Outsourcing Models

Let’s first understand what is outsourcing and then will move forward to different outsourcing and pricing models available.

What is Outsourcing?

A practice used by IT and manufacturing industry where they transfer some work to the third party vendors rather than completing it internally. The main reasons why companies opt for ‘Outsourcing’ is to save the production costs or when they don’t have the required skills internally to complete the work. It sometimes involves transfer of employees and assets from one organization to another and not always.

How Outsourcing works in IT industry?

In traditional IT outsourcing methods, a vendor used to provide the services like managing servers, monitoring networks, databases and developing applications and customer used to pay for the services used either at fixed price, as per use basis (cost and material basis) or cost plus basis.

Nowadays customers’ expectations has increased a lot, now they want more value from the IT Suppliers or vendors. Suppliers also expect to have more margin values from the services provided and it has given birth to various new pricing models for the services.

Outsourcing Models:

• Staff Augmentation: It is one of the simplest model used by companies where they expand their existing staff with the outsourced staff. It involves high involvement from client to supervise the augmented staff i.e. client is responsible for project management and technical leadership. The responsibility of the augmented staff is only to develop the quality software and perform the testing of the software if required. In this model there is very less innovation involved from the augmented staff as they have been given a set of clearly defined responsibilities and expectations by the client.

• Build-Operate-Transfer (BOT): It is also termed as ‘BOT’ model. In this model, a company lets an outsourcing vendor establish an offshore development center for them. This model is opted by the companies where they want to have optimized costs and access to a large pool of skilled professionals. Here the outsourced company keeps the core competencies with them only. The offshore partner have local knowledge and relationships, while client do not have to learn the local intricacies of doing business, hiring, or finding office space. They simply focus on their core business while the offshore partner takes care of development of the offshore center and transfers back the ownership to the client company when they are ready for it. 

It conserves client’s capital expenditure, reduces the operating risk and gives them the ability to launch a complete end-to-end solution in a short duration.

• Offshore Development Center (ODC): It is similar to BOT model with only one difference that in the end the ownership is transferred to client whereas in ODC it remains with the vendor. It helps outsourcer to accommodate a high variety of projects and activities such as new product development, legacy modernization and maintenance, testing services and other long-term activities whereas the ODC staff is managed by outsourcing vendor. Here the outsourcer has to take care of initial knowledge transfer between the company and the vendor. The outsourcer gets a consistent and dedicated resources for a specific duration (contract duration) and the infrastructure costs can be reduced by over 40%. 

• Project Based/ Tactical Outsourcing: Whenever a business need is identified, the outsourcer looks for the offshore resource vendors if they don’t have the bandwidth to develop it in-house. This model gives high level flexibility and focus but with a higher cost and knowledge transfer challenge. This model gives outsourcer the access to a pool of skilled professional which they need for a specified duration to match the requirements. It is very easy for the outsourcer to change the staff as per the needs. Outsourcer has the ability to terminate the contract at any point of time if they are not happy with the quality of services. The outsourcer need not have to bring the specific knowledge internally and get in to the cumbersome process of hiring as the outsourcing partner does the same for them. 

The main difference between offshore development center and project based outsourcing is that the resources are dedicated to the outsourcer 100% for the specified duration.

Outsourcing Pricing Models:

Selection of an outsourcing pricing model depends upon the organization’s budget and cash flow requirements. These days’ outsourcers have multiple options to pick from various models available

• Fixed Rate Pricing Model:  It is one of the most commonly used model in Industry. Both the parties agrees for a fixed price after discussing the scope and requirements of the project. This is helpful for the projects which has defined scope, objectives and a predefined set of requirements. The service provider and the outsourcer, both parties are aware of each other’s skills, capabilities and duties.

• Variable Rate Pricing Model: In this model, the outsourcer pays a fixed basic rate and have the flexibility to pay additional for additional services or can even pay less if the market price goes down. This method is best when you want to try out a new vendor, if you are satisfied with the quality of work you have to pay little additional for additional services.

