery of newspapers • W hat, • W hy, • Why: TMTM financial model for start-ups • W hen (time), • W ith whom, • In W hat way
Q&A
References • Hirschheim, R., & Dibbern, J. (2014). Information technology outsourcing: towards sustainable business value. In Information Systems Outsourcing (pp. 1-19). Springer Berlin Heidelberg.
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