Sustainable Business Transformation

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Archive for the ‘General’ Category

Can social media be used to mitigate cross cultural differences in offshore outsourcing?

Posted by Hemant Puthli on October 11, 2015

Answer by Hemant Puthli:

Culture always poses a challenge in outsourcing, especially when part of the team is based at a remote location. Bridging cultural gaps is never easy and there is no magic wand to make it happen.

That said, promoting cultural exchanges at various levels could go a long way in reducing some of these gaps. Open-mindedness on both sides is a vital pre-requisite to this. If there are already cultural prejudices on the customer's side or the vendor's side, this task could prove to be insurmountable. Respecting and embracing cultural diversity should be the default attitude on both sides. This would be facilitated if the vendor is treated like a partner, on an equal footing with the customer, and if the teams on both sides engage on a flat, "peer-to-peer" basis (as opposed to a hierarchical "master-slave" relationship).

Soft-skills Training, Communications and Change Management programs that are carefully designed and effectively implemented, would support these goals. Inasmuch as social media can be used as one of the tools by such programs, the answer to your question would be "Yes".

Can social media be used to mitigate cross cultural differences in offshore outsourcing?


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For a typical Software Services/Product Development company, what are the key factors in deciding to engage with an Outsourcing Partner V…

Posted by Hemant Puthli on October 8, 2015

Answer by Hemant Puthli:

Here's an indicative list of factors (in no particular order):

1. Technology: How rare or common are the platforms involved? If rare/ unique, then there may be very few vendors available for you to partner with, and you may either have to work on their terms or DIY.

2. Resources: Do you have the ability to manage resources at a remote location? Your offshore center needs to be able to attract and retain the right kind of talent and if you are not sure you can do that yourself, you may want to find a partner.

3. Facilities & Infrastructure: Do you have the wherewithal to build and operate a development center at a remote location? If not, consider partnering.

4. IP Protection: How sensitive and well protected is your "secret sauce"? Are   you comfortable with a 3rd party handling  your code?

These are just a few of the important factors.

Many companies enter in to a Build-Operate-Transfer (BOT) type of agreement with a vendor, whereby the vendor does the initial work and runs the center for a few years and then transfers ownership to the customer. This approach addresses many of the initial challenges but also brings its own risks.

I would strongly recommend the formulation of an outsourcing/ offshoring strategy – which involves a methodical study of all the relevant factors, followed by a financial model and risk analysis of various alternatives.

Please also see my answer to a related question:
What is the best way to create an offshore software development center?
You may find some relevant points there as well.

For a typical Software Services/Product Development company, what are the key factors in deciding to engage with an Outsourcing Partner V…

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Are Chief Revenue Officer and Developer Evangelist redundant positions?

Posted by Hemant Puthli on September 29, 2015

Answer by Hemant Puthli:

The Chief Revenue Officer's main job is to bring in revenue by maximizing revenue opportunities. This covers a variety of responsibilities related to the Sales function, including pricing. As far as the company's top line is concerned, the buck stops with the CRO. A company may not have a separate designation called CRO, but then the responsibilities involved will most likely be shared by the CEO in conjunction with other CxOs. This role does not intrinsically involve deep/ hands-on technical knowledge of the company's products – some working knowledge is usually adequate. Deep knowledge is a nice to have but not all that essential.

The role of a Developer Evangelist is to optimize communications among members of the developer community – between groups of developers within the company and developers outside the company (relevant to companies producing enabling technologies, software platforms, utilities etc., used by external developers as opposed to business users) and also between developers and various types of non-technical staff involved in company's value chain. A company may not need this role if it is not in the business of producing software that developers use to customize the product or build other applications based on the product. This role requires fairly deep technical knowledge and good communication skills, and does not intrinsically involve a revenue responsibility (though it indirectly impacts sales opportunities).

These two roles are quite distinct, and in a large, well-established company there may hardly be any overlap – they can complement each other to the extent that the Developer Evangelist can drive sales opportunities where the CRO needs someone with a technical background to push the technology to  a (prospective) customer's development group.

In smaller companies and startups, many roles tend to get telescoped into a few leaders who, typically, have multidimensional skills, can wear many hats and rapidly switch them. In such situations, one person may play both roles (assuming they possess the relevant competencies).

