Stop Perfecting The Irrelevant!

Recently I attended the HfS Research Blueprint Sessions 3.0 in New York City.  This was a great event with global services leaders discussing, debating the state of today’s and tomorrow’s Services Industry.  There were several good sound bites, however one really stood out that captured the theme of the event.  Lee Coulter, CEO Ascension Health Shared Services at Ascension Health, delivered this timeless nugget:

“For companies to prevent becoming a Zombie Enterprise (eg. Blockbuster, Sears, Sony), it is crucial that companies focus on their core competence in the market and not functional activity. We, as leaders, need to stop perfecting the irrelevant, hand that work off to those who do this work well as their front office business, and focus exclusively on the core.” – Lee Coulter.

There were some interesting and revealing polling questions to determine whether your organization may be a Zombie.  It is definitely worth the time to contact Phil Fersht, CEO HfS Research to take the short Zombie questionnaire.

Special thanks to both Lee and Phil for my participation at the event.

Why the CFO should care about an Optimized Sourcing Strategy…

The CFO should be the biggest proponent of an Optimized Sourcing Strategy; In particular a strategy that is focused on the composition of product and technology teams.

Why? Because the capital spent on resources is likely the highest cost for the organization and least optimized. Any inefficiencies that exist in the organization’s sourcing strategy model should be eliminated. The gains, though small and incremental, become exponential over the long run.  Capital could be freed to invest in high value business objectives without impacting deliverables or quality. Any optimization gains will give the organization an advantage.

Implementing this type of a strategy requires more than an a few speeches and PowerPoint presentations from leadership. There needs to be a single leader, owner, accountable person for such an initiative. This person must be persuasive, organized, well connected in the organization.  The leader will be setting KPIs, driving the change, and managing the data for reporting. Success will likely depend on a set of tools in place to manage all the data, outcomes, and variables.  It is also recommended you have a coach or specialized consultant on hand to build a solid foundation.

Though the office of the CFO should be the biggest proponent of and Optimized Sourcing Strategy, they should not own the initiative.  A group or person much closer to the products and technology teams is ideal.  Finance certainly has their part in setting financial boundaries and controls, but they are not ideal for determining the proper mix of the teams.  To be clear – this is not entirely a financial exercise, it is about optimization.  An example below illustrates this point:

A team that supports a product scheduled to sunset in a few years should have a strong financial component when setting up the optimization parameters.  The idea here would be to maximize the capital every step of the way until a minimum steady states is achieved.

In contrast, a product in growth but with a team that is almost entirely using an onshore / offshore model with very few employees may want to invest in a core team of employees to minimize intellectual property risk and knowledge transfer costs associate with high levels of attrition.  This would increase the capital needed for the team, but optimize the team through reduction of risk.

This point also reinforces the need to have a leader closer to the dynamics and needs of product and development teams but yet savvy in finance.  There just needs to be a balance to find the right optimization sourcing strategy in an organization.

Discussion 1: “Optimization of Sourcing Strategies”

Saint Louis –

I had a discussion today with a few senior level individuals from a large rapidly growing Saint Louis, Missouri organization in the healthcare industry.  Our discussion centered around the optimization strategies at their organization and the processes, practices, and methods in which they operate.  This organization has multiple technologies, vendors, and suppliers.  It has seen rapid organic growth and by merger and acquisition. It was a good discussion, however my findings weren’t out of line with my expectations:

  • There was no centralized sourcing optimization strategy or initiative in place
  • There is more a silo approach to how teams are sourced
  • Review Boards are conducted monthly, but focus on Business Case ROI and Project Issues
  • Difficult to define who would own an Optimized Sourcing Strategy
  • Key Performance Indicators (KPIs) present for SLA agreements but not for optimization
  • Integration, Mergers and Acquisitions increase complexity of Sourcing Initiatives
  • Portfolio and Budget is in a Silo per business unit, No clear overarching portfolio management
  • Products and Services not clearly labeled or publicized in Incubation, Growth, Mature, Decline prodic

