There is a plethora of consulting firms in the business firmament. Some are vertically integrated, others focus on specific functions and yet others on a niche expertise. Some are local and some are global. Some are household names and a few are unsung because of their tendency to be content. Spanning this enormous smorgasbord of choices in consulting seems an impossible task because if you desire focus, you miss the big picture and if you desire to be everywhere at once, you question expertise.
About 2 years ago, an explosive idea resulted from a few questions. What if a firm could develop a methodology that is independent of the vertical? What if a firm could demolish geographical barriers that are usually the result of mobility and cost? What if a firm could tap on the desired expertise or domain on a need basis? And finally, what if a firm could actually go out on a limb in regard to the concerns of its clientele? The idea was born out of intense intellectual churning at a time when corpses of corporations and limping maimed companies threatened the comfort of the remaining few.
To midwife the birth of a new era is never easy. A stellar team of seasoned partners and venture capitalists decided to give life to high ambition - Put together a model that overcomes the limitations of traditional IT outsourcing without sacrificing the end game of unprecedented value. The outcome was a modest start to the path-breaking idea of Second Generation Outsourcing or SGO, a mode of consulting that was impossible without the now available information technology advances.
With great hope, the genie was unleashed. In a span of two years, SGO now spans 17 countries, has won many industry accolades besides garnering significant media attention. More importantly, it is posting growth with a far smaller permanent employee count than first generation outsourcing. An idea whose time has come can be unstoppable.
What is this idea of SGO? What is this idea that has captured the imagination of its converts? What is this idea that is often met with an incredulous, “You may say it, but you can't mean it.” Rather than claiming to be a one stop in-house solution for all kind of business and IT solutions, SGO partners with best of the experts in varied verticals and horizontals such as manufacturing, retail, convergence, supply chain and logistics, web 2.0 to give significantly enhanced business value to the customer through a superior solutions architecture. That is not all; here is an enterprise philosophy that clearly says to its clientele, we win when you win.
At first blush, this seems like all the other current promises. But sit back and take in all it has to say, and a different picture emerges. If you say, they probably have on their rolls an expert or two, for every nitty-gritty of business, the answer is an emphatic, “No!” If you say, they probably bill you by the hour for some dedicated professional, the answer is again “No!” Or, you feel they just have infrastructure in many cities around the globe that they leverage. Or perhaps, you predict their revenues are largely made up of professional fees that are paid off on a fixed calendar time. No and No. All of these carry baggage from first generation outsourcing origins. While SGO represents continuity with some of the strengths of first generation outsourcing, it also represents a radical leap from the current era in many other senses.
While the ingredients of SGO seem obvious, the secret sauce is in a closely guarded methodology, NextGen Sourcing, by its pioneer. The pioneer uses its methodology to blend several consulting skills into a business solution that is holistic and attempts not to leave out any untapped benefit. For example, IT infrastructure is viewed as architected strategic business solution rather than merely firmware. Secondly, it uses a wide network of partners, local and global, and divines the expertise needed from time to time. That is to say, it can tap on specific strengths required to execute the project while it focuses on the essential skill of success viz. program management. Thirdly, it demands its revenues from business risk and reward sharing that is settled prior to the consulting engagement. Once the consultant delivers the solution, to the satisfaction of the company, it gets a certain percentage of the value accrued to the customer as a variable fee.
The benefits of SGO are remarkable. It enables the client choose from a menu of business solutions that provides perspective into other possibilities of leveraging consulting. The menu, per se, is not static in detail or in content, as the exact skill required can be mined from across a wide network. This enables, say, a phase of solution architecting to blend seamlessly into solution implementation. Further an IT solution for a company can be viewed in the light of different functions to maximize returns. For example, a purely HR solution can tie into business performance measures in operations through cascading goals effectively. On the other hand, a purely operational intervention into an aspect such as decision making speed can open up avenues for automation.
The other benefit directly derived from having a partner network to tap on for peripheral skills is that of a single-point program management. A client could potentially have an initiative launched enterprise-wide that requires expertise in several niche areas and yet have its interface issues addressed effectively. Often, going over the common interfacing areas and arriving at a workable solution is almost impossible between different geographies, functions and levels in the organization. In such cases, making the problem apparent in all its dimensions and working out a meaningful middle-ground requires highly skilled project and program management. By being the means to tap on the network, SGO effectively manages the end.
The third benefit, despite being met with skepticism and disbelief at its introduction, is that of value- based pricing. Clients often look at this model of pricing with suspicion and may get stuck in first generation straightjackets. This aspect of SGO quite simply states that consulting revenues, in larger part, will be based on the client achieving a certain level of business performance. This may be difficult to comprehend initially. Take inventory for example. Stock-taking as a routine exercise may fail to produce the exact impacting inventory as it may be hidden at different points in the process. An overall view is possible by an audit that is impartial to the location of the inventory. Then, deciding to attack it with best practices such as IT-enabled JIT/ Kanban, Self-Certification, 3 PL, supplier fitment, etc. can result in vastly improved inventory figures. In this example, SGO takes a piece of the gains realized by the client through reduced inventory.
The incubating minds for SGO and its consulting pedigree can be traced to eight partners, who were instrumental in building a US$ 200 million consulting and outsourcing business from scratch in about a decade at one of India's IT giants. Today, after almost two years of inception, this SGO pioneer has more than 40 delivery partners in 8 countries in its ecosystem. The company today has a 5000 strong workforce along with its various partners serving customers in 17 countries. The company has shown strident growth in the first financial year 2007-08 and has already set up offices in Mumbai, Chennai, Singapore, the US, and the UK. They are also a Carnegie Mellon authorised organisation for providing hands on support for implementing eSourcing Capability Model for Service Providers (eSCM-SP)
Who engages SGO consultants? Whoever seeks measurable performance improvement and who would like to be a sustainable result of integrating significant business interventions such as regenerating strategy and reengineering business processes with leveraging IT investments. Clients engage SGO consultants as they believe SGO can strengthen existing competitive advantages and find some new ones. The portfolio of its work for clients ranges from (hard to believe) delivery of simple information systems to devising new country entry strategies. Regardless of the industry - manufacturing, convergence, logistics or healthcare - SGO holds the key to get the best expertise and execution at costs that are a result of value. Perhaps the answer as to “Why engage an SGO consultant?” is contained in the SGO model itself. The next generation of consulting is here. So is the next generation of IT outsourcing. We walked you through the ABC's and “Y?” of it. It is evident that the end or the “Z” of SGO is not in sight and may not ever be written.
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Date Published :
Jan 10 2009