Whether a given company needs a CRO or a Developer Evangelist or both is an open question – a lot depends on the company's size, the complexity of the technology involved and the nature of its customer base.

Are Chief Revenue Officer and Developer Evangelist redundant positions?

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What is the difference between business strategy and sales strategy?

Posted by Hemant Puthli on September 14, 2015

Answer by Hemant Puthli:

Thanks for the ask to answer.

A sales strategy is a subset of a business strategy. Profit-oriented enterprises exist to make a profit so that they can deliver the return on investment to their shareholders. The way to make profit is to ensure that there is an income inflow that is consistently greater than the expense outflow.

A sales strategy focuses on setting up the necessary ingredients that will achieve (and hopefully exceed) the targeted sales volume such that it will result in the desired income inflow. It doesn't concern itself with the other half of the problem i.e. how to control outgoing costs and expenses so that they remain less than the incoming revenue.

A business strategy looks at the entire picture – how to increase revenue while also decreasing costs. This in turn may involve a variety of dependencies such as how to stoke customer needs and satisfy customer expectations; how to innovate and come out with new/ improved products and services; how to improve the quality of existing products and services; how to price them at optimal price points; how to procure from reliable suppliers; how to meet employees' needs for career growth; how to manage the brand and what it means to the external world, and so on and so forth.

Trust this clarifies.

What is the difference between business strategy and sales strategy?

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Everyone says that it is cheaper to hold a customer than to acquire a new one. But why do most companies act exactly the other way. My ce…

Posted by Hemant Puthli on December 27, 2012

Answer by Hemant Puthli:

Your question already contains a hint to explain this phenomenon. I will try and expand on that theme a bit here and throw-in a few more points.

Within the perspective in which this question is framed, it may be useful to classify sales strategies into two types: hunting (acquiring new customers) and farming (defending the existing customer base and getting more revenue from existing customers by cross-selling and up-selling). Typically, companies should use a combination of both to maximize their revenue potential and simultaneously defend and grow market share. The exact point where these two strategies balance out may vary from industry to industry and from market to market, but there always is one. The challenge is to find it.

The general assumption made by hunting-oriented sales teams is that an acquired customer won't easily switch to competition, and so may be "taken for granted". Instead they believe that in an ever-expanding market "pie", it is imperative to grab as much market share (i.e. new customers) as possible, before competition does. If the "pie" is not constantly expanding, then they'd argue that it is all the more imperative to acquire the finite number of potential customers in a closed universe/ marketplace.

The basis for taking existing customers for granted could be a combination of beliefs such as: (a) the belief that switching costs are high (b) the belief that our products/ services/ support offer the best value for the customer's money (c) the belief that our loyalty programs are effective. Whether or not these beliefs are backed-up by fact is an open question and the answer would vary on a case-by-case basis.

However, customer stickiness/ "lock-in" is never as easy as one would like to think, and the job of "hunters" from the competing sales force is to prove that it can be done. They will attack beliefs (b) and (c) and propose alternatives to reduce your customer's switching costs i.e., belief (a). All it takes for their relentless sales pitch to strike root is a few bad experience your customer might have. This is exactly why it is important to "defend" the customer base from such an "attack" but sadly, many companies don't see the cold logic in this. Mainly because it is not "sexy".

In many companies, the persona of the hunter (a typical alpha male – the hero who brings home the kill, fighting all odds) dominates strategy discussions, and this explains why despite cold logic, such companies tend to favor hunting rather than farming. Investor pressure to show growth in revenues and market share is translated by such heroes to a mandate for hunting, though (in many cases, but not all) such goals could probably be met almost entirely by farming too, and definitely (in all cases) by finding the optimum point of balance between the two.

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Do you think that companies should outsource their IT needs or have a team internally?

Posted by Hemant Puthli on December 24, 2012

Answer by Hemant Puthli:

There's no single right answer that works for all companies. Each company should conduct a preliminary assessment of the need to outsource, and if they find adequate basis, they should build a business case to justify it.