• Time and Material Model: In this model, one has to pay as per usage i.e. pricing is based on time and material used to complete the project. It is mainly used for application development and maintenance projects which have long time duration. It is also known as Cost and material model. The outsourcing company may agree upon monthly/hourly rates depending upon the skills and experience of the resources engaged for the project or if any non-standard software or hardware is installed to meet their requirements. It is very beneficial for outsourcer as they can modify the specifications at any point of time based on the changed business needs and market requirements and can get the desired experience without any hassles of searching the required skills and hiring them.

• Cost plus Profit Pricing Model / Open Book Model: In this model, the outsourcer has to pay a fixed amount for the services used along with a pre-defined percentage or amount as agreed by both the parties. Here outsourcer knows exactly how much he is paying and for what he is paying i.e. its transparent model and hence also called as ‘Open book’. The only drawback of this model is its inflexibility to incorporate the business objective or technology changes.

• Incentive Based Model: This is a hybrid model which is used along with Fixed Price or Time and Material Model where the outsourcer decides to pay some bonus or incentive to the service provider at an agreed rate when they achieve some key metrics which adds value to business such as early completion, project completion at a lower cost than the estimated one and delivery exceeding service levels specified in contract. In some cases, outsourcer also adds a clause of penalty if delivery is delayed or metrics are not achieved and business faces loss because of that.

• Shared Risk/Reward Model: It is not very popular model and is used by the companies to fund new products and solutions with a deal to share the profit between the service provider and the outsourcer. Outsourcers has an advantage here that if the product or business ideas fails then the loss is divided among both the parties. Another advantage of this model is that Outsourcer can easily take the risk of launching new innovative ideas and solutions without much worrying about the loss and risk as it is shared by both the parties.

• Pay as you use/ per unit Model: This models offers the outsourcer to pay only for the services used i.e. a unit based rate is set and payment is made as per usage. This model is beneficial for the business which has variable demand based work and require random number of resources like maintenance services. At times, the services usage is at its peak and in off-screen it is hardly used service.

There is no single model which is the best one. The selection of outsourcing model depends upon the business requirements, business constraints and the budget. Both the parties should discuss together to find out which model will work best for them and which pricing model will serve their interests.

Aashima Chetal is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, She actively contributes to the areas of Technology and Information Security. She can be contacted at:aashima.chetal@spluspl.com

Sourcing Advisory As Service

Sourcing Advisory:

Sourcing advisory as the name suggests is the outsourcing of the advice to the third party or within the company during the process of managing the sourcing required at the time of developing a software or tools and applications. Advice could be seek during outsourcing, offshoring or global sourcing. Many management consulting firm’s now-a-days offer sourcing advisory as a service moreover some independent freelancing consultants also provides sourcing advisory services.

SaaS (Software as a Service)

Since the first windows came into existence, whenever someone talks about “Software”, we combine it to the software package that comes with an installation compact disc or can be downloaded from a website, with the .exe file one can install the software locally on his/her machine and once installed, it can be launched. The concept here was more of a packaged “Product” that user could purchase and use on his system.

This was well until the time wherein a user performed all his work on a single independent machine. But the scenario changed as the user became mobile and connected through various devices like his tablet, laptop, smartphone, etc. it became cumbersome for user to access the data on all devices and at all times. Thus this was the time to give a new definition to “Software”.

Modern day Scenario of SaaS

SaaS is like a cloud of applications/software’s and tools which are hosted by the owning organization or company whom a user can access using his web browser from any device which can be connected to internet. The benefit over here is it can be used from anyplace and from multiple device and at any time, this makes SaaS a versatile and a robust methodology for accessing software’s moreover only a one time subscription is needed to activate the access and it can be re-validated after its expiration.

SAaaS (sourcing advisory as a service)

Similarly SAaaS has also emerged out in the way SaaS has, now-a-days there are tools available with automation which helps provide the SAaaS, services, they assists users to observe and see the trend in data and services. Sourcing advisory as a service is still relatively a new concept, so it’s going through different transitions and testing’s so as to make them fool proof.

