Co-sourcing, Ecosystems and KPIs

Nevi Inkoopdag, 22th June 2017

Bart van der Linden

Theo Bosselaers

Innovation and

outsourcing

Ecosystems

Nice to meet you

Theo Bosselaers,

Canon: contract specialist

WRGL; trainer

E-mail: trb@planet.nl

Bart van der Linden

PhD Candidate Nyenrode

Business University

Founder Source2Innovate

E-mail: b.vdlinden@Nyenrode.nl

Ecosystems

• Introduction

• Platform Outsourcing Netherlands

• Workgroup Innovation

• Co-sourcing

• Introduction

• Case study

• Results

• Ecosystems

• Introduction

• Case study

• Results

• KPI’s

• Q&A

Agenda

• 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

Introduction: background PON

Innovation & IT Outsourcing:

introduction

Can innovation happen after the ink is dry?

‘Creating innovation by outsourcing and

alignment’

Presentation PON (2010)

Background workgroup innovationF

irst

work

gro

up Definition innovation

15 members

3 subgroups

- Optimize IT

- Improve the business

- Innovate the business

Book

Seminar

Scientific paper

Second

work

gro

up Innovation process

20 members

4 subgroups

- Government

- Manufacturing

- Financials

- Rest

Book

Seminar

Article

Third w

ork

gro

up Implementation of

innovation

20 members

3 subgroups

- Co-sourcing

- Ecosystems

- Measurement & KPI’s

Book

Seminar

Scientific paper

Theory: meta-model Innovation pillars

1Dimension of

innovation

Mode of innovation

Market segment of innovation

Impact of innovation

Client of innovation

2Innovation domains

Reason for outsourcing

Phase of outsourcing

Duration of outsourcing

Strategy of outsourcing

Location of outsourcing

3Position IT

organization

Organizational structure

Organizational climate

Organizational culture

4Process models

Modes of collaboration

Innovation process

monitoring systems

5Governance

models

Governance systems

Competences

Leadership

IC1

Innovation

Characteristics

SC2

Sourcing

Characteristics

3OS

Organisational

Structure

4

CPCollaborative

Innovation Process

Go5

Governance

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

• 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

– Aegon and HCL starting a joint initiative, cXstudio

21-6-2017 Pon Werkgroep Innovatie - start werkgroep 12

A collaboration of and

Case:

The contract between Aegon and HCL

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• 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.

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 interconnectedin 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 connectorintroduction

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

• Goal: promote innovation: we cannot do it ourselves

of members of the ecosystem (FrieslandCampina and IT partners)

Innovation of (out)sourcing strategy and process

Case FrieslandCampina Ecosystem

Shared responsibly Shared approach Shared success

Ecosystems

Case: how to start (planned)

First results

• 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: Governance

• 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

Case: success factors

• 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)

Lessons learned

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

• What,

• Why,

• Why: TMTM financial model for start-ups

• When (time),

• With whom,

• In What 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.