Preface
With a decade of experience working for two India-based global services providers, as Head Enterprise Application Services Europe at Wipro Technologies and as Country Manager Germany at Mahindra Satyam (today Tech Mahindra), complemented by a couple of years with the Germany-based IT business software company SAP responsible for their global university liaison program with more than 450 academic institutions around the globe,I experienced the issues of working with emerging economies from Bangalore to Cochin, from Hyderabad to Chennai dominated by cross-cultural challenges from Abu Dhabi to Helsinki, from Stanford to Beijing, from Zurich to Sydney concluding that perception and prejudice are dominating when we start forming global teams.
At the India Week Hamburg (Germany) 2011 was an event organized by the Hamburg German Indian Society and the German Indian Round Table (GIRT) with the title “Dance with the Tiger – The Indian Tiger has awakened. Whoever wants to compete with him needs to sharpen his claws”. When I showed it to my Indian colleagues, the immediate reaction was: “Tigers don’t dance! – Why don’t they take the peacock? It is the symbol of grace, joy, beauty and love and it is the national bird of India”. There is obviously a significant difference how we perceive people from other cultures and how they perceive themselves and how they believe the rest of the world perceives them. India’s Ministry of Tourism has been running a campaign “Incredible India” over the years. One of their advertisements shows the close-up of a tiger’s face with the headline “Not all Indians are polite, hospitable and vegetarian”, assuming, that the rest of the world shares their sense of humor. At least the Germans might take this serious.
At the same event, there was a session with the title “Renewable Energies in Hamburg and India” organized by the Hamburg Chamber of Commerce. They invited CEOs from regional solar energy companies, mostly SMEs and start-ups and representatives from the Federation of India Chamber of Commerce & Industry (FICCI). The Indian delegation offered “huge opportunities for German SMEs doing business in Rural India”, implicitly assuming, that the Germans knew about Rural India. The Germans were very interested, implicitly assuming that the Indians knew about Rural Germany, so it could not be that different. The result of the event was that both sides did not understand each other because they still perceived what they wanted to perceive.
Cross-cultural sensitivity has turned out to be the most demanding area when leading global teams, especially in times of polarization when tolerance is decreasing. It starts with respect, learning about each other’s cultural sensitivity and it is bidirectional. During my time as Country Manager Germany for Mahindra Satyam one of my team members was arrested by the police one day, because he had decorated his apartment with swastikas. The swastika was used by the Nazis and its use is prohibited in Germany and there is still a significant emotional potential in Western Europe for an EU-wide ban of the symbol. European Hindus are opposing these attempts. The swastika is an ancient Hindu symbol representing luck and prosperity and is one of the most popular ways of decorating rooms during Diwali, India’s festival of light. What happened? My Indian colleague had been living in Germany with his family for three years already and was socially well integrated into the German neighborhood. With the door to his apartment left open, a neighbor saw the swastikas and called the police. A cross-culturally mature reaction would have been that the German neighbor explained the sensitivity of the swastika in German society while respecting religious practices without calling the police and my Indian friend being more discreet respecting local sentiments. I worked in teams with Christians, Muslims, Hindus, Buddhists, Sikhs and Jews. We were celebrating Christmas and Diwali and respected Ramadan. There is additional conflict potential when people from culturally more tolerant societies are working in teams with people from less tolerant societies. While people from less tolerant societies are expecting “integration”, people from more tolerant societies are expecting “tolerance”.
Culturally induced different work styles have direct impact on the team performance. European customers had problems to accept Indians as project or program managers. Prejudices like “Indians are too soft, they cannot say NO “, were common.