Some of the advantages of SAaaS are mentioned below:

•Providing internal audits so that everything be in compliance

•Assisting consumers manage and established outsourcing partnership 

•Helping buyers through different levels of the transaction

•Assisting client on management of processes

•Suggesting clients identify processes to be outsourced or off shored 

•Providing new analysis & research in context to the sourcing industry

•Advising buyers identify and select potential suppliers (provider selection)

•Enhancing sourcing contracts re-negotiate or renew transactions

SAaaS is a new age of service delivery model that has evolved as a result of changing dynamics of the way people and business operate in the new world of inter-connectivity. The SAaaS has a vast scope in the future as right now it’s just have started to spread in lengths and breadths, so one can hope it will soon be a vital part in IT service industry.

About Author:

Rohan Bhardwaj is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, he actively contributes to the areas of Technology and Information Security. He can be contacted at: rohan.bhardwaj@spluspl.com

Requirement Gathering Techniques.

Before starting with techniques of gathering requirements, let us understand what is Requirement and its types.

What is Requirement?

- A capability that an intended product/software must possess to satisfy the         customers need, objective and goals. Requirement is ‘What’ system should         do (functioning of the system), ‘When’ it should perform those functions and       ‘How’ the system should behave i.e. what and how system should behave in        different conditions.

- A key component of any business project which provides objective ways to         measure the project’s success. 

Types of Requirements:

• Business Requirement: 

- A High-level requirement defining the business’s objectives, goals and vision. 

- Providing the scope of a business need or problem that needs to be addressed    through a specific activity or project.

- Must be defined clearly at high-level.

• Functional Requirement: 

- A detailed breakdown of the Business Requirements explaining how the              system outcome of a project will operate to meet the specified business              requirements.

- It is basically the series of steps that different users will take in the new             system.

• Technical/ Non-functional Requirement:  

-  Pertains to the technical aspects that your system must fulfill, such as                 performance-related issues, reliability issues, and availability issues. 

- Also called as service level requirements or quality of service (QoS)                    requirements.

You can also categorize requirements as:

• Conscious Requirements: stakeholder knows the requirement.

• Unconscious Requirements: stakeholder knows the requirements and thinks it    is obvious and need not have to explicitly mention it. 

• Undreamed requirements: stakeholders does not ask for, either because they think they are not possible or they are new ideas that have occurred to them.

Techniques to Gather Requirements:

When it comes to business requirements gathering, various techniques are available and each technique has its own merits and demerits. Commonly used techniques are:

1 Questionnaires

Questionnaires are much more informal, and they are good tools to gather requirements from stakeholders (dozens/hundreds/ or thousands of people) across geographical areas or those who will have only minor input into the overall requirements. It has a series of questions which helps eliciting information from users. 

Survey- is one of the types of questionnaire. It insists the users to choose from the given options i.e. YES/NO, Agree/Disagree or ratings. A well designed survey gives a significant amount of focused data in a short period of time. It should not be utilized for prioritizing of requirements or features.

 

2 Interviews

One of the commonly used techniques where you have zero chances to satisfy the stakeholders and users’ needs if you do not know their expectations and goals. You also have to understand the perspective of every interviewee, in order to properly address and weigh their inputs. Good Listening skills is the key to get the best results by using this technique.

3 Focus Group & Workshops

A focus group is actually gathering of people who are customers or users representatives for a product to gain its feedback about opportunities, needs, and problems to determine requirements or it can be collected to refine and validate the already elicited requirements. It reveals a wealth of detailed information and deep insight.

Workshops are popularly known as JAD or joint application design and can be efficient for gathering requirements. These are more organized and structured than a brainstorming session where the involved parties get together to document requirements. A workshop with two analysts is more effective than one in which one works as a facilitator and the other scribes the work together.

4 Observation

It covers the study of users in its natural habitat i.e. you work with the user as Shadow. By watching users, a process flow, pain points, awkward steps and opportunities can be determined by an analyst for improvement. Observation can either be passive or active.

• Passive observation- provides better feedback to refine requirements 

• Active observation- works best for obtaining an understanding over an existing   business process.