Typically, a business case would consider factors such as (indicative examples, not a comprehensive list):
1. Savings in operating expenses,
2. Access to skilled resources and/ or mature processes
3. Ability to scale on demand,
4. Impact on turnaround time and time-to-market,
5. Ability of leadership team to focus better on strategic and tactical issues,
6. Downside risks (typically – impact on customer perceptions of quality of product and/ or services)

Many companies have outsourced various parts of their operations relating to support process. Some have even outsourced parts of their "core" business functions. Over a period of time, the outsourcing model has stabilized and has delivered benefits to most companies (there are very few "permanent" failures, though many companies have learned by trial and error). Outsourcing continues to be a growing industry and has now proliferated in terms of scope and scale. So much so that many believe that the more relevant question these days is not "what to outsource" but "what to keep".

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What is the best way to create an offshore software development center?

Posted by Hemant Puthli on December 18, 2012

Answer by Hemant Puthli:

This is not a plug for my firm's services, but I honestly believe you could use the services of an outsourcing adviser. Because the scope of the question is too vast and complex to be addressed in Quora format, and any attempt to provide a truthful and meaningful answer would involve a deeper understanding of the organization that is looking to offshore part of its operations.

An outsourcing adviser would also be able to connect you with the relevant vendors/ service providers at locations you would finally decide upon, help you negotiate and arrive at a comprehensive agreement (can be a bit tricky), support your transition PMO and also help you build a governance model that will continue to oversee the offshoring arrangements on an on-going basis.

The short answer to your question is that you need to formulate a IT services globalization strategy. But in a way, saying that is like re-casting your question in a different manner, and may not help much.

That being said, the following questions may provide a flavor of the kind of issues involved in formulating such a strategy, and that require detailed study and discussion (by no means a comprehensive list – just enough to give a sense):

1. Why are you considering offshoring? Is your prime driver cost or something else (e.g., access to resources/ skills/ process efficiency/ engineering quality)? Are you looking to increase development capacity or improve delivery capability? Have you built a business case to justify it? Are there any specific drivers that are time-boxed (sense of urgency)?

2. What do you want to offshore? How common or unique are the platforms/ technologies involved? Do you have issues in finding skilled technicians locally? How much of your work currently is based on waterfall type of lifecycle models versus, say, agile?

3. How important is geographical proximity and timezone compatibility? Does your organization have a global footprint – do you have offices in some of the locations you've mentioned?

4. How important is the need for scalability? What is the quantum of your initial scope and what does your ramp-up plan look like? (Orders of magnitude; exact numbers may, understandably, not be available at this stage)

5. What is your experience with outsourcing/ offshoring so far? Have you worked with service providers? If so, have you mostly entered into resource-based contracts (typically on a "Time & Materials" basis) or have you also tried "Managed Services"?

Hope this helps.

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Does a good engineering culture matter?

Posted by Hemant Puthli on December 15, 2012

Answer by Hemant Puthli:

Culture matters. Period.

For a software engineering company, a "good" engineering culture definitely matters, and is worth investing in: it needs to be carefully cultivated and nurtured.

But what is a "good" engineering culture? That's the nub of the issue, IMO. If the engineering culture is so dominant as to overwhelm all other priorities (e.g., customer focus and responsiveness, or financial stability or employee welfare), then I would not qualify it as a "good" engineering culture.

Balance is key. Resources are always scarce, competition is always tough and good talent is always hard to find and keep. Knowing where the trade-offs are and allowing that knowledge to inform business decisions is what distinguishes a successful software engineering company from a wannabe or a might-have-been or an also-ran.

Generally speaking, companies may find that the path to eminence and prosperity is broadly determined by three key criteria: (1) Customer intimacy (2) Product/ Service excellence (3) Operational efficiency. Most companies seek to balance all three, but a few exceptional companies assign highly differential weights (i.e. prioritize one of these highly over the other two) and also win.

The bottom line is that a good engineering culture is 'necessary but not sufficient'. A sound business strategy (backed-up by an ability to execute) should aim to bring in all the other factors needed to succeed, whatever they may be (too vast a topic to delve into here – I've already highlighted a few such critical factors above).

Hope this helps.

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Posted by Hemant Puthli on July 24, 2009

Welcome to our site, dedicated to Sustainable Business Transformation and Sustainable Business Technology.┬áTo get started with our blog, we thought we’d share a few links to recent articles and blog posts on relevant topics from other sites or blogs. We hope you like them.

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