I even had the same complaints from a German customer about one of my top French program managers. One of the generic cultural differentiators is time management, a critical factor for successful project execution. I experienced German project teams as time oriented with fixed milestones while the Indians appear more target oriented with variable milestones. Both methods can result in successful project executions (on time, on target, on budget) when managed properly. Germany, Switzerland, U.S. are monochronic time (M-time) cultures. That is one-thing-at-atime, following a linear form. Monochronic cultures stress a high degree of scheduling and an elaborate code of behavior built around promptness in meeting obligations and appointments. India, the Arab part of Middle East, Latin America belong to polychronic time (P-time) cultures. Many things may occur at once since many people are involved in everything, and interruptions are frequent. Human relationships and interactions are valued over “arbitrary” schedules and appointments. Imagine what happens when Germans (M-time) and Indians (P-time) are working in a joint project team with an Indian program manager without cross-culture training.
Well, it happened to me and it was the trigger for this book. After returning to academia I started sharing my experiences teaching “The Issues and Challenges of Operating within the Context of an Emerging Economy” at the University of Strathclyde in Glasgow, United Kingdom, followed by a more formal, scientific didactical approach developing the course “Global Communication and Collaboration” at the University of Applied Sciences and Arts Northwestern Switzerland in Windisch for computer science students.
Six phases to develop the necessary competencies for successfully managing global virtual teams have been derived from interacting with more than 180 students in an evolutionary process: selecting the best global sourcing strategy and partner, risk assessment of working with emerging economies, developing best practices for intercultural competencies, applying professional international project management methods, optimize virtual teams, and develop international conflict management strategies.
Parallel to this course I developed a new combined learning concept in business informatics with a holistic view of the linked business process chain ERP-SCM-CRM-BI-Big Data as combined roleplay, online business simulation/serious gaming, and a text book “Integrated Business Information Systems” in German (springer.com/de/book/9783662437193) and English (springer.com/us/book/9783662532904) funded by Lucerne University of Applied Sciences and Arts, Lucerne, Switzerland. Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM), Business Intelligence (BI) and Big Data Analytics (BDA) are business related tasks and processes, which are supported by standardized software solutions.
This requires business
oriented thinking and acting from IT specialists and data scientists. It is a good idea to let students experience this directly from the business perspective, for example as executives of a virtual company in a serious gaming environment. The course simulates the stepwise integration of the linked business process chain ERP-SCM-CRM-BI-Big Data of four competing groups of companies. The course participants become board members with full P&L responsibility for business units of one of four beer brewery groups each from production to retailer.
The story is a combination of facts and fiction. Global and local beer markets are occupied by beer giants. Four investor groups have acquired the independent breweries including their entire supply chains (Alpha Beer, Green Beer, Royal Beer, Wild Horse Beer). Each group has four retail chains distributed all over the country.
There is a typical post merger situation right after the foundation of the four groups with business units having different business processes, product portfolios, rules, tools and IT infrastructures.
With the strategic goals of an ERP implementation (standardizing business processes, standardization of master data, optimization of the IT infrastructure) the post merger situation will be cleared. The next step is to optimize the supply chains introducing Supply Chain Management (SCM) techniques. With a focus on sales and marketing Customer Relationship Management (CRM) is implemented initiating the direct competition of the four groups. Real time Big Data Analytics is the final step for the successful implementation of Integrated Business Information Systems. Roleplay and gaming phases alternate gradually, starting with the formation of the business units and the analysis of the initial business situation. That finishes the course.