5 Document Analysis- studying Documentation

Evaluating the documentation of a present system can assist when making AS-IS process documents and also when driving the gap analysis for scoping of the migration projects. Chunks of information are mostly buried in present documents that assist you in putting questions as a part of validating the requirement completeness.

As per the ‘BABoK (Business Analyst Body of Knowledge)’, additional techniques are: 

1 Interface Analysis

Interface for any software product will either be human or machine. It is an elicitation technique that helps to identify interfaces between solutions/applications to determine the requirements for ensuring that the components interact with one another effectively i.e. requirements needed to integrate software into its new environment.

2 Prototyping

Prototyping can be very helpful at gathering feedback. It comprises of collecting the requirements and building a prototype. It gives an idea to the user about how their system will work and look like and based on the feedback received you can improve the system by adding/amending the requirements on iterative basis until users finalizes it.

3 Brainstorming

It is utilized in requirements elicitation to gather good number of ideas from a group of people. It is used in identifying all possible solutions to problems and simplifies the detail of opportunities. In short, it is all about:

• Idea generation and

• Idea reduction and voting

4 Reverse Engineering

When you do not have the documentation available with you for an existing project then you review the source code to figure out what actually is happening and is called ‘Reverse Engineering’. It will not determine what thing(s) went wrong with the system and what a system must do.

Conclusion: 

You cannot use a single technique to gather the requirements for a project. It is always a combination of multiple techniques. Therefore the usefulness of a technique is determined by its need and the kind of advantages it offers in a particular project.

Asshima Cheetal is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, She actively contributes to the areas of Technology and Information Security. She can be contacted at:aashima.cheetal@spluspl.com

Risk Analysis Techniques

Risk: Project risk can be defined as any uncalled event or a condition that, if occurs, impacts at least one of the project objectives. 

Risks can either be positive or negative. 

•  Negative risks are unwanted and potentially can cause serious problems      and spoil the project.
•  Positive risks, on the other hand, has a positive effect on the project such    as increasing the Rate of interest or finishing the project ahead of time.
•  Once the risks are identified, we proceed with their analysis. Risk Analysis  determines which risk factors will potentially have a higher impact on the    project and, therefore, should be managed by the stakeholders correctly.

The various techniques for risk analysis are as under:

1.Brainstorming

It is largely used in formative project planning, which helps in identifying and postulating risk scenarios for any given project. 

Process:
Considered as an effective attempt to help people think creatively in a         group without having a fear of being criticized by others. 

• Each member tries to build on the ideas given in preceding comments. 
• Criticism and disapproving verbal or nonverbal behaviors are not allowed. 
• The main intention is to encourage as many ideas as possible, which in turn, triggers the ideas of others.

Best suited - To identify maximum amount of risks possible in a project, as employees build on each other’s ideas, producing much greater output than they would as individuals.

2.Sensitivity Analysis

This is the simplest form of Risk Analysis. 

Process:

• Analysis of the effect of change of a single variable in a project is done, and a corresponding value is placed for the same in the project. 
• This uncovers uncertainty and risks for that project i.e. the sensitivity of the project is exposed.
• Generally, such type of analysis is performed only on those variables which have higher impact on cost and time to which the project is most sensitive.
• Best suited when attempting to determine the actual outcome of a particular variable, if in case it differs from what was previously assumed. The analyst can determine how changes in one variable will impact the target variable by creating different scenarios.
• For example, an analyst might create a financial model that will value a company's equity (the dependent variable) given the amount of earnings per share (an independent variable) the company reports at the end of the year and the company's price-to-earnings multiple (another independent variable) at that time. The analyst can create a table of predicted price-to-earnings multiples and a corresponding value of the company's equity based on different values for each of the independent variables.

Weakness: 
Variables are treated individually, which limits the combinations of variables to be assessed

3.Probability Analysis

Probability analysis overcomes the limitations of sensitivity analysis by mentioning a probability distribution for each variable, and then assessing situations wherein, any or all of these variables can be modified at the same time. 

This analysis answers 3 questions:

     • What can go wrong?

