Archive for the ‘BPO’ Category

Business Transformation With BHAG In Mind By Albert Pang

Monday, October 4th, 2010

On the heels of one of the worst recessions in history, large organizations have started investing in business transformation projects that could breathe new life into the enterprise applications market.

If it proves to be a trend, these projects, which often carry big hairy audacious goals(BHAG) to reshape how a company does business from both tactical and strategic standpoints, could have serious ramifications for a cross-section of apps vendors and their implementation partners.

Big business transformation IT projects were cited last week as one of the reasons behind the strong earnings results of Accenture, which posted a 5% rise in sales to $5.4 billion reaching the high-end of its projection while its net income jumped 67%. Because of strong demand for its consulting services in areas such as ERP upgrades and implementations, Accenture went on a hiring spree to take its headcount above 200,000 for the first time.

Bill Green, chief executive of Accenture, attributed the stellar performance to increased business transformation projects including SAP ERP upgrades from older versions of R2 as well as implementations designed to bring greater insights to SAP business users with the use of advanced analytics and the latest apps technologies.

In addition to Accenture, a number of large systems integrators such as Deloitte have benefited from such business transformation projects. Some of the most heavily attended sessions at the recent Oracle Open World had to do with helping Oracle E-Business Suite customers prepare for and better execute their planned upgrades to achieve high return on their technology investment as well as realize significant business value.

Nowhere is the BHAG more apparent than the on-going implementation of SAP Business Suite and SAP BusinessObjects business intelligence solutions at Sysco, a $37-billion food service distributor. Led by Deloitte Consulting, the SAP implementation will have cost Sysco, more than $50 million as part of its business transformation project.

Slated to run from 2009 to 2012, the four-year project carries a stupendous price tag of $900 million because of the size of the company that entails the decommissioning of numerous home grown and third-party systems after years of acquisitions, the involvement of more than 300 Sysco executives and their associated costs, and the creation of a shared service structure that consolidates all major business areas from finance to supply chain.

Central to the project is the use of SAP Customer Relationship Management application to enable Sysco’s sales and marketing team to access the customer information they need to manage accounts better. What Sysco hopes to accomplish is to use the fully integrated SAP systems to better serve its customers through careful analysis of their purchase history as well as improved order management and execution capabilities including customer self-service, rich media experience like streaming food preparation video online and supplier collaboration especially in the area of category management.

In order to satisfy its shareholders, Sysco has already projected the payoff from the project to kick in starting with a positive impact of $136 million to its 2014 earnings and $201 million the following year. The expected benefits will manifest themselves through reduced inventory and supplier receivables, and higher customer retention and improved profitability in serving new customer segments.

Although the expected outcome is years away, such business transformation projects could be the wave of the future because of the confluence of powerful market forces from globalization to customer intimacy, which will only strengthen within verticals like distribution where tremendous consolidation has ushered in a number of megaplayers.

In fact more of these ambitious and transformative applications projects could be coming from the distribution vertical in the coming years because of the increasing concentration of power within segments that are beginning to converge. In addition to selling to restaurant chains, Sysco also serves hospitals, schools and hotels. And it makes strategic sense for Sysco to not just ship them food and consumer products, but also hard goods like furniture or soft goods like uniforms. Many distributors are adding product lines not just to meet their customer requirements, but also the cumulative effects of proliferation of SKUs and assortments from the suppliers.

All these line extensions will mean an explosion of data, creating a greater demand for role-based information with a specific set of buyers and users in mind, something that cannot be easily reproduced or presented using an inflexible legacy system.

Business transformation projects with BHAG in mind are not limited to the distribution vertical. Last week Lawson announced a $1 million+ license deal to sell a full suite of HCM, talent management, and payroll applications to Fairview Health Services, an integrated delivery network with seven hospitals, 48 clinics and 22,000 employees in Minnesota. In its latest quarter, Lawson experienced a 21% rise in software contracting with robust performance for its S3 and HCM sales to customers in healthcare and public sector verticals.

These big projects are considered the tip of an iceberg with the potential of jumpstarting the entire enterprise applications market. One big reason has to do with the increased conviction that putting off these projects is no longer feasible because of brutal market forces from rising commodity prices to changing customer lifestyles as a result of the online revolution. Companies could choose to engage in big or small business transformation projects, but doing nothing is no longer an option for any organization wanting to transform itself in order to better compete in the future.

Tell me what BHAGs you have in mind and how our research can be of help at apang@appsruntheworld.com and follow me on Twitter @appsruntheworld with our continuous updates on these business transformation projects.

Posted in Accenture, BPO, Distribution, Lawson, Oracle, Oracle Open World, SAP, Sysco

Lessons of the World Cup and Mahindra Satyam By Albert Pang

Monday, August 30th, 2010

This may well be the last piece on the World Cup in South Africa before calling the summer of 2010 a wrap, but the end of one of the greatest sporting events ever held on the African continent marks a new set of opportunities that will endure for years because of the infinite human capacity for perseverance and beating the odds.