Contents
1 Introduction....................................................................................... 1
1.1 Introduction........................................................................................... 1
2.1 Preparation........................................................................................... 7
2.2 Game Structure and Organization........................................................... 7
2.3 Step 1: Supervisor Registration.............................................................. 8
2.4 Step 2: Creating Classes........................................................................ 8
2.5 Step 3: Creating Games......................................................................... 9
2.6 Step 4: Register Students..................................................................... 10
2.7 Student Login...................................................................................... 10
2.8 The Story............................................................................................ 10
2.8.1 History............................................................................................. 10
2.8.2 The Presence.................................................................................... 11
2.9 The Game........................................................................................... 11
2.9.1 Phase 1: Global Sourcing Initiative..................................................... 13
2.9.2 Phase 2: Emerging Economies........................................................... 13
2.9.3 Phase 3: Intercultural Competence.................................................... 13
2.9.4 Phases 4, 5: International Project Management, Virtual Teams............ 13
2.9.5 Phase 6: Conflict Management in International Projects...................... 14
2.10 Roleplay........................................................................................... 14
References............................................................................................... 14
3.1 Global Sourcing Principles...................................................................... 17
3.2 Global Sourcing Strategies..................................................................... 18
3.2.1 Delivery Model................................................................................... 18
3.2.2 Client-Vendor Partnership................................................................... 19
3.3 Supplier Consolidation: Status................................................................ 19
3.4 Gdigservices......................................................................................... 20
3.4.1 Gdigservices Profile and Delivery Model............................................... 20
3.4.2 Gdigservices Capabilities Evaluation.................................................... 20
3.5 Idktech................................................................................................ 20
3.5.1 Idktech Profile and Delivery Model...................................................... 20
3.5.2 Idktech Capabilities Evaluation........................................................... 25
3.6 Sourcing Objectives.............................................................................. 25
3.6.1 Performance Objectives..................................................................... 25
3.6.2 Financial Objectives........................................................................... 26
3.6.3 Relationship Objectives...................................................................... 26
3.7 Final Vendor Selection Process.............................................................. 26
3.7.1 Phase 1: Paired Comparison Method................................................... 26
3.7.2 Phase 2: Scoring Model...................................................................... 26
3.8 Engagement Roadmap: Maturity in Engagement Governance.................. 27
3.9 Organizational Readiness...................................................................... 27
3.10 BS7799 and ISO20000........................................................................ 30
3.11 ITIL: Information Technology Infrastructure Library.............................. 31
3.12 Capability Maturity Model Integration................................................... 34
3.12.1 CMMI: Capability Level..................................................................... 34
3.12.2 CMMI: Maturity Level....................................................................... 35
3.12.3 CMMI: Services................................................................................ 36
3.13 Six Sigma........................................................................................... 37
3.14 Lean IT.............................................................................................. 38
3.15 Decisions: Paired Comparison Method and Scoring Model...................... 39
3.16 Decisions: Global Sourcing Priorities..................................................... 39
3.17 Assigned Reading............................................................................... 39
References................................................................................................ 41
4.1 How to Identify Emerging Economies..................................................... 43
4.2 The Gini Index...................................................................................... 44
4.3 The Educational Challenge..................................................................... 45
4.4 Global Sourcing Risk Assessment............................................................ 47
4.4.1 The Infosys Case (GadgetsNow 2010).................................................. 47
4.4.2 The Satyam Case................................................................................ 47
4.5 Emerging Economies and Innovation....................................................... 48
4.6 Decisions – Emerging Economy Risks...................................................... 48
4.7 Assigned Reading.................................................................................. 48
References................................................................................................. 49
5.1 Environment of International Cooperation................................................ 51
5.1.1 The Traditional Approach: International Trade, Foreign Direct Investment
and Firm Internationalization (Morgan and Katsikeas 1997)............................ 51
5.1.2 Global, Transnational, International and MultinationalmCompanies ........ 53
5.2 Theory in International Business (Grosse and Behrman 1992)................... 54