     • Severity of the potential detriment?

     • How likely it is to occur?

        Best suited when companies have a large amount of data.

4.Delphi Method

A panel of experts arrive at a convergent solution to any specific problem, so as to form a consensus of opinion. This is very useful for probability assessments of large and critical risk impacts related to the future. The first and most important step is to select a panel of people who have experience in the area of issue. 

It is advisable that the panel members should not know each other’s identity and hence the selection process should be conducted at different locations.

The responses along with opinions and justifications, are evaluated and a statistical feedback is given to each panel member in the next iteration. The process is ongoing, until group responses converge to any particular solution.

Best suited - For Business Forecasting as forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups. Also decisions are not biased which keeps any one person from having undue influence on the outcome.

5.Monte Carlo

The Monte Carlo method is simulation by means of random numbers. It is a simple yet powerful way of incorporating probabilistic data. 

Basic steps include:

(a) Define a domain of possible inputs.

(b) Generate inputs randomly from a probability distribution over the domain.

(c) Perform a deterministic computation on the inputs.

(d) Aggregate the results.

Monte Carlo method determines best case, most-likely, and worst-case estimates for any given scenario.

Example: 

Consider creating Most-Likely, worst-case and best-case estimates for the duration of a project. For each of the above mentioned scenarios, the project manager lists out the probability of occurrence.

• Most-likely scenario: Duration will be of three days (70% probability), but it can also be completed in two days (10%) or even four days (20%)
• Worst-case scenario: 60% probability of taking six days to finish, a 20%   probability each of being completed in five days or eight days.
• Best-case scenario: 80% probability to complete in four days, 5% probability to complete in three days and a 15% probability to complete in five days
• A series of simulations are performed on the project probabilities using the Monte Carlo Analysis. The simulation is to run for a thousand odd times, and for each simulation, an end date is noted.
• Once the analysis is completed, there would be no single project completion date. Instead a probability curve is formed which depicts the likely dates of completion and the probability of attaining each.
• With the help of this probability curve, the project manager informs the senior management of the expected date of completion. The project manager would choose the date with a 90% chance of attaining it.

Best advised - To use the Monte Carlo simulation to analyze the likelihood of meeting objectives, given project risk factors, as determined by our schedule risk profile. It is very effective as it is built on evaluation of data numerically and no guesswork is involved.

About Author:

Geetika Varma is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, She actively contributes to the areas of Technology and Information Security. She can be contacted at: geetika.varma@spluspl.com

Customer Relationship Management

All the companies want to increase their rate of sales and quality of their services/products continuously to higher and higher points. 
Hence, nowadays, it is almost impossible to unlink CRM and success of the business.

Now, let’s understand what exactly is Customer Relationship Management? 

Peter Drucker rightly said “The purpose of a business is to create and keep a customer.” this is exactly what CRM is all about!

Customer Relationship Management (CRM) is an approach to manage a company’s interactions with current and future customers. It often involves use of technology to organize, automate, and sync sales, marketing, customer service and technical support.

Broadly, it’s the relationship between the organization and its customers. Customers are the backbone of any organization, be it a global corporation or a small trader with a handful of regular customers.

Successful organizations make use of three basic steps to build customer relationships:

• Decide on mutually satisfying goals 
• Set up and maintain customer rapport
• Generate positive feelings in the organization as well as for the customers

1 CRM conditions
To have a good CRM, we need to consider set of conditions such as- wants and needs of both the parties:

• For organizations- Make profit to survive and grow
• For customers- Good service, quality products and an acceptable price

2 Need of CRM

• To increase profit- By providing better services to customers than our competitors
• Reduced costs, wastage, and complaints
• Reduced staff stress as services and relationships improve 
• Instant market research, as customers give us direct and constant market feedback on our products, services and performance, far better than any market survey.

A good CRM grows our business due to following reasons:

• Customers stay with us longer
• Referrals to new customers increase, from increasing numbers of satisfied customers 
• Organization’s service flows are more efficient as teams work happily 
• Organizations should aim to be more customer-centric. 