Like many companies from Budweiser to Yingli, Mahindra Satyam was among the sponsors that helped make the World Cup 2010 possible and that in itself was a major accomplishment for the Indian systems integrator, whose fate was hanging in the balance amid an accounting scandal in early 2009.

While the accounting scandal has begun to recede with the arrest of the former chairman of Satyam for a litany of charges including inflating its assets, Tech Mahindra, a subsidiary of the $7-billion industrial company Mahindra & Mahindra that acquired Satyam in April 2009, spent much of last year stabilizing the company by overhauling its management as well as the positioning of the now-rebranded Mahindra Satyam.

With billions of people watching the month-long tournament either live or with rich media, Mahindra Satyam worked largely behind the scenes managing more than $1 billion assets, three million tickets, 250,000 accreditations, 130,000 volunteers, 1,000 vehicles, 64 matches and 10 stadiums in South Africa.

It was flawless execution running a gamut of event management applications, a reliable and scalable extranet for event organizer FIFA, as well as an assortment of integration services and complementary technologies with 100% uptime besting the performance of tech powerhouses such as IBM in the same role at high-profile events like the Olympics.

For a company that was on the brink of a downward spiral, the rebirth of Mahindra Satyam has been remarkable. One magazine headline in January 2009 even referred to Satyam’s former chairman Ramalingam Raju as India’s Madoff. For the record, Bernard Madoff’s company was a Ponzi scheme, but Satyam was doing legitimate IT integration business for hundreds of customers.

Let’s also be clear about my involvement. I was a paid speaker at a Satyam customer event in 2008. Through the years I have had the pleasure of working with a number of Satyam executives, many of whom remain loyal to the company because of their unyielding integrity and faith in its latest reincarnation. In late May 2010 I was invited by Mahindra Satyam to participate in its analyst event in Hyderabad, India, and saw first-hand the new company in action.

Since its rebirth, the IT service provider has kept many of its customers such as BASF IT Service and GlaxoSmithKline, both of which recently extended or renewed their contract with Mahindra Satyam. It has won 54 new logos and its customer count now exceeds 360. Shortly before the scandal broke, the customer count was 690. It was difficult to determine whether the decline was attributed to the scandal, the recession, or a combination of the two.

Despite the setback, many global companies have continued to express their support by relying on Mahindra Satyam to run their mission-critical applications and a long list of key functions from managing supply chain strategies and programs to operating data centers on behalf of some of the biggest telcos in the world.

Two data points suggest that Mahindra Satyam has not skipped a beat over the past year with its SLA adherence reaching 99.72% and its zero defect delivery staying at 99.77%, which is noteworthy for their consistent showing.

A director of engineering at a world-class technology company outlined the amount of testing work that Mahindra Satyam is involved in, with the latter assigning its more than 100 engineers to test tens of millions of codes regularly before new Cloud services are introduced by the former to the public.

The CIO of a major transportation company in North America said the reason to stick with Mahindra Satyam is because of its large pool of SAP experts, something that his company was not able to locate easily in terms of meeting its quality, reliability and industry-specific knowledge requirements. In recent quarters, Mahindra Satyam has won more than 22 new customers helping them manage their SAP and Oracle applications.

It’s fair to suggest that the rebirth of Mahindra Satyam is a work in progress given that every measure of its financial health is still being evaluated and cross-checked by its current auditors Deloitte and Grant Thornton. Upcoming releases of its financial results will help shore up customer confidence.

Still, there will be more changes pending. There have been talks about Tech Mahindra, which now owns 42.7% of Mahindra Satyam, will combine Mahindra Satyam into its fold creating a streamlined operation. Just last week, Sanjay Kaira, a veteran of Tech Mahindra who became its CEO last year, announced his decision to leave the company. He will be replaced by Vineet Nayyar, the current vice chairman.

During my meetings with Mahindra Satyam executives, they have reiterated their desire to restore growth now that the past is behind them. But what’s even more striking to me is that Mahindra Satyam is a microcosm of India teeming with young, bright and talented individuals who are giving everything that they have in order to bring positive change to their families and their country.

Which brings us back to South Africa where we have witnessed many young players working tirelessly and skillfully to win one game after another. Against all odds, these teams including Uruguay, Ghana and even Germany that were once considered underdogs rose to the challenge and delivered world-class performance, just like Mahindra Satyam.

By the way, Mahindra Satyam will be the IT service provider for the 2014 World Cup in Brazil. I can hardly wait for that to happen, watching Mahindra Satyam work quietly and methodically, but with absolute control of the game.

Tell me what you think of the World Cup, Mahindra Satyam and follow me on Twitter @appsruntheworld.

Posted in BASF, BPO, GlaxoSmithKline, IBM, Mahindra & Mahindra, Mahindra Satyam, Oracle, SAP, Tech Mahindra, Vendor, Verticals