Transformation of organisations
In October 2006, the Dutch Nyenrode Business University established a chair in Outsourcing. Andrzej Hajdasinski was appointed professor of this chair – a function he combines with that of business development manager at Cap Gemini. In daily practice he counsels organisations on sourcing issues. His specialisation is ‘transformational outsourcing’, which deals with the effect of outsourcing on future developments of an organisation. Reason enough for us to go and visit Nyenrode.
Andrzej Hajdasinski (57) is Polish by birth and has studied Applied Mathematics as well as Steering and Optimisation of Multivariable Dynamic Systems. Drawn by the innovative status of the Netherlands, Andrzej and his family moved to the Netherlands in 1980 and he became professor at the Technical University in Eindhoven. He later officially adopted the Dutch nationality and, after his professorship, has worked for various Dutch IT institutes. His interest in the organisation and management of companies eventually lead to a job as business development manager at Cap Gemini. On the reason as to why he decided to migrate to the Netherlands, Andrzej states: “The Netherlands appealed to me, especially their level of inventiveness. Most technological innovations were coming from the Netherlands at the time.”
What is the reason outsourcing has become so popular these last few years?
“Outsourcing has always been around; it is not a new thing. You could say it was invented by the Dutch in the 13th century when they transferred their trade activity to Genoa and Venice. Later they went on to colonise the East and West Indies. The Dutch exported a lot of their business processes. This of course does not concern IT outsourcing, but the outsourcing of commercial activities.”
Does the current trend in outsourcing company processes to foreign countries jeopardise the Dutch economy?
“On the contrary. Technology has become a commodity and can therefore be outsourced. However, outsourcing basic production processes to a country like China does not necessarily mean that the development and production of technologically advanced products also drains off to these countries. The Netherlands plays a leading role in producing compressors, motors and microelectronics. Intellect and inventiveness simply cannot be outsourced; it is how you apply the technology by which an organisation can distinguish itself. Luckily, the Dutch are very enterprising and ambitious by nature.”
Which processes should not be outsourced?
“I may be a professor of Outsourcing, but I will be the first to say that you should not always want to outsource. OK, commodities can be outsourced; but whether or not you want to outsource other processes completely depends on the strategic importance such a department has for the development phase the organisation is in. Personally I am hesitant about outsourcing primary processes, but some organisations choose to do so – especially English ones. In Krakow, Poland for example, Cap Gemini handles the customer relationship management of many other companies. The Poles who work there speak fluent Danish, English or French. The customers who call them think they’re speaking with the actual supplier and do not notice a thing. So there’s no problem there.”
Is there a generic model for outsourcing issues?
“That is very hard to formulate; which things should I measure and how should I interpret what I have measured? One option is discussing a theoretical optimum in static form. Another option is to formulate an optimum taking into account certain boundary conditions and the variability of your organisation. These boundary conditions can change due to parameters such as market conditions, labour market, financial policy, financial climate, world economy, globalisation, etc. One of the reasons for outsourcing can be the lack of certified personnel in your own environment. This is what happened in the Netherlands in the nineties; business administration was very popular among students, which lead to a shortage of engineers being educated. This is no longer the case. You constantly have to adapt to the current situation, which means that sometimes you have to outsource and sometimes you have to insource. And because of this constant interdependency of factors it is hard to just walk into an organisation, take a look at the various business units and say: “This unit needs to be outsourced.”
Are there any emotional factors involved?
“In some cases a department is considered as a kind of child of an organisation. The emotional factor then outweighs the factual. Especially CIOs (Chief Information Officer – ed.) are not capable of outsourcing their ‘child’, i.e. the ICT department. Composing a matrix containing the advantages and disadvantages of the strategic, practical, operational, social and process-related aspects could provide better insight. You can rate every aspect with a plus or a minus, and in the end also indicate an emotional factor. Only then will you have a certain index. After that the second phase starts, which consists of thinking about the actual transformation.
Does outsourcing result in a change in the organisation?
“Outsourcing by definition changes an organisation; some positions are created, others are disposed of, the contact with the outsourcing parties has to be maintained, SLAs need to be made, the variability, efficiency and costs need to be measured – in short, the function of ICT manager will be replaced by that of programme manager. Outsourcing also effects the supply chain management and your partners, suppliers, customers, marketing organisation, financial management, etc.”
So if an organisation focuses too much on the costs aspect (‘outsourcing means saving costs’) they could be deceived?
“Many outsourcing deals that are solely focused on saving costs will suffer losses within a few years. Such an organisation then often decides to insource again. That does not mean that the outsourcing process went wrong, just that the organisation did not go through the necessary transformation. It can however – and often does – work the other way around: by outsourcing you create extra budget for development and innovation, or for setting up an organisation abroad or purchasing new technology. The extra budget needs to be invested in something that will yield a return. Transformational outsourcing actually encompasses an entire project deriving from the question ‘How can I improve the organisation of my company?’ This can however lead to the conclusion that outsourcing is not the solution.”
What do you think will change in the next few years in terms of outsourcing in the Netherlands?
“I am thinking of multivendor outsourcing (specialised independent outsourcing organisations –ed.). I expect the introduction of so-called ‘ecosystems’ in which various parties conduct the same outsourcing. Syndicates may even be formed in which multiple parties join and specialise in a certain field, for example infrastructure or application management.”
Dutch organisations should then not be afraid of outsourcing processes?
The Netherlands is actually a trendsetter in business concepts. Dutch managers show great motivation. And in science, the Netherlands have always been a guiding force. It has been absent for a while, maybe due to tiredness and prosperity, but it’s coming back: the Netherlands will again play a leading role in innovation. With such a level of ambition and inventiveness, we in the Netherlands need not be afraid of outsourcing.”
Het 4s-model
For the various cycles within organisations Andrzej Hajdasinski has come up with the 4S model:
1. Synergy: This is the phase in which various organisations seek to cooperate.
2. Symbiosis: The phase in which various entities need each other to grow, like an oak tree, a mushroom and a squirrel.
3. Symphony: The continued existence of these various elements so they can operate in harmony – a process which requires a conductor.
4. Synechia: This is an attack of bacteria on your body which confuses you and leads to total chaos and cacophony. This is the moment of fatigue and indolence. You will then have to rediscover synergy, etc.
According to Andrzej the Netherlands finds itself in the phase of symbiosis at the moment, on the verge of the symphonic phase. The people in the organisations he has visited recognise this cycle from their own experience. When asked what organisations need right now, Andrzej says: “Dutch organisations need to consistently realise their policies. A new idea is often received and realised with great enthusiasm at first, but after a year or two the efforts slacken. You cannot avoid the phase of synechia, but the trick is to properly time that moment of fatigue and indolence.”
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