During the California gold rush, it was said that the only people who made fortunes were those who sold picks and shovels to the prospectors. During the current globe rush, vendors and consultants are similarly aiming to cash in, either by assisting companies in the globalization process as consultants and aggregators or by selling software to help customers manage their globally scattered service providers.
As you globalize, here are a few of the players you might meet. Although better known for its hosting services, Navisite, in Andover, Mass., also offers advice to those interested in building a global sourcing strategy. Navisites Sumeet Sabharwal, senior vice president of outsourcing services and global delivery, stresses the importance of upfront planning.
“Putting a comprehensive governance framework in place is important. It often falls by the wayside because clients have too many things to do,” said Sabharwal.
The necessary planning is not free, Sabharwal warned. “There are costs on top of costs savings. Studies have shown 15 percent to 40 percent of the value of a contract, including transition costs, layoff and retention costs, and process improvement costs, need to be done upfront.” After that, he said, “There are contract management and vendor selection costs.”
Another vendor, EXA Infosystems, wraps offshore advice in its aggregation service, which finds the best partners for particular tasks. The Stamford, Conn., company specializes in Russian, Eastern European and Israeli service providers. “We identify resources. We aggregate the talent or partner with companies in different countries to provide the talent,” said EXA Infosystems CEO Arthur Tisi. The company recently hired a new chief technology officer, Oleg Margolin, who is originally from Russia.
Some vendors are selling tools to aid in the management of service providers. One such vendor is Denver-based IQNavigator, which offers its flagship tool set, IQNavigator7, as a hosted service.
“It helps customers control outsourcing engagements,” said John Martin, senior vice president of strategy and technology at IQNavigator. If youre having application development work done, you enter all the contract information about the relationship into IQNavigator, including deliverables, time frames and quality metrics, said Martin. “We then calculate the invoice based on deliverables and contract terms,” he said, noting that that can go a long way to heading off disputes with service providers before they happen, since both customers and providers can access IQNavigator via a Web browser. The tool also rates the performance of providers. “You can find out whos giving you the best talent and price,” Martin said.
IQNavigator supports multiple currencies and multiple languages for global implementations, Martin added. Even though pricing starts in the low six figures, the service can pay for itself quickly by ensuring that you pay only for what you get, according to Martin.
Shell Oil is using IQNavigator to manage its global procurement process. “We develop centrally global strategies and execute in local environments in over 100 countries,” said Allen Kirkley, vice president of contracting and procurement at Shell, in London. IQNavigator is being used to handle some of the services within $15 billion per year in “downstream” procurement, that is, for goods and services other than hydrocarbon resources such as oil and gas. Included is contract labor and a wide variety of technical products used in refineries and chemical plants, said Kirkley.
Helen Huntley, a Gartner analyst, had this to say at the recent Gartner Outsourcing Summit, in Orlando, Fla. “Outsourcing contracts require major review and modification before they can go global, to reduce liability, regulatory enforceability service performance and privacy risks. Its not that easy. There are different understandings and stringency of contract enforceability in different countries.”
Bottom line: Tools are great, but when it comes to globalization, theres no substitute for the human touch.
>E-mail Stan Gibson at [email protected].