Let’s understand this better with a simple example: 
Previously, the old viewpoint in the industry was: 

• ‘Here’s what we can make – who wants to buy our product?’

But now, the new viewpoint in the industry is:

• ‘What exactly do our customers need?’ and
• ‘What needs to be done to be able to produce and deliver it to our customers?

'This is a significant change of pattern in terms of how we look at our business activity.

3. Benefits of effective CRM
There are significant business benefits that flow from an effective, integrated CRM approach. These include:

• Costs reduce (effective and efficient working)
• Customer satisfaction
• Growth in numbers of customers
• Maximization of opportunities (due to referrals, increased services, etc.)
• Improved access to a source of market and competitor information
• Highlights poor operational processes
• Profitability and Sustainability

Basic underlying principle to a good CRM:

• Organizations who have momentary relationships with customers consequently, have to shell out a lot of money in finding new customers.
• Hence, relationships with customers should be – 
• Continuous
• Cooperative, and
• Made for the long term.

The cost of keeping existing customers is a tiny fraction compared to the cost of acquiring new customers!


About Author:
Geetika Varma is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, She actively contributes to the areas of Technology and Information Security. She can be contacted at: geetika.varma@spluspl.com

Project Management Revitalized

What is Project Management? Before answering this let us understand “what is a Project?”

As defined by PMI - It's a temporary endeavor undertaken to create a unique product, service or result which has a defined beginning and end in time. Few basic examples of project are; developing a software, construction projects, manufacturing automobiles. All the above mentioned projects must be managed efficiently so that we can complete it on time and within the given budget. This is where Project Management makes an impact.

PMI defines Project management as the application of knowledge, skills, tools, and techniques of project activities to meet the project requirements. It has always been practiced informally, but began to emerge as a distinct profession in the mid-20th century. 

With recent development in technology Project management is no longer limited to emails or file sharing platforms. For your project to be successful it is important that you have the right tools available at your disposal. Few years back the tools which were available only on papers have become a reality and are proving their worth in the project management field.

The following aspects allow for smoother operation, increased efficiencies, and a better overall collaborative experience:

Time Management: For a project to be successful it is very important that we meet all deadlines and complete the project on time. For this we should organize and plan, how long we are going to spend on specific activities, which in short refers to “Time Management”. In the pre-industrial era time tracking was vague and it depended on lot of factors. In the industrial era time management gained importance because we shifted from agricultural economy to industrial economy. In this era we focused on time tracking and which would help improve our productivity and speed. It is in this era of digital world we have different tools and apps that helps us focus on our core tasks. There are few apps which will send you weekly reports about your time spent on various activities.  There free online tools available which generates to-do lists with priorities, so that it becomes easy for the user to track their progress.

Instant communication: Instant messaging helps you send information back and forth in real time. Few years’ back one didn’t had the option of using skype or other communication tools for instant messaging. Earlier all the requirements were gathered at one go and the internal team used to work as per the requirements gathered in those meetings. Some companies used to send their employees on-site, so that they can discuss the requirement with client and the project would move faster.  Instant communication came to prominence with the rise in social media but soon business professionals realized its importance about how it can be used for business communication. Instant Messaging allows real time communication between two people working at different parts of the world without having to pay any charges. Shipping companies and freight brokering organizations benefit greatly from the reduced cost associated with using instant messaging. It gives you the flexibility to work from anywhere be it your home or whilst traveling. 

Budget Tracking: Few years back excel was the primary tool to track business expenses. When it came to managing multiple varieties of expense, the length of the formulas in excel would increase and it was complicated for people to understand especially during handover of projects to a new member. Recent updates in project management tools and business budgeting programs have made life easy by automating the calculation.

Data Backup: One of the most important thing in any field is to have your data intact. We usually refer to archives while working on projects to get a better idea. Earlier we used to store data in magnetic tapes, HDD, CD-DVD and then Flash Drives. These devices helped you to store your data, but to access the data from these sources, you must have these devices handy. In recent years technology has made it possible to back all our data as and when you are working. You can store your data on cloud to access it from anywhere and you always have the option of External Hard Drives to back your data, just to make sure that your project doesn’t fail even if your computer does.

