1. SOCIETY FOR SCHOLARY PUBLISHING
Managing Change in Publishing Environments
FRANK STUMPF
President & COO
June 2, 2004
2. PRESENTATION OVERVIEW
§ Outsourcing
§ Definition
§ History
§ Trends
§ Critical success factors
§ Outsourcing in STM publishing space
§ Offshoring
§ Definition & key drivers
§ Benefits of offshoring
§ Trends & Myths
§ Processes that can be offshored
§ Offshore lifecycle
§ Vendor selection criteria
§ Top challenges in offshoring
§ Key takeaways
§ STM Publisher Comments
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3. OUTSOURCING
What is it ?
Outsourcing is the delegation of one or more business processes or functions
to an external provider who, in turn, owns, administers and manages the
selected process(es) or functions based upon defined and measurable
performance metrics.
What can be Outsourced ?
Critical, Non core activities Critical, Core activities
Likelihood to outsource – moderate today, high Likelihood to outsource – low today, low
tomorrow tomorrow
§ Accounting § Core competencies
§ Supply Chain Mgt § Managing market image/trademarks
§ HR/Administration § Caring for patients
§ Claims administration, Billing § Find/sell oil and gas
Non Critical, Non core activities § Strategy
Likelihood to outsource - high today § Patents and technology
and tomorrow
§ Landscaping
§ Cafeteria
§ Laundry Source: Gartner Company estimates
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4. A SHORT HISTORY OF OUTSOURCING
§ 1980s: tactical and immediate
§ Outsourcing of support services (payroll, food services, etc.)
§ A response to corporate restructuring, or a specific problem
§ Focus on ‘doing the same for less’
§ 1990s: strategic outsourcing
§ Scope of outsourcing widens to include more ‘services’
§ Realization that outsourcing gives wider control over all functions
§ Focus shifted from ‘supplier’ to ‘business partner’
§ 2000s: transformational outsourcing
§ Now using outsourcing to redefine the business
§ Emphasis on the innovation that outsiders can bring to the business
§ Focus shift from ‘business partner’ to ‘agent of change’
Source: Michel F Corbett & Associates Ltd
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5. TRENDS IN OUTSOURCING
§ Increased level of outsourcing within enterprises and among enterprises in an
industry vertical
§ Enterprises are being courted by more service providers that claim
outsourcing qualifications, requiring a deliberate analysis of sourcing drivers
and a careful evaluation of market choices
§ Risk management and contact governance increasingly important.
Customers are becoming more hands-on
§ Increasing end-to-end outsourcing offerings from vendors requiring deep
domain skills and the ability to integrate BPO, IT and voice based interface
§ Offshore outsourcing gaining legitimacy and becoming mainstream. Anti-
offshoring wave beginning to influence decision making
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6. OUTSOURCING –
CRITICAL SUCCESS FACTORS
§ Be clear about what you want to outsource, why you want to outsource and
how you want to outsource - requirements/expectations/measurements
§ Service provider evaluation is more than presentations
§ References, expertise, flexibility, financial stability, compatible mindset
§ Ask tough questions:
§ Is there strategic synergy between the organizations ? Is there good
chemistry ?
§ Is there an opportunity for growth - both volume and expanded
services ?
§ Is risk really reduced ?
§ Is this a “win-win” ?
§ Does the provider have a solid management team in place ?
§ Does the provider have the technology environment needed to
support “world-class” service ?
§ Can the provider leverage industry experience to devise improved
solutions ?
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7. OUTSOURCING –
CRITICAL SUCCESS FACTORS
§ Understand the requirements for a smooth transition
§ Flexibility (both parties)
§ Teamwork/collaborative environment
§ Solid project management and project managers on both sides
§ Stakeholder buy-in
§ Outsource provider’s personnel should be trained to understand
outsourcing organization’s business environment, culture and goals
§ Define benefits upfront—the “ROI”
§ Consider a Service Level Agreement
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8. OUTSOURCING IN STM PUBLISHING
SPACE
§ Some activities have long been outsourced:
§ Journal subscription marketing/administration
§ Distribution of print product to customers
§ Large parts of the production process—typesetting and printing
§ Copyright administration
§ Document delivery
§ More recently others:
§ Web product development and delivery system
§ More pieces of production/editorial
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9. OFFSHORING
What is it ?
It is the relocation of labor-intensive service functions from high labor cost regions to
lower labor cost regions. Offshoring often includes “near-shoring”, “best-shoring” and
“captive offshoring”
Key Drivers for offshoring
§ Increasingly competitive global markets in all industries leading to constant search for
sustainable growth and competitive advantage thru lower costs and focus on core
competencies
§ Separation of information from physical media leading to geographical independence
§ Global availability of low-cost computing power, web-based interconnectivity and
telecom bandwidth. Globalization and use of English as the language of business in
offshore centers
§ Standardized software packages such as SAP, MS Office & Windows, Acrobat and
Oracle available globally
§ Most non core business functions (“services”) can be automated and carried out from
remote locations
§ Rapid adoption of best practices based on landmark offshoring success stories of
Fortune 100 companies
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10. BENEFITS OF OFFSHORING
Why are organizations doing it ?
