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Outsourcing 2.0 - The Global Delivery Model

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The Global Delivery Model with a Geographic Twist!

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Outsourcing 2.0 - The Global Delivery Model

  1. 1. The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark Globalisation Your success in globalization is not what you can get out of it..... But what you can get into it! Bo Eske Nyhus -¤- Morten Munk
  2. 2. Outsourcing 2.0: THE NEW RULES OF THE GAME The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  3. 3. Lean Consumption in “The Perfect Storm” <ul><li>Lasting Contraction in Consumer Spending </li></ul><ul><ul><li>Less money and less wealth </li></ul></ul><ul><ul><li>More insecurity and instability </li></ul></ul><ul><ul><li>Structural changes </li></ul></ul><ul><li>To whom, what & how can you sell with a profit? </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  4. 4. What will happen in Europe? <ul><li>Proximity to markets is determining business locations </li></ul><ul><li>Companies are constantly on the move and creating virtual HQs </li></ul><ul><li>Small remote countries will struggle most </li></ul><ul><ul><li>Blue Oceans and Resourceful Nations </li></ul></ul><ul><li>Lost jobs will not reappear </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  5. 5. Outsourcing 2.0 - A Way of Thinking <ul><li>The world is already flat but may become smaller </li></ul><ul><ul><li>The technologies are already here, can and will be applied with success all over </li></ul></ul><ul><li>Local involvement but no local commitment </li></ul><ul><ul><li>Business Re-engineering revisited </li></ul></ul><ul><li>Reconfiguration of the value-chain </li></ul><ul><ul><li>Blue and white collar distinction is irrelevant </li></ul></ul><ul><li>Time zones </li></ul><ul><ul><li>Windows of manageable opportunities </li></ul></ul><ul><ul><li>Socially constructed borders will fall </li></ul></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  6. 6. The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark The Geographic twist <ul><li>Your physical locations determines: </li></ul><ul><ul><li>-Wages </li></ul></ul><ul><ul><li>-Competencies </li></ul></ul><ul><ul><li>-Logistics </li></ul></ul><ul><ul><li>-CO2 </li></ul></ul>
  7. 7. The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark Outsourcing 2.0 A Consumer Oriented Delivery Model with a Geographic Twist
  8. 8. The Geographic Twist <ul><li>Traditional Outsourcing is necessary but far from sufficient to survive the post crisis period </li></ul><ul><li>Focus on those factors which are resistant to changes </li></ul><ul><ul><li>Geography, Demography & some Governance </li></ul></ul><ul><ul><ul><li>Geography, determines your costs </li></ul></ul></ul><ul><ul><ul><li>Demography, your market </li></ul></ul></ul><ul><ul><ul><li>Governance, the external costs of relocation </li></ul></ul></ul><ul><li>It is not a lasting solution but keeps you in business </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  9. 9. The delivery model <ul><li>Market proximity and customer priority </li></ul><ul><ul><li>DDP, not EXW, is the central element </li></ul></ul><ul><ul><li>Hours per truck and distance to the customer </li></ul></ul><ul><li>The whole organization on the move </li></ul><ul><ul><li>Equally important for all parts of the organization, not limited to manufacturing processes </li></ul></ul><ul><li>C02 footprints will be priced </li></ul><ul><ul><li>Transportation costs, taxes and image </li></ul></ul><ul><li>Talent Sourcing is not limited by geography </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  10. 10. The Present is about “Survival First ” <ul><li>Downsizing was the answer to a ”standard temporary recession” </li></ul><ul><li>Investment mistakes are no longer eased </li></ul><ul><li>There will be no second try – no trial and error – its now or newer for most manufactures! </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  11. 11. Outsourcing 2.0 <ul><li>Geographic optimization – the core in business </li></ul><ul><li>Wages, logistics, CO2 </li></ul><ul><li>Reconfiguring the dividing lines </li></ul><ul><li>From blue and white to customer priority; close or distant </li></ul><ul><li>Process integration replaces pre-documentation </li></ul><ul><li>The time window = manageable opportunities </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  12. 12. Outsourcing 2.0 <ul><li>Geographic optimization – the core in business </li></ul><ul><li>- Costumer proximity </li></ul><ul><li>- Geography determines cost structures </li></ul><ul><li>- Logistics, hours pr. truck and HR streaming </li></ul><ul><li>- The CO2 joker </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  13. 13. Outsourcing 2.0 <ul><li>Reconfiguration of dividing lines </li></ul><ul><li>- Thin slicing the value chain </li></ul><ul><li>- The blue and white collar story </li></ul><ul><li>- Process integration replaces pre- </li></ul><ul><li> documentation </li></ul><ul><li>- It is all about costs – organizing competencies </li></ul><ul><li>remain the key </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  14. 14. Outsourcing 2.0 <ul><li>The time window – manageable opportunities </li></ul><ul><li>- Market requirements defines the real tine </li></ul><ul><li> activities </li></ul><ul><li>- Time zone geography </li></ul><ul><li>- Management around the clock </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  15. 15. Outsourcing 2.0 <ul><li>The top of the iceberg </li></ul><ul><li>- Low cost outsourcing was the take-off </li></ul><ul><li>- The geographical embedded advantages as </li></ul><ul><li>the corner stone </li></ul><ul><li>- Process integration in stead of pre- </li></ul><ul><li>documentation </li></ul><ul><li>Organizing competencies remains the key to success </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  16. 16. The Global delivery Model <ul><li>Geography </li></ul><ul><li>Dividing lines </li></ul><ul><li>Time window </li></ul><ul><li>All factors that moves slowly................. </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  17. 17. This is…. <ul><li>Something universal – not only applicable to IT companies </li></ul><ul><li>The condensated version of what companies experience, after having used the outsourcing toolbox on the distance </li></ul><ul><li>About today and the next 5 years </li></ul><ul><li>Not recommendations on what companies should do, but about what they actually are doing! </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  18. 18. The Traditional Outsourcing was… <ul><li>A viable tool for cost cutting </li></ul><ul><li>Wage arbitrage and production focus </li></ul><ul><li>Ultimately resulting in high quality goods at a low price – “German Quality at China Price” </li></ul><ul><li>Easy to copy – none of the tools were more than a Google-mile away! </li></ul><ul><li>Traditional Outsourcing gave short-run competitive advantages but created a “Red Queen’s Race” </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark
  19. 19. Outsourcing 2.0: The Global delivery Model with a geographic twist... <ul><li>Thank you for your attention.... </li></ul>The 2009 European Outsourcing Summit Marriott Chicago Downtown | September 22, 2009 © 2009 IAOP ® All Rights Reserved The 2009 European Outsourcing Summit 15-16 October, 2009  Copenhagen Business School  Copenhagen, Denmark

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