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129 stumpf

  1. 1. SOCIETY FOR SCHOLARY PUBLISHINGManaging Change in Publishing Environments FRANK STUMPF President & COO June 2, 2004
  2. 2. PRESENTATION OVERVIEW § Outsourcing § Definition § History § Trends § Critical success factors § Outsourcing in STM publishing space § Offshoring § Definition & key drivers § Benefits of offshoring § Trends & Myths § Processes that can be offshored § Offshore lifecycle § Vendor selection criteria § Top challenges in offshoring § Key takeaways § STM Publisher Comments22 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  3. 3. OUTSOURCING What is it ? Outsourcing is the delegation of one or more business processes or functions to an external provider who, in turn, owns, administers and manages the selected process(es) or functions based upon defined and measurable performance metrics. What can be Outsourced ? Critical, Non core activities Critical, Core activities Likelihood to outsource – moderate today, high Likelihood to outsource – low today, low tomorrow tomorrow § Accounting § Core competencies § Supply Chain Mgt § Managing market image/trademarks § HR/Administration § Caring for patients § Claims administration, Billing § Find/sell oil and gas Non Critical, Non core activities § Strategy Likelihood to outsource - high today § Patents and technology and tomorrow § Landscaping § Cafeteria § Laundry Source: Gartner Company estimates33 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  4. 4. A SHORT HISTORY OF OUTSOURCING § 1980s: tactical and immediate § Outsourcing of support services (payroll, food services, etc.) § A response to corporate restructuring, or a specific problem § Focus on ‘doing the same for less’ § 1990s: strategic outsourcing § Scope of outsourcing widens to include more ‘services’ § Realization that outsourcing gives wider control over all functions § Focus shifted from ‘supplier’ to ‘business partner’ § 2000s: transformational outsourcing § Now using outsourcing to redefine the business § Emphasis on the innovation that outsiders can bring to the business § Focus shift from ‘business partner’ to ‘agent of change’ Source: Michel F Corbett & Associates Ltd44 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  5. 5. TRENDS IN OUTSOURCING § Increased level of outsourcing within enterprises and among enterprises in an industry vertical § Enterprises are being courted by more service providers that claim outsourcing qualifications, requiring a deliberate analysis of sourcing drivers and a careful evaluation of market choices § Risk management and contact governance increasingly important. Customers are becoming more hands-on § Increasing end-to-end outsourcing offerings from vendors requiring deep domain skills and the ability to integrate BPO, IT and voice based interface § Offshore outsourcing gaining legitimacy and becoming mainstream. Anti- offshoring wave beginning to influence decision making55 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  6. 6. OUTSOURCING – CRITICAL SUCCESS FACTORS § Be clear about what you want to outsource, why you want to outsource and how you want to outsource - requirements/expectations/measurements § Service provider evaluation is more than presentations § References, expertise, flexibility, financial stability, compatible mindset § Ask tough questions: § Is there strategic synergy between the organizations ? Is there good chemistry ? § Is there an opportunity for growth - both volume and expanded services ? § Is risk really reduced ? § Is this a “win-win” ? § Does the provider have a solid management team in place ? § Does the provider have the technology environment needed to support “world-class” service ? § Can the provider leverage industry experience to devise improved solutions ?66 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  7. 7. OUTSOURCING – CRITICAL SUCCESS FACTORS § Understand the requirements for a smooth transition § Flexibility (both parties) § Teamwork/collaborative environment § Solid project management and project managers on both sides § Stakeholder buy-in § Outsource provider’s personnel should be trained to understand outsourcing organization’s business environment, culture and goals § Define benefits upfront—the “ROI” § Consider a Service Level Agreement77 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  8. 8. OUTSOURCING IN STM PUBLISHING SPACE § Some activities have long been outsourced: § Journal subscription marketing/administration § Distribution of print product to customers § Large parts of the production process—typesetting and printing § Copyright administration § Document delivery § More recently others: § Web product development and delivery system § More pieces of production/editorial88 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  9. 9. OFFSHORING What is it ? It is the relocation of labor-intensive service functions from high labor cost regions to lower labor cost regions. Offshoring often includes “near-shoring”, “best-shoring” and “captive offshoring” Key Drivers for offshoring § Increasingly competitive global markets in all industries leading to constant search for sustainable growth and competitive advantage thru lower costs and focus on core competencies § Separation of information from physical media leading to geographical independence § Global availability of low-cost computing power, web-based interconnectivity and telecom bandwidth. Globalization and use of English as the language of business in offshore centers § Standardized software packages such as SAP, MS Office & Windows, Acrobat and Oracle available globally § Most non core business functions (“services”) can be automated and carried out from remote locations § Rapid adoption of best practices based on landmark offshoring success stories of Fortune 100 companies99 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  10. 