Integration of the outsourcer's strategy with that of the client

May, Shaun Patrick (2006-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2006.

Thesis

ENGLISH ABSTRACT: "Strategy is when you are out of ammunition but keep on firing so that the enemy won't know". (Mintzberg, 2005, 13) Business Connexion (Pry) Ltd (BCX) is a leading black empowered ICT company with a proud 25-year track record. BeX is an integrator of competitive, innovative business solutions based on information and communications technology (ICT). Business Connexion runs mission-critical ICT systems for many JSE listed organisations and manages products, services and solutions for key public sector organisations, parastatal enterprises and a host of medium sized emergent companies. Nampak is the largest and most diverse packaging company in South Africa, with operations in Africa and Europe as well. Nampak Pty. Ltd. has experienced declining revenues over the last two years despite an upturn in the South African economy. This has resulted in them putting pressure on BCX and going out on a request for proposal (RFP) for the infrastructure outsourcing. This research report addresses how a company like BCX can align its strategy to that of an outsource client, Nampak Currently in an outsource environment the client will say that they see no value add from being outsourced. BCX will produce statistics to say that they are performing to service licence agreements (SLA). Between BCX and the Nampak there is misaligrunent. The outsource market is a maturing one and companies like BCX are struggling to maintain and grow their market share. Currently there are international players like HP trying to enter the African market. Globalisation is affecting the economy of South Africa. An organisation's strategy defines the sum of its choices about where it will compete, how it will create superior value for its customers, and how it will generate superior profits for itself. If you look at the strategies of the competitors they will invariably say and come to the same conclusions as Bex. This report hopes to show that strategy development is the search for ways to build a competitive advantage through distinctive capabilities. It is about finding new ways of doing things that provide an advantage over the competitors. The literature review indicates that everyone is a strategy consultant and that there is no one definition in defining and aligning this strategy! Methodologies do exist and where a company takes the advice of consultants they fmd themselves ending up with a synonym for the word strategy - expensive. The literarure review looks at some of the academics and consultants thinking on the subject since 1960. Interviews were conducted with key players within Group IT for Nampak and with some of the business executives of Nampak. The interviews were supplemented by information gathered by the author from working on the account for two years. This researeh report aims to use the experience of the people working on the account to derme the strategy with Nampak going forward. Currently BCX runs the Nampak account within the structures of a cluster and uses shared services to manage the account. The strategy is a reactive one and Nampak sces very little value add from BCX. Nampak sees BCX as a strategic supplier as opposed to a strategic partner. The conclusion of this report represents the "what" of the report. By continuing to carry on in the fashion BCX has, will result in them losing the outsource contract with Nampak. This is the reason that Nampak has gone out on a general request for proposals to the market. The "so what" of the report is that BCX will lose the Nampak account should it not change the way it handles this outsource business. BCX would be better off running the account as a stand alone business with its own executive who is empowered to make decisions. This fmding supports the work of Miller and Heiman who do consulting on how to handle large strategic accounts (Miller, 2004). The recommendations of this research report support the direction some of the executives at BCX would like to take, which is treat each large outsourced account as a stand alone business. BCX needs to position itself as a strategic supplier to Nampak and be more involved in the business. The "now what" is more fully explored in the recommendations part of this report. Companies think that by introducing a new product or service they will beat the competition. Whilst this is sometimes true, companies are better off focusing on delivering what they do to the client better. The recommendations focus on how BCX can deliver better value and strucntre themselves more efficiently. A good strategy in outsourcing means fully understanding your own and your customer's position so that like a good general you are in the right place with the right people at the right time.