5.3 Generation “D” as Synonym for the Future International Manager ............ 55
5.4 The Cage Distance Framework (Ghemawat 2001).................................... 56
5.5 About Globalization: People’s Voice (Jim 1999)........................................ 57
5.5.1 Globalization: Positive Aspects............................................................. 57
5.5.2 Globalization: Negative Aspects........................................................... 58
5.6 Globalization: China’s Big Mac Attack (Watson 2000)............................... 59
5.7 Manage Generic Cultural Differences....................................................... 61
5.7.1 The Process of Management (Littrell 2008)........................................... 61
5.7.2 The Problem of Planning (Littrell 2008)................................................. 61
5.7.3 Monochronic and Polychronic Time (Hall E and Hall M 1990).................. 62
5.7.4 Time Orientation (Hall E and Hall M 1990)............................................ 62
5.7.5 High and Low-Context Cultures (Hall E and Hall M 1990)....................... 63
5.8 Decisions: Intercultural Competencies..................................................... 63
5.9 Assigned Reading.................................................................................. 64
References................................................................................................. 64
6.1 Stakeholder Management...................................................................... 67
6.1.1 Why Projects Fail............................................................................... 67
6.1.2 Project Success................................................................................. 68
6.2 Stakeholder Engagement Approaches (stakeholdermap.com 2016).......... 68
6.3 Virtual Teams....................................................................................... 69
6.3.1 Five Challenges to Virtual Team Success (Kirkman et al. 2002)............. 70
6.3.2 Managing Virtual Teams (Reiche 2013)............................................... 72
6.3.3 Making Virtual Teams Work (Watkins 2013)........................................ 74
6.4 Innovation in Global Delivery and Virtual Teams (Neumann 2012)........... 77
6.5 Decisions: Virtual Team Best Practices................................................... 77
6.6 Assigned Reading................................................................................. 78
References................................................................................................ 78
7.1 Hofstede’s Dimensions of National Culture (Hofstede 2001)..................... 79
7.2 Differences Between Cultures on the Value Dimensions (Hofstede 2016).. 81
7.3 Thomas & Kilman’s Conflict Management Styles (Thomas and Kilmann).... 82
7.4 Culture and Conflict Management (Mohammed et al. 2008)...................... 84
7.4.1 Competitor......................................................................................... 84
7.4.2 Accommodator................................................................................... 84
7.4.3 Avoider.............................................................................................. 84
7.4.4 Collaborator....................................................................................... 85
7.4.5 Compromiser..................................................................................... 85
7.4.6 Conflict Management Style Ranking Total Average............................... 86
7.5 Decisions: Conflict management style ranking........................................ 86
7.6 Assigned Reading................................................................................. 87
References................................................................................................ 88
8.1 Lionel Messi’s shoes: ‘The greatest insult in Egyptian history?’ (CNN 2016). 91
8.2 Airbus Industries (Airbus 2015)............................................................. 92
8.3 CRM Contributes to a Scary Halloween for Hershey. (techtarget 2004)..... 95
8.4 Global Sourcing: Shifting the Focus from Cost Saving to a Strategic Set-up (Gronwald 2012)........... 96
8.5 Successful People Strategies for Innovation in Global Delivery and Virtual Teams (Neumann 2012).. 102
8.6 Advancing Intercultural Competencies for Global Collaboration (Messner and Schaefer 2012)........... 110
References.................................................................................................. 121
9.1 Global Results....................................................................................... 125
9.2 Global and Regional Revenue Market Share............................................. 125
9.2.1 Global Revenue Market Share.............................................................. 125
9.2.2 Market Share Americas by Revenue..................................................... 125
9.2.3 Market Share Europe by Revenue........................................................ 125
9.2.4 Market Share Africa by Revenue.......................................................... 125
9.2.5 Market Share Asia Pacific by Revenue.................................................. 129
9.3 Global Volume Market Share.................................................................. 129
9.3.1 Global Market Share by Volume.......................................................... 129
9.3.2 Market Share Americas by Volume...................................................... 129
9.3.3 Market Share Europe by Volume......................................................... 131
9.3.4 Market Share Africa by Volume........................................................... 131
9.3.5 Market Share Asia Pacific by Volume................................................... 131
9.4 Global EBITDA Market Share................................................................. 133
9.4.1 Global Market Share by EBITDA.......................................................... 133
9.4.2 Market Share Americas by EBITDA...................................................... 133
9.4.3 Market Share Europe by EBITDA......................................................... 133
9.4.4 Market Share Africa by EBITDA........................................................... 135
9.4.5 Market Share Asia Pacific by EBITDA................................................... 135
9.5 Alpha Beer........................................................................................... 135
9.5.1 Alpha Beer Results............................................................................. 136
9.5.2 Global Presence Alpha Beer................................................................ 136