This organization would clearly benefit from implementing along side other business initiatives and strategies an optimization sourcing strategy. Optimization is subtle, The gains are small and incremental, but they are exponential over a longer period of time.  Optimized sourcing initiatives will give a company a clear edge. In this case, I believe it would accomplish the following for their organization:

  • Give better financial bounds and set expectations for team formations
  • Free capital lower value projects to be used in high value areas
  • Give Finance better measures and guides for team formation and hiring
  • Give framework for mergers and acquisition decisions on how to mix resources
  • Take away ad-hoc approach at manager level to staffing.
  • Not impact delivery or quality
  • Bring order across the organization and better control over team composition

I look forward to speaking with this organization more in the future.  More updates to this post fill follow accordingly. Thank you to the individuals and organization for their time.

Traction: “2014 Outsourcing World Summit”

Thomas Helfrich, Founder of 1evolve.com, will be presenting the 1evolve Optimized Sourcing Framework (OSF) at the 2014 Outsourcing World Summit in Orlando, Florida. February 17-19, 2014.  This is a great networking and knowledge sharing event.  There is always a great buzz at the summit with plenty of opportunities to learn.

Thomas will be a VIP speaker presenting the Optimized Sourcing Framework. In particular he will address management consulting approach, the challenges, and some of the real world results from implementing an Optimized Sourcing Framework.  If you would like more information on the event please visit the IAOP website at: http://www.iaop.org/summit

If you would like to connect with Thomas Helfrich please use the Contact form or connect via LinkedIn.


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Traction: “Optimized Sourcing Framework”

A large global organization with a goal was to reduce technology spend by 10% across all business units. There were over 50 different products with teams ranging in size from 5 to over 50.  The teams were mixed with employees, onshore/offshore, contractors (staff aug.), subject matter experts (SME), interns, and administration overhead.  Total size of the scope was 450 individuals. The premise was that the technology and product teams had become bloated and inefficient.  The challenge became how to implement an optimized sourcing strategy that fit the financial constraints while providing minimal disruption to deliverables and quality.  The workforce was going to be reduced; the challenge was to quickly develop, implement, and manage the optimized sourcing strategy while this initiative was being executed.

There had been overarching centralized sourcing strategies before within the organization.  Historically buy-in and support of the global initiatives by management was minimal.   The organizational influence and persuasion to pull this effort together was significant.  If the executive team wanted to meet the goals of the initiative, clear top down support was required.

This organization had never taken an optimization approach to finding a “fitted” model to allow for scaling requirement, financial constraints, and risk. There were no management tools or services in place or readily available on the market to manage the efforts nor were there any means by which to check the organizations compliance to the strategy.

A management consulting approach was executed over 6 months to derive at the optimized sourcing strategy. The management tool, processes, and governance were also created during this time and within 12 months; the workforce was optimally reduced from 450 to 331. Core teams were identified and organization saw very little disruption to the deliverables or quality.  The Optimized Sourcing Framework and Strategy now allows for the organization to now scale up and avoid bloating and waste.  Additionally, the Optimized Sourcing Framework can be applied in both a centralized and decentralized approach.

What is 1evolve?

1evolve is a management consulting and services company. I founded this website to serve the industry as a forum for discussing, improving, and developing the Optimized Sourcing Framework (OSF). The OSF can be adopted by almost any organization interested in the optimization of their product and technology team’s composition. The OSF could also be extended to optimize almost any sourcing strategy. The framework provides for this flexibility by the following two main components:

The framework is built upon existing technologies to ensure an organization can easily adopt it. Some of these technologies include:

  • Microsoft
  • Oracle

The current state of the framework is focused on the optimization of technology and product teams supporting products or services. However, the framework model could be extended and adapted to optimize any sourcing strategy. The goal of 1evolve and this forum is to continue to refine and improve the framework. I look forward to the your contributions and feedback.

-Thomas C. Helfrich, Founder | 1evolve.com

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