Rising operating costs, tightening budgets, and new dependencies on cloud and platform providers are changing the rules of the game in IT sourcing. What was primarily a matter of price negotiation when noventum’s sourcing consulting practice began in 1998 has now become an ongoing task: Contracts must allow for adjustments, governance models must be effective, and incentive systems determine quality, speed, and innovation. This article examines the economic mechanisms behind typical friction points in provider relationships and explains why transparency and controllability are now more important than the supposedly best price.
Merging companies is a complex process in which many factors need to be taken into account. One of the most important aspects is human resource management. However, HR issues are often not given sufficient consideration during purchase negotiations.
The experienced people & culture consultant Michaela Gottwald provides valuable insights into why human resources should be focussed on at an early stage and what challenges HR management faces in post-merger integration.
Even though IT outsourcing regularly becomes a topic (mergers, acquisitions, next generation sourcing ...), it needs a lot of expertise and experience. Without good project management, IT outsourcing will not be a success. Holger Bredenkötter has been working as an IT consultant on this topic for more than 20 years. In his article, he explores the question of why IT outsourcing projects always represent a state of emergency for companies, what IT managers need to pay attention to when the time comes and why you actually need four project managers.
IT outsourcing is standard. If a company decides to have its IT operated by a service provider, this is not an unusual process. And yet the path to the sourcing partner is often not easy and burst sourcing contracts are not uncommon. But what has gone wrong if the partnership is not a real pleasure? IT tenders are the supreme discipline on the way to finding the right service provider and this is where things often go wrong.
When two companies merge, two technical worlds usually become one. Higher efficiency, scaling effects and the basic idea of "one company - one system" are the guiding principles of any integration. Since a large-scale IT integration cannot wait for every side event, smaller special applications are often dragged along and end up in isolation. This pragmatism helps at first, but subsequently causes problems and leads to a dead end.
Even if the new IT provider and the customer have already worked together successfully in previous years, the renewed service takeover after a provider intermezzo is still not a piece of cake and can become a lesson. noventum consulting has accompanied such a case in an advisory capacity and the realization on all sides after successful project completion is: the combination of a provider change with extensive system changes must not be overstretched if time pressure is high at the same time.
According to the World Economic Forum up to 10 percent of the global gross domestic product will be generated via blockchains by 2027. Reason enough to take a good look at this technology already today. The upcoming opportunities of blockchain technology have, in fact, found their way into discussions on the executive level. Especially in terms of the alignment of the long-term IT strategy, the topic of blockchain should be taken into consideration in order to be able to identify early on opportunities for your own company. However, decision-makers should have a clear understanding of the potential impacts of the technologies on processes and industries.
The outsourcing market already reached ever new record levels in the past, both domestically and internationally. The number and complexity of provider agreements keeps increasing, so do the challenges for the IT procurement department. Not only does the latter have to master shorter sourcing cycles, but ever more frequently said department is also taking on the role of provider management. In the future, the IT procurement department – as central bearer of know-how – will decisively co-determine what’s going on in sourcing in the company. Whether or not the department assumes the leading role will, to a certain extent, depend on who within the company is one step ahead in terms of specialist knowledge.
Over the past few years, more and more IT service providers have relocated services to countries with lower wage levels, especially India. The aim of this offshoring is to meet the increased competitive and cost pressure of the markets. However, many companies had to realize after outsourcing that the expected savings potentials can only be partially realized. As great as the business incentives are, as high are the demands on the provider management of these offshore projects. Due to intercultural differences, serious inefficiencies can occur in such projects. In addition to purely organisational challenges, it is especially the large cultural differences that have a decisive influence on the success of an offshore project.
Digital transformation is everywhere! As if the IT-technological development of the last decades had only been an insignificant foreplay, digitization is on everyone's lips. No socially relevant field remains unaffected by this and it seems to be all about the question of speed. The demand for agility and flexibility sets the pace, and this has already clarified what the dynamics of digitization are aimed at. The different players are quite differently positioned and IT departments in companies are often unable to keep up with the pace on their own. Sourcing to IT service providers can relieve the burden on them, whether they are external service providers or internal service providers in larger groups. However, the ever-increasing expectations from business about the speed and scope of digital transformation are also changing the relationship between IT departments and their service providers. In the future, they will have to move much closer to the specialist departments in the companies in order to be able to deliver precisely and quickly.
Cloud computing is currently the technological answer to the many calls for agile IT environments in times of digitalization. However, the market is constantly changing and not a few cloud projects fail due to lack of preparation. The call for a sophisticated cloud strategy and secure procedural models is growing. Together with Microsoft and CAST, the market leader for software analysis and measurement, noventum consulting GmbH has developed a solution for these requirements. The professional partnership between the three companies culminates in a workshop offering for companies that want to test their way into the cloud.
Even in centrally managed international corporations, national or local developments have repeatedly occurred over the years, which run counter to a uniform approach. Such developments are often pragmatic and good, often they are simply expensive. Especially in areas driven by technical developments, such a "wildness" is not uncommon. In this sense, IT sourcing in corporate groups is sometimes confusing.
Companies, public institutions, and state institutions are feverishly dealing with strategies for the digital age and are exploring how this technological megatrend is carrying changes over into all areas of life. The insight is taking a hold that any and all structures and processes will have to endure the digitalisation check-up. In this, sourcing strategies are also prominently encountering the pressure to change. However, a lot of companies do not yet have such strategies to date, and run the risk of losing control in the maelstrom of changes.
