Like All Hands on the deck, Enterprise companies are putting everything on the table when planning the next phase of IT Strategic Sourcing. There are some early indicators on 3 main theme that are likely to become more prominent as the thinking evolves further on these – Consolidation, Creative Constructs, Captive Center Re-alignment ; in short lets call these as 3 Cs.
Consolidation – Over the years, enterprises accumulate and grow with many business processes, IT platforms, technologies, partners, suppliers etc. and before they realize – it becomes a complex web for them to manage that finally not only starts bringing the productivity down but also makes the enterprises less agile with an increased manageability layer. With an intense market condition, when companies get into “operate” phase rather than the “growth” phase, one of the effective ways is to start looking at Consolidation – all across, from business processes, technologies, platforms, suppliers etc. It’s a great strategy to start focusing on this on a proactive basis – rather than getting pushed to a situation to consider consolidation.
Creative Constructs – Traditional business models are becoming “passé” and more and more enterprises are looking at new and creative ways to engage with the eco-systems of partners and customers. Partnering with customers to develop products with shared risk and rewards has increased the “skin in the game” to a new level. This is not only a commercial model, but is more market aligned and demonstrates a true partnership approach that shares both the risks and the rewards. Chances of success are higher as the goals are aligned to ensure product / business success. If not managed well, this also has the propensity to increase the risk profile for the partners and hence must be done with strong governance and change management.
Captive Center Re-alignment – Over the last 5 years more than eight hundred captive centers have been inaugurated in India itself – the count almost doubles if we include all the other global locations. Captive Centers are the local development centers for the technology and enterprise companies – that were set up to take advantage of the low cost and skilled resource pools. After the initial honeymoon period got over – most of these centers now realize that they can’t get the value or the productivity from their teams and its too cumbersome to manage as well. There is no best practice on manageability that’s been deployed and the returns on investment are just not worth it. Companies below 300 people are the ones that face this on an increased level. Most of these companies will look at re-alignment of their strategy on captive centers.