10. BENEFITS OF OFFSHORING Why are organizations doing it ? To meet the ever increasing challenge to grow, or at least maintain, competitiveness in today’s economy Benefits § More cost-effective § Improve service quality § Drive revenue growth § e.g. Increase the amount of follow-up on the receivables to increase collections § e.g. Offer customers mores service such as 24x7 support § Offshoring is a win-win game1010 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  11. 11. TRENDS IN OFFSHORING Offshoring is here to stay Outsourcing Industry Growth CAGR (2001 - 2008) 38% 26% 1.5% Onshore Outsourcing Offshore outsourcing Captive offshoring & Shared services USD Billion 2001 2008 Onshore outsourcing + Shared Services 3304 3664 Offshore Outsourcing 17 164 Captive Offshoring 35 182 § Offshore outsourcing delivery will show the highest growth § Cost & quality levels are the biggest drivers Source: Industry Analysts, TCS1111 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  12. 12. TRENDS IN OFFSHORING Recent trends in offshoring § Multiple offshoring destinations competing with each other. It is important to match skill sets required for the “outsourced process” with the capabilities of a particular location § Consolidation in the vendor space across industries as vendors look for opportunities to offer end-to-end capabilities § Risk mitigation and corporate governance are becoming increasingly important § Customers are becoming more hands-on in the actual execution of the outsourced arrangement § Many offshoring models emerging – near-shoring, best-shoring, hybrid models etc12 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  13. 13. OFFSHORING MYTHS Common offshoring myths § Less costly equals lower quality or slower process or less flexible service § Only really simple, basic activities § Sweat shops § Everyone’s doing it, so it must be good and I should do it too13 13 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  14. 14. WHAT CAN BE OFFSHORED Offshoreable processes Complexity STM Publishing Research Services Project Management § Content development § Product design services Technical Editing § CAD / CAM services HIGH Knowledge Services Subscriber/Author Customer § Customer analytics Service § Portfolio & risk management § Equity research Complex Copyediting Back Office MEDIUM § Finance and Accounting Software Application Devp. § HR and shared services § Technology support Multimedia Production Contact Services § Inbound customer relations & Basic Copyediting helpdesk Typesetting LOW § Outbound telemarketing § Collections Data Processing Keyboarding § Basic data entry § Transaction processing § Document management1414 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  15. 15. OFFSHORE LIFECYCLE Plan § Offshore Strategy § Portfolio Assessments § Sourcing models Source § Build, buy or outsource § RFI/RFP Management § JV/Supplier Due Diligence § Location/Supplier Selection § Contract Negotiations Manage § Transition Management § Program Management § Financial § Contract/Operations § Performance § Relationship § Benchmarking Source: TPI, Company sources15 15 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  16. 16. VENDOR SELECTION CRITERIA Offshore Process/methodology Referencable Clients Cost Scale & Flexibility Customer Service &Project Mgt Security/BCP Onshore Presence Technology 0 1 2 3 4 5 6 7 Source: Company estimates1616 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  17. 17. TOP CHALLENGES IN OFFSHORING Deciding what to outsource Selecting the right vendor Managing communication & culture Managing change within the organization Managing risk through metrics & transparency 0 1 2 3 4 5 6 7 Source: Company estimates17 17 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  18. 18. KEY TAKEAWAYS Offshoring is not a delivery option but a strategic competitive tool Selection of vendor should be based on sustainability and value delivery Focusing on change management and long term value delivery rather than success of a pilot is crucial Clear definition of objectives of outsourcing along people, process and technology adoption and organizational readiness is imperative Re-engineering of processes is important to obtain long-term value It is important to manage expectations by realizing that offshore is not a nirvana solution Contractual flexibility is important to engage and enable returns Source: TCS, Industry sources1818 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  19. 19. SURVEY – PUBLISHERS USING OFFSHORE SERVICE PROVIDERS § Participants: Elsevier, U. of Chicago Press, Rockefeller U. Press, Blackwell, AGU, Capital City Press § Major Objectives in Considering Offshore Service Provider § Price—Three listed as number one objective § Three indicated same criteria as onshore provider objectives § Speed; XML/SGML and electronic deliverables ability § Transition Concerns § Communications (time zones, cultural, language) § Quality § Internal employee reactions § Company and political stability § Steps in Choosing Offshore Service Provider § Reference checking and site visit § Samples, tests, proof of concept project § Do not rush the process1919 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS
  20. 20. SURVEY – PUBLISHERS USING OFFSHORE SERVICE PROVIDERS § Transition Process Lessons § Communication (regular, detailed feedback, personal visits, direct) § Commitment to relationship § Staff training and cultural sensitizing § IT support § Experience Relative to Perception (1-5 scale: worse to better) § Product/Content Quality - Better (3.8) § Speed/On-time Delivery - Better (4.2) § Service/Responsiveness - Better (4.5) § Innovation - Better (4) § Value for Money - Better (4.5) § Experience Relative to Onshore Service Providers (same 1-5 scale) § Product/Content Quality - Same (3.3) § Speed/On-time Delivery - Better (3.8) § Service/Responsiveness - Better (4.2) § Innovation - Better (3.8) § Value for Money - Better (4)2020 MANAGING CHANGE IN PUBLISHING ENVIRONMENTS