To meet the ever increasing challenge to grow, or at least maintain,
competitiveness in today’s economy
Benefits
§ More cost-effective
§ Improve service quality
§ Drive revenue growth
§ e.g. Increase the amount of follow-up on the receivables to increase
collections
§ e.g. Offer customers mores service such as 24x7 support
§ Offshoring is a win-win game
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11. TRENDS IN OFFSHORING
Offshoring is here to stay
Outsourcing Industry Growth
CAGR (2001 - 2008)
38%
26%
1.5%
Onshore Outsourcing Offshore outsourcing Captive offshoring
& Shared services
USD Billion 2001 2008
Onshore outsourcing + Shared Services 3304 3664
Offshore Outsourcing 17 164
Captive Offshoring 35 182
§ Offshore outsourcing delivery will show the highest growth
§ Cost & quality levels are the biggest drivers
Source: Industry Analysts, TCS
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12. TRENDS IN OFFSHORING
Recent trends in offshoring
§ Multiple offshoring destinations competing with each other. It is important
to match skill sets required for the “outsourced process” with the
capabilities of a particular location
§ Consolidation in the vendor space across industries as vendors look for
opportunities to offer end-to-end capabilities
§ Risk mitigation and corporate governance are becoming increasingly
important
§ Customers are becoming more hands-on in the actual execution of the
outsourced arrangement
§ Many offshoring models emerging – near-shoring, best-shoring, hybrid
models etc
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13. OFFSHORING MYTHS
Common offshoring myths
§ Less costly equals lower quality or slower process or less flexible service
§ Only really simple, basic activities
§ Sweat shops
§ Everyone’s doing it, so it must be good and I should do it too
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14. WHAT CAN BE OFFSHORED
Offshoreable processes Complexity STM Publishing
Research Services
Project Management
§ Content development
§ Product design services Technical Editing
§ CAD / CAM services
HIGH
Knowledge Services Subscriber/Author Customer
§ Customer analytics
Service
§ Portfolio & risk management
§ Equity research Complex Copyediting
Back Office
MEDIUM
§ Finance and Accounting Software Application Devp.
§ HR and shared services
§ Technology support Multimedia Production
Contact Services
§ Inbound customer relations & Basic Copyediting
helpdesk
Typesetting
LOW
§ Outbound telemarketing
§ Collections
Data Processing Keyboarding
§ Basic data entry
§ Transaction processing
§ Document management
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15. OFFSHORE LIFECYCLE
Plan
§ Offshore Strategy
§ Portfolio Assessments
§ Sourcing models
Source
§ Build, buy or outsource
§ RFI/RFP Management
§ JV/Supplier Due Diligence
§ Location/Supplier Selection
§ Contract Negotiations
Manage
§ Transition Management
§ Program Management
§ Financial
§ Contract/Operations
§ Performance
§ Relationship
§ Benchmarking Source: TPI, Company sources
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17. TOP CHALLENGES IN OFFSHORING
Deciding what to
outsource
Selecting the right
vendor
Managing communication
& culture
Managing change within
the organization
Managing risk through
metrics & transparency
0 1 2 3 4 5 6 7
Source: Company estimates
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18. KEY TAKEAWAYS
Offshoring is not a delivery option but a strategic competitive tool
Selection of vendor should be based on sustainability and value delivery
Focusing on change management and long term value delivery rather
than success of a pilot is crucial
Clear definition of objectives of outsourcing along people, process and
technology adoption and organizational readiness is imperative
Re-engineering of processes is important to obtain long-term value
It is important to manage expectations by realizing that offshore is not
a nirvana solution
Contractual flexibility is important to engage and enable returns
Source: TCS, Industry sources
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19. SURVEY – PUBLISHERS USING
OFFSHORE SERVICE PROVIDERS
§ Participants: Elsevier, U. of Chicago Press, Rockefeller U. Press, Blackwell,
AGU, Capital City Press
§ Major Objectives in Considering Offshore Service Provider
§ Price—Three listed as number one objective
§ Three indicated same criteria as onshore provider objectives
§ Speed; XML/SGML and electronic deliverables ability
§ Transition Concerns
§ Communications (time zones, cultural, language)
§ Quality
§ Internal employee reactions
§ Company and political stability
§ Steps in Choosing Offshore Service Provider
§ Reference checking and site visit
§ Samples, tests, proof of concept project
§ Do not rush the process
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20. SURVEY – PUBLISHERS USING
OFFSHORE SERVICE PROVIDERS
§ Transition Process Lessons
§ Communication (regular, detailed feedback, personal visits, direct)
§ Commitment to relationship
§ Staff training and cultural sensitizing
§ IT support
§ Experience Relative to Perception (1-5 scale: worse to better)
§ Product/Content Quality - Better (3.8)
§ Speed/On-time Delivery - Better (4.2)
§ Service/Responsiveness - Better (4.5)
§ Innovation - Better (4)
§ Value for Money - Better (4.5)
§ Experience Relative to Onshore Service Providers (same 1-5 scale)
§ Product/Content Quality - Same (3.3)
§ Speed/On-time Delivery - Better (3.8)
§ Service/Responsiveness - Better (4.2)
§ Innovation - Better (3.8)
§ Value for Money - Better (4)
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