All the features mentioned above are good on their own but they will work best for you if you can collate them into one interactive program that manages all your project.

Thus we can see that, with the evolution of technology, project management has become much easier. With the right fit for your firm you can see drastic changes in your management style, which will definitely help you attain a better place in this competitive environment.

About Author:

Akash Poojary is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, he actively contributes to the areas of Technology and Information Security. He can be contacted at: akash.poojary@spluspl.com

E- procurement

What is E-procurement?

E-procurement, also known as Supplier Exchange, is nothing but business to business (B2B) sale and purchase of goods model over the internet. E-procurement enables widely spread buyers and suppliers of goods to come together, interact, and perform purchase transactions directly over the Internet. E-Procurement gives businesses the ability to compare supplier prices, quality of services and various other aspects of the products.

The information technology (IT) sector has very well adapted to the ongoing change in the needs of businesses. It has helped many businesses by providing electronic solutions and internet based solutions for their supply chain networks to operate efficiently. We know that, procurement is an important function in any organization with its direct impact on the ‘productivity’, the most strategic objective of any business and has also had its share in the global e-transformation. Now, it has very promptly changed its form to a new concept called ‘E-procurement’.

E-procurement, one of the major aspects of e-commerce, is still very new to many businesses around the world however it is now catching up in the race as many businesses are beginning to realize its importance. But the transformation from conventional procurement to e-procurement has done great benifit to businesses in achieving their strategic objectives and targets.

Over the last decade in Pakistan, there has been a remarkable increase in the specialized supply chain services through IT enabled systems for the supply chain sector. This is a very good example in the industrial sector of an organization benefitting after shifting on an ERP and E-procurement system is the Polyester Fiber Business, of ICI Pakistan Limited.

Why E-procurement?

1.Cost Reduction

Costs can be reduced by structuring supplier relationships improvising systems to reduce external expenditure thereby improving quality and supplier performance. E-procurement solutions made it easier for purchasers to buy ‘on contract’; increasing buying leverage with key suppliers.

E-procurement also makes work paperless. Also, reduces rework and errors.

Also, because of dynamic on-line pricing, vendors offer limited-time spot discount offers on excess inventory. Even a small reduction in purchasing expenses can yield significant savings for large organizations.

2. Transparency of Expenditure

Central tracking system of transactions enables full reporting of requirements, purchase, processing of orders and payments. E-procurement also ensures compliance.

3. Increases Productivity

Internal customers acquire the items from an approved items catalogue through an online procurement system. Thereby, relieving the burden of low value transactions from the procurement staff, to let them concentrate on orders of strategic importance and on building supplier relationships.

4. Controls

Standardizing approval processes and formalizing workflows ensure authentication of transactions. Compliance to policy is also enhanced as users are able to quickly locate products and services from suppliers according to their preference.

5. E-procurement and technology

E-procurement advantages can only be fully realized when the systems and processes to manage it are in place. Software tools are needed to create the standard procurement documentation: electronic requests for information (e-RFI), requests for proposal (e-RFP) and requests for quotation (e-RFQ). These are proven methods to source goods and make the framework agreements that offer the best prices.

An adequate, fully integrated e-procurement approach is needed for overall success. Additional programs will provide the framework for the supplier databases management as well as holding vendor information and being an electronic repository. All these facilities cost money but this is fairly clear that cost savings are possible!

It pays for companies to spend money on e-procurement technology! 

Picture Source: Google Images

About Author:

Harpreet Kaur Dua is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, she actively contributes to the areas of Technology and Information Security. She can be contacted at: harpreet.dua@spluspl.com 

Strategic Consulting

In most of the successful organizations across globe, top CEOs are re-evaluating their business strategy. This is driven by drying up of traditional sources of growth. New regulations, slow consumer demand, and stale operating models are posing new challenges every day. There are major shifts in global demographics and economics; and dynamic breakthroughs in technology impacted every sector in the economy.