AFRIKAANSE OPSOMMING: Business Connexion (pty) Ltd (BeX) is 'n voorstc swart-bemagtigde ICT-maatskappy met 'n trOlse rekord van 25 jaar. sex integreer mededingende, vemuwende sake-opJossings met inligtings- en kommunikasietegnoiogie (lCT) as grondsiag. Business Connexion bedryf missie-gerigte ICT-stelsels vir baie maatskappye wat op die JSE genoteer is en bestuur produkte, dienste en opJossings vir sleutelorganisasics in die openbarc sektor, semistaatsmstellings en 'n groat aaotal opkomende maatskappye van gemiddeJde groone. Nampak is die grootste en mees gediversifisecrde verpakkingsmaatskappy in Suid-Afrika, met takke in die res van Afrika en Europa. Nampak Pty. Ltd. het die afgelope twee jaar 'n afname in inkomste ondervind, ten spyte van 'n verbetering in die Suid-Afrikaanse ekonomie. As gevolg daarvan bet hulle druk op sex geplaas eo '0 algemene versoek in die mark gerig om voorleggings vir uitkontraktering van die infrastruktuur. Hierdie navorsingsvcrSlag dui aan hoe 'n maatskappy soos BeX sy strategie op eeo lyn kan bring met die van '0 uitkontrakteringsklient, Nampak. Tans sal die klient in 'n uitkontrakteringsomgewing se ciat bulle geeo waardetoevoeging sien in uitkontraktering nie. sex sal statistieke voorsien om te toon dat hulle presteer volgens dienslisensie-ooreenkomste. sex en Nampak is nie op een Jyn nie. Die uitkontrakteriogsmark is 'n ontwikkelende mark en maatskappye soos sex sukkel om bulle markaandeel te bebou en te vergroot. Daar is tans internasionale maatskappye soos HP wat probeer om die Afrika-mark binne te dring. Globalisering het 'n impak op die ekonomie van Suid-Afrika. 'n Organisasie se strategic defirueer die sam van sy keuses I.o.v. waar am te kompeteer, boe am uitstekende waarde aan kliente te bied, en boe om vir bomself uitstekende wins te genereer. As jy na die strategie van die kompetcsie kyk, jy sal sien dat bulle baie na aan die strategie van BeX is. Hierdie report wil wys dat strategie ontwikkeling is die besoeking van nuwe maniere om kompetitief te bly deur distinktiewe maniere. Dit is hoe u nuwe dinge doen, dat u kompetisie nie doen rue. Die literatuuroorsig dui aan dat almal strategiekonsultante is en dat daar geen enkele defirusie is wat hierdie strategie defmieer en belyn nie! Daar bestaan wei memdicke en waar 'n maatskappy die advies van konsultante aaovaar, vind hulle dat bulle eiodig met 'n sinoniem vir die woord strategic - duur. Die literatuuroorsig bekyk die gedagtes van akademici en konsullante oor hierdie ondelWerp sedert 1960. Onderhoude is gevoer met s!eutelro!spelers binne Groep IT vir Nampak en met sommlge van die uitvoerende sakebestuurders van Nampak. Die onderhoude is aangevul deur inligting ingewin deur die auteur, wat twee jaar lank op hierdie rekening gewerk het. Hierdie navorsingsverslag het ten docl om gebruilc te maak van die ondervinding van die mense wat op die rekening werk, om toekomstige strategic vir Nampak te dcfinieer. Bex bedryf tans die Nampak-rekening binne die strukture van 'n saamgroepering en gebruik gedeelde dienste om die rekening te bestuur. Die strategic is rcaktief en Nampak ondervind baie min waardetoevoeging van Bex. Nampak beskou BeX as 'n strategiese verskaffer cerder as 'n strategiese vennoot. Die gevolgtrekking van hierdie verslag verteenwoordig die "what" van die verslag. As BeX voortgaan soos tans, sal die gevolg wees dat hulle die uitkontrakteringskontrak met Nampak verloor. Oit is waarom Nampak algemene versoeke in die mark gerig het vir voorleggings. Die "so what" van die verslag is dat sex die Nampak-rekening sal verloor as hulle Die 'n verandering aanbring aan die wyse waarop hulle hierdie uitkontrakteringsbesigheid hanteer nie. sex sal beter vaar as bulle die rekening as 'n aparte besighcid bedryf, met sy eie uitvoerende bestuurder wat mab>tiging het om besluite te neern. Hierdie bevinding ondersteun die werk van Miller en Heiman, wat konsu!teer op hoe om groot strategiese rekeninge te hanteer (Miller, 2004). Die aanbeve!ings van hierdie navorsingsverslag ondersteun die rigring wat sommige van die uitvoerende bestuurders by sex wi! inslaan, naamlik om elke groot uitgekontrakteerde rekening te hanteer as 'n alleenstaande besighcid. sex moet homself posisioneer as 'n strategiese verskaffer vir Nampak en moet meer betrokke raak by die besigbeid. Die "now what" word meer volledig ondersoek in die aanbevelingsgedec!te van hierdic verslag. 'n Maatskappy dink dat as hulle 'n nuwe produk skep dat bulle die komperisie sal oorwin. Party keur is dir waar, maar meestal is dit beter om dinge beter to lever as die kompetisie. Die rekomendasies vir sex wys dat dit bcter is as hulle korrek restrukteer vir die klient. 'n Goeie strategie vir uitkontraktering beteken volle begrip van jou eie en jOll klient se posisie, sodat jy soos 'n goeie generaal op die regte tyd op die regte plek is met die rcgte mense.

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