Asking five critical questions will help better plan for your efforts to globalize operations. Avoid the failure-to-plan syndrome by evaluating self preparedness and maturity of vendors.
In my last column I wrote about the first phase in the services globalization lifecycle: the knowledge phase. The second phase is the planning phase, aimed toward creating a strategic services globalization blueprint that answers the questions of why, what, where, when, and how the organization should globalize its services.
• Why: assessing the global readiness of the organization, defining objectives, and conducting a base-case cost analysis. Whether an organization is ready to globalize its services depends in part on its maturity. The neoIT globalization strategy framework GS8 can be a useful guide in analyzing the maturity of an organization; the framework considers company culture, corporate strategy, industry activity, control, cost savings, quality, risk, and social responsibility.
When mature enough, organizations need a set of clear objectives for the globalization initiative. Where companies used to look at services globalization as a short-term fix to a cost problem, evolved globalizers look beyond savings and quick fixes. They have objectives that go far beyond cost savings, including quality improvements, the ability to tap into new pools of resources, and an added freedom to focus on strategy.
Successful globalizers also understand that there is more to the globalization financial case than wage differences. Even when they pursue lower costs, successful enterprises are realistic about the cost and direct financial benefits of global sourcing and manage all costs, including those associated with change management, governance, advisory services, travel to the provider, resource redeployment, training, and productivity.
• What: assessing the global readiness of current processes in the portfolio. If the organization determines that it is ready to globalize and can achieve a net financial benefit, the question becomes, “What processes should be globalized?” For the answer, conduct a portfolio assessment, which involves:
• Identifying portfolio components;
• Defining services globalization criteria;
• Collecting information;
• Evaluating and scoring; and
• Process mapping.
• Where: identifying candidate suppliers and locations. An organization’s own readiness for services globalization is only one factor determining if it should globalize processes; supplier maturity is another.
As the market for global services constantly changes and improves, supplier maturity is best evaluated through a complete market analysis. Global services qualification standards—including COPC, ISO 9000, CMM, eSCM, and neoIT’s own neoQA—can help evaluate providers.
Analyzing global locations should include an evaluation of such factors as government support, labor pool, infrastructure, educational system, direct and indirect cost advantages, cultural compatibility, time zone and distance advantages, language proficiency, geopolitical environment, process maturity and competitiveness, supportive people factors, and supportive economic factors.
• When: defining a timeframe. Too many organizations fail to achieve their business and globalization objectives because they source services at the wrong times. A laddered or wave approach to services globalization can provide a complete schedule of activities.
The wave strategy breaks a globalization initiative into six- to 18-month segments that sets a definitive timeline for activities to be performed and potential savings to be evaluated. Processes with the highest degree of global readiness are globalized first.
• How: conducting a strategic evaluation of sourcing options. The process of choosing a specific type of sourcing model—from third-party sourcing to entering a joint venture, building a captive center, or engaging a build-operate-transfer arrangement—depends on an analysis of the organization’s strategic requirements, decision influencers, and key benefits afforded. Organizations that globalize services for the first time typically do the best sourcing to a third-party.
As the old adage suggests, “He who fails to plan, plans to fail.” While most organizations that fail to adequately plan their globalization initiatives probably aren’t looking to fail, the point is that no reasonable excuse for poor planning exists. The process of creating a strategic services globalization blueprint—the planning phase—will help an organization develop a solid plan for success in services globalization.