Common Partner KPIs for BPaaS – TCS’s Approach to Multi-Vendor Collaboration

This week we attended the TCS Benelux analyst event in Amsterdam. TCS – a BPO player, as defined in our operational deployment model – has fared well over the past years.  TCS Benelux operations have seen continuous growth of approximately 25% over the last 3 years. Clients include KLM, ABN AMRO, and TCS has acquired 7 new customers in the past  12 months. The event focused on the Benelux market, the TCS operating models and included a customer case study from ABN AMRO. TCS’s  Benelux strategy is focused on five key initiatives:

  • Local Investments – TCS is investing in expanding local data capacity with local data centers (near shore delivery centers in the Netherlands and Luxembourg) and increasing local market reach.
  • Full Services –  TCS wants to increase its focus on delivery of the full range of services and focus on up-selling and cross selling TCS solutions (BPaaS and BPO).
  • Partner Ecosystems – TCS is focusing on local alliances and also on specific industry sectors. Multi-Vendor collaboration is a hot topic for TCS.
  • Industry Sector Scan – TCS is expanding its coverage in the public sector. Besides PWN (a Dutch water utility) , the company now also is starting to tender for engagements with the European Commission.
  • IP based non-linear solution – TCS will increase its focus on service integration.

It’s the Multi-Vendor Collaboration that caught our attention. TCS emphasized the importance of Multi-Vendor Collaboration, quoting clients who state that: “Getting multiple vendors to work together is a big problem and a significant overhead on my retained organisation”. Multi-vendor collaboration, or partner ecosystems as we call them, will become increasingly important, especially in a BPO and even more so, a BPaaS environment. So, what is this Multi-Vendor Collaboration? And what does it mean for TCS, its partners and the client? Basically it is a partner ecosystem, where TCS emphasizes the fact that all entities in an ecosystem need to collaborate: “All entities in a collaboration ecosystem need to agree and sign up; Incremental outsourcing arrangements can cause issues in acceptance by all entities”.

In TCS’s multi vendor collaboration model, the client takes the lead  and sets the collaboration guidelines. These preferences are then communicated to all vendor parties involved. Vendors then work together to create collaboration rules and a unified RACI  (a responsibility matrix). In order to make sure commitments are lived up to, all parties sign collaboration agreements.

ABN Amro is one of TCS’s high profile clients in the Benelux, working in a multi-vendor environment.  In 2005 the bank moved much of its operations offshore, but now they are rationalizing offshore activity. Gerard Vries, Global head of IT international at ABN Amro explained during the event that they moved too much knowledge, and were lacking sufficient knowledge and capacity in-house.  At the moment they are rebuilding that functional knowledge again. As part of that rationalization process, the bank also made a strategic decision to work with a smaller number of vendors and increase the amount of work they do with them.  Currently, the bank’s main suppliers are IBM, KPN, Verizon, TCS, Cognizant and Infosys. Of this group of vendors, IBM has the so-called guardian vendor role. ABN AMRO works with a shared KPI model, meaning that all vendors are measured on:

  • Business satisfaction
  • Project excellence
  • IT Availability
  • IT Capacity

The bank has created a vendor management team (30 people) and a steering committee that takes action when KPIs aren’t met. The bank admits there are still some difficulties to overcome, most differences are country based and people driven. However, with shared vendor interest and shared KPIs the bank feels that partner collaboration is stimulated and enhanced, especially compared to earlier days. The bank states that with the combined approach they have been able to increase the available knowledge, and focus on value enhancement.

The jury is still out on how this approach with client-led collaboration, and shared KPI’s will work. Practical issues arise very fast; for example can a vendor who‘s main input is system integration be held responsible for another vendor, who fails to timely deliver infrastructure. On the other hand, the need for a joint approach is very clear.  As new computing deployment models evolve, it becomes clear that vendors will need to work within new, evolving ecosystems.  Partner networks no longer begin or end, they collide. And the combined behavior of a partner network influences  technology adoption. In our opinion TCS’ is on track to require commitment from the partners they work with. Other leading vendors like IBM and Accenture will have their collaboration guidelines ready as well. We are more curious to see how clients are working with collaboration guidelines. Are they ready to set the KPIs? Please share your thoughts!

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About Simone de Bruin