9.5.3 Alpha Beer Market Share.................................................................... 136
9.5.4 Alpha Beer Portfolio........................................................................... 137
9.5.5 Alpha Group Organization Chart.......................................................... 139
9.5.6 Alpha Global IT & Business Servicers................................................... 140
9.6 Green Beer........................................................................................... 140
9.6.1 Green Beer Results............................................................................. 140
9.6.2 Global Presence Green Beer................................................................ 141
9.6.3 Green Beer Market Share.................................................................... 142
9.6.4 Green Beer Portfolio........................................................................... 142
9.6.5 Green Group Organization Chart......................................................... 143
9.6.6 Green Global IT Organization Chart..................................................... 144
9.7 Royal Beer........................................................................................... 145
9.7.1 Royal Beer Results............................................................................. 146
9.7.2 Global Presence Royal Beer................................................................ 146
9.7.3 Royal Beer Market Share.................................................................... 146
9.7.4 Royal Beer Portfolio........................................................................... 146
9.7.5 Royal Group Organization Chart......................................................... 149
9.7.6 Royal Global IT Organization Chart..................................................... 149
9.8 Wild Horse Beer................................................................................... 150
9.8.1 Wild Horse Beer Results..................................................................... 150
9.8.2 Global Presence Wild Horse Beer........................................................ 151
9.8.3 Wild Horse Beer Market Share............................................................ 151
9.8.4 Wild Horse Beer Portfolio................................................................... 154
9.8.5 Wild Horse Group Organization Chart.................................................. 154
9.8.6 Wild Horse Global IT Organization Chart............................................. 154
10.1 Gdigservices: Profile and Delivery Model............................................ 157
10.1.1 History......................................................................................... 157
10.1.2 Global Footprint............................................................................ 157
10.1.3 Building Right Capability and Leadership......................................... 158
10.1.4 Globally diversified service portfolio................................................ 158
10.1.5 Engagement Roadmap.................................................................. 159
10.1.6 Investing in Optimized Global Delivery Model.................................. 160
10.1.7 Gdigdelivery: Applied Innovation to Application Support................... 161
10.1.8 Outsourcing Challenges and Traditional Delivery Models.................. 161
10.1.9 gdigDelivery Versus Traditional Outsourcing Challenges................... 162
10.1.10 Organizations suited for gdigDelivery............................................ 162
10.1.11 gdigDelivery Service Offerings...................................................... 163
10.1.12 Gdigservices Execution model...................................................... 164
10.1.13 Gdigservices Tools...................................................................... 165
10.1.14 Pricing Models............................................................................ 165
10.1.15 Operational Model: Security and Ticket Allocation......................... 165
10.1.16 Value Proposition....................................................................... 166
10.1.17 Governance Structure................................................................. 167
10.1.18 Governance Organization............................................................ 167
10.2 Idktech: Profile and Delivery Model.................................................. 168
10.2.1 History........................................................................................ 168
10.2.2 Global Presence........................................................................... 169
10.2.3 Associates................................................................................... 169
10.2.4 Process Models............................................................................ 170
10.2.5 Full Life Cycle Offering................................................................. 170
10.2.6 Lines of Business......................................................................... 171
10.2.7 Advanced Shared Competency Delivery Model: ASCDM.................. 171
10.2.8 ASCDM: Utilization with Maximized Profitability and Zero Bench...... 172
10.2.9 Advanced Shared Competency Delivery Versus Dedicated Support.. 172
10.2.10 Advanced Shared Competency Delivery Model Comparison........... 172
10.2.11 Competency Tower based Service Delivery.................................. 173
10.2.12 Advanced Shared Competency Delivery Benchmark...................... 174
10.2.13 ASCDM Tool Support.................................................................. 175
10.2.14 Sourcing Model.......................................................................... 177
10.2.15 Governance Model..................................................................... 178
10.2.16 Governance Participants............................................................. 178
Index.................................................................................................... 179
Chapter 1
Introduction
Abstract Global sourcing is about working in virtual teams in a global, multicultural environment. It requires a significant amount of organizational and behavioral change of people and organizations. Understanding cultural differences in working styles is key for successful global project management. Theories of international management, company internationalization, cultural dimensions and distances are helping to develop cross-cultural competencies and conflict management styles for international project managers. This course simulates the stepwise outsourcing of global IT and business services to shared services centers as profit centers of four global beer groups.