Since Indian companies have, for a long time already, been successfully acting internationally as software producers, outsourcing deals have, in recent years, increasingly be awarded to India. In the day-to-day work of provider control, cultural differences become apparent that can make a successful cooperation considerably more difficult. German managers and administrators must be aware of these differences in order to do a good job with the Asian partners. Outsourcing expert Tamara Wagner of the IT management consulting firm noventum consulting has made remarkable observations in the cooperation with large Indian providers.
The change from one IT provider to another is always a demanding project. The more complex an IT landscape is, the higher the requirements posed to project management and communication between the companies involved are. In mid-2015, a new contract was signed with a new service provider the hosting of the IT of ista International. The change was to be completed by the end of May 2016. noventum consulting assumed responsibility for the superordinate management of the transition project. In the end, the committed and professional cooperation of all parties involved allowed for a successful transition already 4 weeks ahead of the planned schedule. Very satisfied with the perfect timing and with the financial impacts associated therewith, the new provider and ista now have tackled the first steps for the pending transformation.
In the selection of their IT provider, customers must pay particular attention to quality and costs. Especially the question of cost is quite often the triggering factor to start tackling a sourcing project. Especially in the assigning of commodity services, a lot of companies then do not see significant differences between the numerous providers and consider additional decision criteria other than price and quality to be insignificant. What is forgotten in this quite often is that a well functioning cooperation also includes a good communication. In day-to-day business subsequent to the signing of the contract, a lot of different employees of the customer and of the provider also have to clarify controversial questions with each other. If this does not work, the strong focusing especially on the cost factor can quickly turn out to be a "bottomless pit". What initially appeared to be economically lucrative becomes very expensive mid-term. What is to be concluded? In the process for selecting a provider, one additional factor is gaining increasing importance as a decision criterion, the so-called "Cultural Fit".
With the experience of many successful sourcing projects in more than 15 years of IT consulting, noventum consulting has developed a process model with which companies can develop IT sourcing strategies.
The outsourcing of the complete IT of a medium-sized company as well as the offshoring of the data center operation of a DAX group will be presented by the responsible IT managers of the companies Nowega and Merck at the 1st Noventum Sourcing Day, which will take place on March 25, 2015 from 3 pm at the Mercure Hotel in Düsseldorf. The IT management consultancy noventum consulting, specialist in the field of IT outsourcing, invites CIOs, IT managers, IT purchasers and provider managers to this free information event.
„Never change a running system.“ This motto is known to every IT employee. But, what to do when the system does not function perfectly anymore? Customers complain about the lack of quality. The management complains about ever-rising IT costs. An IT landscape that often has developed over years in small steps is no longer meeting the requirements and is up for discussion. Now, the management of IT has to think about changes. But what should be changed? Are small corrective actions sufficient or does it have to be more
As it is known, in a Microsoft infrastructure, access to resources, data as well as applications is controlled via Active Directory (AD). Depending on how complex the business structures mapped are, AD not only controls access at 1:1, but also describes the different levels of the trust relationship between individual domains. A mostly complex system that reflects the inner dynamics of a company like a mirror image.
To simplify the reading of this article mainly the term transition is used for both transition and transformation. Transition projects where IT Outsourcing (ITO) providers are switched are highly complex, resource intensive, challenging and risky. Typically, the ITO customer has outsourced the required knowledge to the incumbent provider. The new provider has not yet the required knowledge to provide IT services as needed at the beginning of the transition. Therefore, both parties, the ITO customer and the new provider rely on the support from the incumbent provider.
In terms of outsourcing, the opinions were split for a long time: the big ones among the companies obtained room to manoeuvre for their core business by outsourcing functions. Small and medium-sized enterprises (SMEs), however, shied away from this step. Insufficient outsourcing experience, worrying about their business-critical data, fear of intransparency and dependency were hindering a good many in terms of handing tasks over to third parties. Now also available in German, the first international standard for this subject area – DIN ISO 37500 „Guidance on outsourcing“ – standardises the process of outsourcing.
Be it floods, technical accidents, or complete power outages: nobody is immune to catastrophes and ever so often companies are affected as well, whose production stagnates as a result or even comes to a grinding halt. In this, the survivability of a lot of business operations is dependent on continuously available IT services and their underlying IT infrastructure.
As part of a larger IT outsourcing project in Singapore, Tamara Wagner, IT Outsourcing Consultant at noventum, visited the Asian computer centre of its German client. From an IT point of view, this client represents the German company in Asia on the Germany-Singapore-USA axis.
The partners have already completed the first successful joint projects, and another prominent IT outsourcing project, in which both companies are involved with their consulting expertise, is currently heading towards completion. Now, Diapharm and noventum consulting have sealed their cooperation with a cooperation agreement.
In 2015, the internationally standardised ISO standard ISO 37500 will regulate all essential details in outsourcing. Experts from 42 nations are participating in the development of this standard that is recognised worldwide, among them Frank Wübken, IT outsourcing expert and management consultant at noventum consulting. Frank Wübken is participating in the development of the standard as "Head of Delegation" of the German participants. In this function, he participated in an international conference in Delhi, India, at the end of February.
Everybody is talking about outsourcing, scenarios for sourcing models are state-of-the-art.
If the internal IT service provider decides to outsource parts or whole areas of its provision of services to one or more external providers, i.e., to initiate an outsourcing project, then a lot of framework conditions are changing for it.
Not all IT providers are alike. The customer structure and hence the portfolio make up part of the distinction, as well as the actual position in the technical upgrading cycle which all IT providers are more or less subject to. The consultants at noventum consulting have been working in the IT banking environment since the mid-1990s. In an editorial interview, noventum Management Consultant Markus Ristau and Stefan Wolters put together key data for a situation analysis dedicated to this special kind of IT Provider.
