System of Requisite Knowledge for Service Engagement Transformation Veerendra K Rai Systems Research Laboratory Tata Consultancy Services 54B, Hadapsar Industrial Estate Pune-411013, India Email:
[email protected] Abstract— This paper outlines and discusses a system of knowledge required to understand the nature of service engagement from stakeholders’ perspective and undertake a successful service engagement transformation. It identifies variants on transformation undertaken in practice. These variations range from no analysis of the current state to whether or not current and desired state rest on the same plane. This paper constructs a meta-model that connects elements in service engagement transformation domain. It eventually outlines a requisite system of knowledge with systems thinking as integrator. System thinking is not accorded any special position albeit underlines the fact that all knowledge pieces are interdependent and none of them holds on its own with respect to the transformation. Keywords- requisite knowledge, service transformation, current state, desired state
I.
The transformation challenge, on the other hand, is concerned with continuously identifying sources of values in ClientService Provider ecosystem and transforming the service engagement infrastructure to realize these values. It consists of:
Transformation is knowledge intensive. Service engagements and service engagement transformation has been discussed in [1], [2] and [3]. Transformation carried out with inadequate knowledge, understanding and planning could be counterproductive and risky. Every action carried out in the process of transformation must be accounted for in terms of consequences it could produce and the planning that must go into performing that action. From understanding value realization in the current state to selecting the engagement(s) for transformation to choosing right strategies for transformation to configuring desired state and selecting right service model thereof; all steps seek knowledge. Domain knowledge in outsourcing space, however, is fragmented and unstructured. This paper highlights this need and attempts to set an agenda to fulfill this need.
engagement,
INTRODUCTION
Outsourcing through various service engagement models has immensely contributed to business development worldwide and has impacted project, program and service management practice. Scant attention, alas, has been paid by researchers to develop a framework to guide Clients and Service-Providers on service engagement model selection and transformation. This paper proposes a system of requisite knowledge for service engagement transformation. Outsourcing space has two distinct challenges which may be referred to as: Selection and Transformation. The problem of selection is the primary concern of client and consists of:
The requisite knowledge framework The meta model given in figure 1, in its completeness, is the basis for creating requisite knowledge for service engagement transformation. Each and every element in this meta model is to be developed and expanded to create the complete body of knowledge for service engagement transformation. The meta model contains the set of elements and relationships in the domain.
Selection of functions to be outsourced (keeping the core functions within the organization) Selection of Service-Providers Selection of service engagement models
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Transformation of operating model Transformation of pricing model Transformation of underlying infrastructure Transition of the service engagement from a given state (As-Is state) to a desired state (To-Be state).
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Figure 1. Knowledge structure meta model for service engagement transformation II. NATURE OF SERVICE ENGAGEEMNT TRANSFORMATION current state to desired state. Within this common understanding there are variations, which could be recounted as follows and they have bearing on how transformation could be carried out in a given context.
Transformation means many things to many people. All pervasive view on transformation considers any change as transformation. All views on transformation agree that there is a current state (the so called As-Is state), a desired state (ToBe state), and there is a transition / transformation from
No As-Is Analysis Some professionals argue that there is no need for analyzing the As-Is state [4]. This view contends that all we need to do is to configure the desired state and undertake transformation to To-Be state from wherever we are. There is less interest in doing As-Is analysis, this view contends, due to following reasons.
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Organizations are not willing to pay for As-Is analysis. As-Is analysis may have undesired consequences, which organizations may not want to face. As-Is analysis may induce a certain type of thinking, which may not be conducive to fresh innovative thinking to solve the problem [4].
service engagement transformation alone, but also must cover design and execution of service engagements.
Proponents of this view (No As-Is analysis) assume there is nothing in the As-Is state that can be taken forward. However, that may not be the case. One of the reference points of As-Is analysis is to see what is working for the system and what is not. Assuming nothing is working for the system in its current state is too extreme a statement. Besides, if As-Is analysis is not done chances are past mistakes may be repeated.
Outsourcing and pricing models This includes knowledge of various outsourcing models (operating models) and knowledge of pricing models. The former tells how services could be outsourced while the latter talks about how the services provided should be priced. There are three distinct classes of outsourcing models. Traditional outsourcing models, intermediate outsourcing models and oneto-one-to-many outsourcing models. Pricing models also has a number of variations-time and material, fixed-price, cost plus and shared risk and shared reward among them. Service bundling to optimize value realization for client as well as for the vendor is also part of pricing model. Service pricing and bundling is also used a lever for realizing business objectives. An outsourcing arrangement is not complete unless operating model as well as pricing model both have not been taken into account.
As-Is and To-Be states onn the same plane As-Is and To-Be state share the same structure i.e. elements and relationship remain the same. As-Is forms the baseline for transition and improvement to To-Be state. If As-Is state descibes a model then transformation is nothing but transformation of the same model. As such both models are built with the same set of parameters and changes comes mostly through different values of the parameters. As-Is analysis and insights obtained therein are used in the process of transformation and this ensures old mistakes are not repeated and best practices are retained. As-Is and To-Be state lie at the two ends of the same continuum. Transformation is continuous in nature and resembles more to optimization of As-Is state.