An organization’s future success is dependent on its ability to develop and execute strategies that effectively take into account a number of factors including its customers, suppliers and the policy and regulatory landscape.

Big decisions faced by both public and private-sector organizations need to be informed by a strong evidence base, leading-edge insight and robust analysis that demonstrate how different choices are aligned to strategy.

Effectiveness of the strategy depends on the kind of choices one makes. It must help stretch and sharpen organization’s ambition – grounded firmly in the realities of the marketplace, the capabilities of the organization and the goals of their stakeholders.

Strategic services

There are many challenges an organization faces due to diversity and dynamisms. Some of the strategic services include the following:

• Corporate Strategy - Define and evaluate corporate and business unit strategies and investment portfolios, reflecting market, competitive and other external drivers.
• Strategic Planning - Develop and deploy actionable strategic planning capabilities linking your vision and strategies to priority initiatives, investments and KPIs
• Merger and acquisition strategy - identifying potential new M&A opportunities
• Organic Growth strategies – helping clients to select and grow into new adjacent markets that align with their organization’s goal
• New Business opportunities – determining new capabilities and new market opportunities for clients to capture, often requiring disruptive innovations in existing or new markets
• Defining international and emerging market strategy – highlighting new international markets to grow into and the optimal entry strategy
• Enterprise profitability - Evaluate enterprise cost performance levers across front and back office functions and processes, and define an actionable plan on how they can be improved to achieve significantly better financial performance (EBITDA, ROI, ROA)
• Performance Alignment - Align leadership model to strategic priorities, performance drivers, risks, and behaviors to close the gap between business strategy and execution and achieve transformational change.

Strategy forms backbone of any organization. Every decision or choice made determines the future success and failures. Thus it is always in the interest of the top management to invest systematically in this direction. Always remember, a good strategic start is half battle won.

About Author:

Harsh Saraogi is consultant and part of Systems Plus Pvt. Ltd. He is a part of consulting team that delivers Sourcing and Vendor Management Office projects. He can be contacted at: harshvardhan.s@spluspl.com

ITIL and its impact on your business

Economics of IT industry has capped supply whereas the demand is infinite, unlike other markets where ideally demand is equal to supply. Demand in IT is only restricted to what one can imagine and apply. Still most of the organizations have a limited budget allocated to its IT needs.

Most organizations today rely upon IT to enable them to achieve their company vision, business strategy and goals. Investing into IT, for a manager of an organization, as a part of its service strategy is normally governed by the typical Return on Investment (RoI) and Return on Value (RoV). The quality of an organization’s IT is reflected in its reputation and brand, and has direct impact upon sales and revenue. For an IT investment to provide benefit, the resulting IT service must be well planned, well designed, well managed and well delivered. That is what the practice of IT service management is about.

ITIL (Information Technology Infrastructure Library) is a set of practices for ITSM (IT service management) that focuses on aligning IT services with the needs of business. It is non-proprietary best practice that can be adapted for use in all business and organizational environments. ITIL provides an extensive body of knowledge, capabilities and skills. It is accessible through publications, training, qualifications and support tools.

There are various advantages of adopting ITIL for an organization:

• Reports coming out of ITIL help compare effectiveness of organizational processes with best in the industry and thus reaffirm the value of ITSM practices
• IT services help align business priorities and objectives, to help business achieves more in terms of its strategic objectives
• It ensures the business better plans its finances
• Increased business productivity, efficiency and effectiveness, because IT services are more reliable and work better for the business users
• Financial savings from improved resource management and reduced rework
• More effective change management, enabling the business to keep pace with change and drive business change to its advantage
• Improved user and customer satisfaction with IT
• Improved end-customer perception and brand image.

ITIL helps an organization to align its business strategy and reassure that the processes are at par with industry standards. It helps the higher management to connect the IT Service Management to the budget cycle and ultimately set priorities for the business area.

About Author:

Harsh Saraogi is consultant and part of Systems Plus Pvt. Ltd. He is a part of consulting team that delivers Sourcing and Vendor Management Office projects. He can be contacted at: harshvardhan.s@spluspl.com