1.1 Introduction
Global sourcing is about working in virtual teams in a global, multicultural environment. It requires a significant amount of organizational and behavioral change of people and organizations. Organizational change management is the method to eliminate resistance against change and improve organizational readiness. Organizational readiness is the measure for the changeability of an organization. There are four key factors which have significant impact on global collaboration:
• Speed
• Social change
• Historical inheritance
• Cultural gaps
Understanding cultural differences in working styles is key for successful global project management. Theories of international management, company internationalization, cultural dimensions and distances are helping to develop cross-cultural competencies and conflict management styles for international project managers. They will understand modern theories and methods of international management and will be able to apply these to practical project management problems. They understand the benefits and challenges of international cooperation and know how to identify modes of cooperation that are relevant to the needs of international teams. High attrition in the IT services industry in emerging economies requires a focus on knowledge retention rather than people retention. Attrition and rotation of highly skilled and experienced talents add to the challenges to build and work in virtual teams.
This course simulates the stepwise outsourcing of global IT and business services to shared services centers as profit centers of four global beer groups Alpha Beer, Green Beer, Royal Beer, Wild Horse Beer. They are the avatars for Anheuser-Busch InBev, Carlsberg, Heineken, SABMiller. All of them have outsourced their IT and Business Services to captive centers. Alpha Global IT & Business Services, Green Global IT & Business Services, Royal Global IT & Business Services, and Wild Horse Global IT & Business Services have become profit centers in our simulation. Additional they have started the process to offshore parts of their services to India. The course begins in a phase when two India-based global service providers (gdigservices and idktech) have already been selected and the integration of the offshore providers has started.
Students will become the leadership teams with roles as service cluster heads for ERP, SCM, CRM, Big Data Analytics (BDA) headed by a Program Manager. IT & Business Service Centers are profit centers contributing directly to the profitability of the business. After developing the necessary competencies, teams will make strategic decisions for six phases in the kdibis business simulation (kdibis.com) to gain competitive advantage and increase the market share for their respective company.
Phase 1: Select the best global sourcing strategy and partner.
Phase 2: Risk assessment of working with emerging economies.
Phase 3: Develop best practices for intercultural competencies.
Phase 4: Implement professional international project management standards.
Phase 5: Optimize virtual teams.
Phase 6: Develop international conflict management strategies.
Each phase finishes with a set of decisions to be made by each team in the online business simulation system kdibis. Those decisions are based on real studies and surveys, but are not included in the book. They will be disclosed only after the teams made their respective decisions online to compare their results with the reality. The closer students’ match the real surveys, the bigger becomes their market and profitability gain. Since the beer market is saturated and actually shrinking year by year, growth can only be achieved by stealing market shares from the competition.
This makes the book and the online simulation mandatory components for the course.
The instructor is included into the roleplay as chairperson discussing the performance of each team in formal board review meetings.
The book is separated into three parts.
Part I: Role based business simulation. Introduction of the role based simulation environment kdibis, the story, methods and background information for the online simulation including the registration process and game initiation.
Part II: Course content for the six phases for building competency. The online decisions complete each phase.
Part III: Complementary course material including case studies and company profiles of the virtual kdibis world.
All other course material like templates for presentations and review meetings are available as downloads from kdibis.