Knowledge strategy, critical success factors and control variables Transition from one outsourcing model to another requires knowledge and understanding of right strategy. This includes knowledge of strategy formulation, strategy implementation and strategy control. This entails understanding of entire pathway- from organization’s vision and mission to strategy to critical success factors to critical business processes to control variables to balanced score card. This layer of knowledge not only takes care of application of strategy to effect transformation, but also provides for dynamic performance management of the service engagement. In outsourcing financial parameters are no longer the only concern and a balanced approach to measure the performance of an engagement is increasingly called for.
As-Is and To-Be state are NOT on the same plane There are instances wherein As-Is and To-Be state do not share the same structure. These states do not belong to the same continuum. This pattern is more frequently observed in service engagement transformation domain especially when one wants to go from Staff augmentation to Managed services and other disparate set of outsourcing models. In this domain, for instance, As-Is analysis is done to see if the organizational objectives could be met and expected values realized with the current aggangement and if this arrangement (service engagement model) itself could be a limiting factor in objective realization. As-Is analysis is done and insights are derived, however, As-Is model and To-Be models are substantially different. Nature of transformation is disruptive.
Knowledge of values production Value production and benefit realization is central to a service engagement. What values client is seeking and where to seek those values? What can be transformed to produce those values is what this layer of knowledge consists of i.e. knowledge of sources of values, which must be exploited in the transformation space to produce values. Sources of values include structural changes, business alignment, stability of portfolio, business transformation, sourcing, and focus on core competencies. It also includes rules of engagement, governance, orientation (silo / shared service), and composition of skills.
III. SYSTEM OF REQUISITE KNOWLEDGE Book of knowledge of outsourcing We need to create book of knowledge for outsourcing that covers all aspects of outsourcing including production and transaction cost reduction, division of labor, resource management, resource and capability, core competencies, contracts, economics of outsourcing, relationship management, rules of engagement and norms, stakeholder management vendor capability exploitation and vendor behavior control and others. This body of knowledge essentially is to facilitate the understanding of economics of outsourcing [5]. This book of knowledge is not confined to
Knowledge of transformation consequences Transformation impacts systems, structures, processes and architectures. Addition, deletion and modification may happen as a result. There is an investment and cost associated with
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transformation and there are risks and secondary effects. This constrains the transformation process and introduces another dimension of complexity. Every transformation brings about a set of consequences and knowledge of these is essential so that transformation process could be guided intelligently to ensure right and acceptable values are produced through the transformation.
value model that captures what values to produce, sources of values, and how values could be produced. However, value production must connect to strategy and control variables body of knowledge to identify a method for value production. But, value production is constrained by primary and secondary effects of transformation and body of knowledge of transformation consequences is considered for the purpose.
Knowledge of stakeholders, objectives, environment and context There are multiple stakeholders in an engagement with respective objectives. Transformation is undertaken to meet these objectives. Objectives change as business environment and context changes. Stakeholders have different views on the state of the engagement, which plays an important role in choosing the right strategy for transformation. One stakeholder can look at the engagement from ownership point of view while other may like to see it from value generation point of view. Systems thinking None of the individual body of knowledge is more or less important than others for carrying out the transformation. Systems thinking places two requirements on the bodies of knowledge. One, the interconnection among them and two each body of knowledge must describe a model of its own. For instance, value production body of knowledge will have a
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Figure 2: Integrated system of requisite knowledge out the transformation. For each body of knowledge there is a model that defines the underlying concepts and also the interfaces with other bodies of knowledge. This is the role systems thinking plays. Like project management book of knowledge (PMBOK) service engagement book of knowledge (SEBOK) is called for that guides the organizations on selection and transformation of knowledge.
IV. CONCLUSION This paper describes the initial sketches of a system of requisite knowledge for service engagement transformation. Knowledge of domain probably plays more dominant role than techniques used to process this knowledge for carrying
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Why Managed services and why not staff augmentation. Ensuring companies derive the most value, including flexibility and skill access, from IT service providers. © 2010 CGI Group Inc., 2010. [3] The Outsourcing engagement model as a strategic element in expanding share of buyer’s wallet. [4] Why can’t you skip the As-Is Process Analysis. http://fluxicon.com/blog/2011/01/dont-skip-as-is/ [5] Petter Gottschalk and Hans Solli-Saether, “Managing Succeful IT Outsourcing Relationship”, Norwegian School of Management Norway. [2]
ACKNOWLEDGMENT Author acknowledges the inputs given by Industry Service Units (ISU) of Tata Consultancy Services (TCS)
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REFERENCES Transitioning from Staff augmentation model to Managed services Model. Research Summary, www.neoIT.com, volume 5, Issue 2, 2007. J. Clerk Maxwell, A Treatise on Electricity and Magnetism, 3rd ed., vol. 2. Oxford: Clarendon, 1892, pp.68–73.
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